The more sacrifices that have been made because of the investments, the better they need to be protected from falling in value, writes Merja Mähkä.
An increasing number of Finns are interested in investing. Igor Stevanovic
One day here in the fall, I told you on Instagram how the fall in stock prices has affected my equity portfolio. Unfortunately, of course, it has made an impact. The value of the portfolio has lost EUR 60,000.
I got a lot of questions in this regard about how to really endure such a decline?
I’ll then explain that it doesn’t feel so awful. I have invested for so long that I know such bills are relevant. I also know the balance of the portfolio will improve over time. In the short term, stock prices will cut back and forth, sometimes more bumpy. In the long run, it is now said, even with a five-year perspective, the direction is upwards and towards new heights. This has always been the case in the Western stock market and will be the case. So no worries.
However, this is only half the truth. The other side is that I already have a nice property. The more it is, the less money invested later is needed to make life bearable or to enjoy life. Then you can take more risk with your investments.
“More risk” means investing in properties where the return is not so certain, but if the return comes, it can come from the recipients by pouring. Individual shares are such an investment, although there is a huge difference between them as well.
It is important for all investors to know how much risk they can take in their investments. But at least I’m guilty of pretending at this point. When investing is marketed – thankfully – to everyone, it would be worth remembering that the initial situation of the investor should influence the choice of investment targets.
In good weather, ie in a stock market rise, different investors are on the same line, as the rise treats everyone equally comfortably. The bills, on the other hand, are more cruel to some than to others.
For me and many other speaking ends of investing, bills are often just opportunities to buy more shares at a lower price. I can’t empathize with a situation where I would be solely responsible for the day-to-day life of the family, but I realize that the situation of a single parent is different from mine. The more sacrifices have been made to invest, the more serious the bills are.
It is excellent that an increasing number of Finns are interested in investing. It is also excellent that it is possible to invest with even smaller amounts. At least a hundred were needed before, now ten are enough. However, you have to think carefully about your own level of risk, and when you think about it, you will find that the world of investing is unfair. Where others can boldly seek returns, it is safer for others to focus on choices where the potential for momentary depreciation is smaller, even if it means a weaker upside potential.
In the case of practical investment choices, this may mean, for example, that funds are chosen as investment targets instead of fashionable stocks, perhaps even combinations that have been tarnished by hard investors. They carry less risk than equity funds, not to mention individual stocks.
Funds may only yield returns by pouring out recipients, but they can still help build better financial security little by little.