We all know the risks, we understand how to think about the pros and cons of a decision. But when it comes to the stock market, are you certain you’re thinking about it the right way?
The risk isn’t that your portfolio goes down in value, the risk is that you can’t reach your goals. What are your goals and when do you want to reach them? When do you expect to spend the dollars that you put into the market today?
I think about risk as either:
You permanently lose money
You do not reach your goals
If you have long-term goals that require money, the biggest risk you take is not investing in the stock market. It’s one of the safest places to make a long-term investment and not lose purchasing power.