The market would have to go back up 50 percent to make back the 50 percent that you lost, right? Wrong. To recover the loss of 50 percent of your money, you would have to make a 100 percent positive return just to get back to even.
Think about that for a moment. How long would it take you to make 100 percent on your money? A 7 percent a year net return would take you a decade. Even a 10 percent per year net gain would take you 7 years to make 100 percent.
While you are trying to regain what you lost, you may be racking up the years of negative performance that many people are still trying to recover from. How many more times will you take the ride all the way down to the bottom and then slowly claw your way back to the top just to get thrown to the bottom again before you change your approach to wealth building?
Rather than trying to beat the market every year or even trying to match it, wouldn’t the best strategy be to take an approach that focuses on avoiding the downside? In a perfect world, that’s what we would all choose to do. Participate when the market is rising and not when it’s falling thus effectively winning by not losing.
Most will tell you the key to financial success is just to stay in for the long run and never attempting to get out. If you can take the punches as long as you are willing to stay in the fight, everything will work out in the long run. Clearly, that has not worked for a long time. Even if it did work, most people don’t like getting punched in the face.
What does your perfect investment look like? For me, it has four things:
- Liquidity
- Safety
- Rate of Return
- Tax Free
Is all of that possible? Could something like this actually exist already? The answer is, yes. It’s been around for about 15 years and it does all of the things most of us dream our investments should do.
If you’d like to discuss your particular situation and whether or not this approach would works for you, reach out to me and in just a few minutes I will be able to tell you if I can help you and if we might be a good fit to work together on your plan. Click here to contact me.
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Information presented in this blog post is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personalized investment advice, but are limited to the dissemination of general information and may not be suitable for all readers. A professional adviser should be consulted before implementing any of the strategies presented.