Investing money is something I’ve been trying to do ever since I set up an emergency fund years ago. And lately, I’ve been leaning towards stocks as an investment.
Investing in stocks can be a risky proposition. Markets can be very volatile, and over the years I’ve seen my portfolio lose significant value week after week.
But I also know that stocks have a long history of rewarding investors who keep buying for decades. Over the past 50 years, the stock market’s average annual return has been 10%. If he invested $10,000 today with the same return, it could be worth about $1.17 million in 50 years (I’m not kidding).
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To be clear, I have not always been comfortable investing in stocks. It took me years to convince myself to accept the risks involved. But to this day, there are certain investments that I don’t even consider adding to my portfolio. Here are three that fit into that category.
1. Cryptography
As someone who owns a significant amount of stock, I’m used to taking risks.However, for me, cryptocurrency investment is just Method It’s riskier than stock investing purely because it hasn’t been around that long.
There are stocks in my portfolio whose issuing companies have been around for over 100 years. In contrast, Bitcoin was first introduced to the public in 2009.
It’s hard for me to know how much staying power cryptocurrencies have. That’s a risk I don’t want to take.
2. Art
I like classic paintings as much as the next person. Mona Lisa? I made sure to check it out when I visited the Louvre many years ago.
But while I like looking at art, I refuse to actually invest in it. The reason is that I don’t know enough about art to judge whether a work has the potential to gain value or not.
As a general rule, I believe that you should only invest in assets that you understand. I don’t understand the economic situation of art.
Well, to some extent, I don’t always understand art Behind the art is something like a modern painting that sells for a million dollars, when all you see is a bunch of swirling lines on a canvas. Therefore, it makes no sense to add art to my portfolio.
3. Real estate
I invest in real estate to the point where I own a REIT (Real Estate Investment Trust). REITs are publicly traded and, to a large extent, are very similar to stocks. However, I do not own physical real estate such as rental properties as an investment. A big reason is that I know I’m not capable of doing the job.
Being a landlord is about more than issuing rental agreements and collecting monthly rent checks. That would require an enormous amount of work, and I don’t have the capacity to do it.
Owning stocks, on the other hand, takes minimal time. Certainly, you should research stocks before adding them to your portfolio. And I like to continually check the performance of my stocks.
But that’s nothing compared to the amount of time I spend overseeing rental properties. So physical real estate is an asset that I don’t plan on investing in any time soon.
Choose your investments carefully
If you want to invest and make good use of your money, you need to become familiar with your chosen asset. Therefore, we recommend that you limit your holdings to investments that meet the following criteria:
- the risk is something you can tolerate to some extent
- understand how they work
- There is time for maintenance
Deviation from these lines can result in losses. So while it’s a good idea to expand your portfolio to some extent, you should do so with caution and avoid overthinking it.
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