Tip 12. Cut your expectations - Better Investing Tips

I hate to say it, but it's really-really hard to get rich fast.


Are you getting into investing with the expectation that quick riches soon await? Hate to be a wet blanket, but unless you are extremely lucky, you will not make a fortune in the next year investing in any asset class. Such returns generally cannot be achieved unless you take on a great deal of risk by, for instance, buying extensively on margin or taking a flier on a chancy security. At this point, you have crossed the line from investing into speculating.

Though stocks have historically been the highest-return asset class, this still means returns in the 10%-12% range. These returns have also come with a great deal of volatility. If you don't have the proper expectations for the returns and volatility you will experience when investing in stocks, irrational behavior-taking on exorbitant risk in get-rich-quick strategies, trading too much, swearing off stocks forever because of a short-term loss-may ensue.



 
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