2012-12-05

Investments Can Be Hard to Select

Image via Flickr by 401k 2012

Investing isn't easy, and anyone who tells you that it's an easy activity is either lying or seriously ignorant. You can invest in a lot of different styles, but there is no perfect solution to the dilemma of "what do you put your money?" Fortunately, there are many ways to win.

Investing is as Challenging as You Make It

There are a lot of different ways to invest your money. Without compound returns, the buying power of your money is going to slowly drain away through the negative influence of inflation. While there are a number of different ways to invest, nowadays benchmarks and total market exchange traded funds can allow you to do reasonably well without putting a great deal of thought into your investing style. If you wish to go beyond this, you would do well to remember that most people are unable to beat the market despite having powerful tools.

Brilliant Investors Often Have Advantages You Can't Touch

As Peter Briger, CIO at Fortress Investment Group could undoubtedly tell you, the pros have a host of advantages that the average person can't touch. While there are advantages to being small-time and to having no external pressure to appear "active" or to please investors who may overreact to the latest news, the individual investor is almost always at a disadvantage compared to a mutual or hedge fund. The level of resources could not be more different, and this difference can make a tremendous impact on what such an investor has access to. For example, you probably can't simply call a company's CEO, and your computer most likely doesn't have anywhere near the power that such a fund's computers do.

No One Knows the Future

Regardless of how large an investor's resource base may be, no one in this world knows the future. While a lot of people wish they did, ultimately, you have to invest with the knowledge that the most risk you take, the more likely you will accidentally make a mistake and cost yourself a significant portion of your previous gains. While this would not happen in a perfect world, this is not a perfect world. The good news is, you can win simply by diversifying and by avoiding the rampant competitiveness that most people fall into.
Winning investments don't actually need to beat anyone. You can win in a wide variety of different ways that have no competitive element about them.

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