Stock Market Information

When you’re first starting out as an investor, there’s a lot to take in. Certainly in terms of investment vehicles you’re not short of options. The invention of Exchange Traded Funds and Exchange Traded Notes means that you can get into almost any asset class with the push of a button. Want in on gold? You can. Want to buy commodities? UBS has you covered.

But the biggest part of the puzzle to remember is that you need to understand yourself and your own tolerance for risk. Investing in any part of the equities markets means that you’re subjecting yourself to volatility. There will be bad times, when your portfolio can drop 10-30% or more in a given period, as we’ve seen over the past year. If you’re a long-haul investor with steely nerves, you can grasp the fact that you should hold on for the ride and that historically speaking time is on your side.

Many people overestimate their tolerance for risk, which can get tricky. Many people believe that they are ready to accept volatility. They think they understand that stock markets go down and that it could be some time before they come up again. Unfortunately when the hammer falls and you’re staring down the painful red ink in your brokerage account, many investors balk and bail out. They can’t take the pain.

How much can you take? Are you prepared to wake up one day and find 30% of your account’s value gone? Are you ready for a broad investment horizon that focuses on performance over decades, not months? If so then you should pick up an investment book and get to work, if not your best bet will be to consult a financial advisor, who can help you earn gains while not exposing your portfolio to excess risk.