Do you read about investing?
I’ve read dozens of books about investing over the years. A commonly recurring theme is that if you want higher returns, you have to accept exposing yourself to more risk.
Why? Because the market prices-in expected growth before you have the chance to buy. The better an opportunity looks, the more expensive it is. So your only chance to obtain higher returns is to invest in something that is riskier, and therefore lower-priced.
This theory is correct… but only sometimes.
If the only way you invest is by directly purchasing assets, then it’s true that you’ll have to accept more risk to get higher returns.
However, there is more than one way to invest your money. There is more than one or two asset categories to put your money into. And there are plenty of interesting ways to leverage your investments to extract higher returns… if you know how.
Long before I was a wealth strategist, I was an engineer. As an engineer, I was trained to set objectives and find a solution to reach those objectives. There was no room for error. If a part or piece didn’t work, it wasn’t the right solution! I threw it out and found a better solution.
The problem with most financial advisers is that they keep using parts and pieces that don’t work, over and over again!
Enough people have been burned by stock market losses (and capital gains taxes) for us to consider other ways to invest.
Do stocks have their time, place, and purpose? Absolutely. There are specific situations in which I will advise my clients to invest in stocks.
For example, at Wealthpoint we use a strategy called the “Capital Warehouse,” which gives you access to a supply of capital you can deploy any time you want. Imagine that the next time the stock market crashes, you don’t lose a penny. Meanwhile your Capital Warehouse is sitting there waiting to be utilized. You can swoop right in and purchase stocks at record lows.
Picking stocks after the 2008 market crash was easy. Practically everything was on sale! The aftermath of a market crash has historically been an incredibly good time to invest.