Emma Aspinall

Knowledge Areas : Global Warming, Crafts, Making and Tinkering, Snow and Water Skiing, Beach Destinations, Roadtrips

Reputation Score: 148

Submit An Answer

Answers ( 1 )

 
  1. Doug Massey 1211 Community Answer

    In general, no.  It's almost always a good idea to be diversified with your investments. That means investing in lots of different things that have a history of generating more wealth, but that don't necessarily react to news the same way.

    Stocks are great, but when there's a recession, they pretty much all lose value at the same time.  That's why a lot of people recommend investing in bonds as well -- because very often, when people are panicking and selling stocks, they're buying bonds with the money they free up.  That means that bond investments increase in value just as stocks are dropping -- and if you own some of each, the losses you take in one type of asset will be offset by gains that happen in the other.  You can also shield yourself from big losses by owning tangible assets like your home.

    You can also diversify by owning some investments in your home country and others in international assets.  If you're an American, just about the simplest way to do this is to invest in a Vanguard Target Retirement Index Fund.  If you take your birth year, add 60 and round it up to the nearest 5, then that'll give you a fund that is probably a pretty darn good choice for you -- and it will continuously rebalance and adjust its asset allocation as you age.  So if you were born in 1993, you'd add 60 to get 2053, round up to 2055, and buy some of the VFFVX fund:

    https://investor.vanguard.com/mutual-funds/profile/VFFVX 

    It will cost you just 15 cents per $100 invested, per year, and right now, will buy thousands of stocks and hundreds of bonds for you, in a pretty stock-heavy allocation (because you're 27, that makes a lot of sense).  As you age, it'll shift more and more of that over to bonds, which is wise.  There's always a risk of loss, but like you say, there's opportunity to make far, far more profit than having it sit in the bank.  You'll lose value to inflation there, so it's wise to do something with it.  This is a really good option.

    If you'd like a more in-depth answer that addresses your personal situation, feel free to ask a private question here on Sage.

    UTC 2020-12-23 03:01 PM 0 Comments

To answer this question, you must be logged in.

Create an account

Already have an account? Login.

By Signing up, you indicate that you have read and agree to Sage's Terms and Conditions and Privacy Policy