by James Copenhaver

What are the real risks in investing?

Many pundits will tell you the risk to investing is losing your money, not making enough money, or some variation that falls between greed and fear. We believe the true risk in investing is not investing.

Why do you invest? More than likely, it’s not to have a number on a statement. It’s to buy things you want and need or to make sure your family and children have what you want for them. You are the only one the can tell what it is you want and desire. Investing is just a means to getting there, and there isn’t just one way to do so successfully.

There are many ways to get the funds to meet your goals, some take longer than others, but the first step to fulfilling your goals is to make the decision to take part of your income and direct it towards that goal.

Academics call it time value of money, bankers call it the power of compounding and I call it procrastination. So look at where you’re spending your hard earn dollars and determine what they could do for you in the future if you put them to work now.

A simple example of how procrastination robs you of opportunity lies with Qualified Investing, such as a 401K and IRA accounts.

Investor 1 invests $2,500 each year between age 20 and 30 in a portfolio that yields a return of 8% and then stops adding to the portfolio but allows the portfolio to grow until age 60. Investor 2 waits until age 30 to start investing $3000 a year and keeps investing annually until age 60, and will get the same return as investor 1. Will Investor 2 catch up to investor 1 by age 60 or ever?

Find out in the next newsletter…

James Copenhaver
Investment Manager – Investment Management
952-249-5801