The 2020 pandemic hit many companies hard, while other companies took it as a chance to grow, seemingly unaffected by the state of the world around them. NVIDIA (NASDAQ:NVDA) came out as one of those thriving businesses and achieved gains of 122% in 2020. The company’s graphics processing units (GPUs) were present and needed for trends that accelerated exponentially due to the pandemic, boost...
You Could Make When First Starting
The stock market is one of the most reliable ways to generate wealth over time with relative ease. That’s a fact.
However, the matter of it being of a highly volatile nature comes down as a reality.
Non-surprisingly, this has led tons of first-time investors worldwide to be extremely careful around all situations that could amount to any kind of loss. In the end, this mainly translates into people investing exclusively towards what some might call “safe investments.”
In some way, this does come as a noble effort for any investor. To simply put it, there’s nothing wrong with wanting to keep your money invested in places where you know that all possible losses are severely cut down to low numbers only.
This venture presents itself as a double-edged sword for investors, with some considering it the least rewarding investment option out of all.
You miss out on better opportunities while also limiting any revenue
The most common method that people typically depend on for safe investments is a savings account. In some cases, it even plays out as their only investment-related activity.
But why wouldn’t they? After all, which kind of risks could harm their wealth if it’s all stashed away?
Every investor should always know regarding savings accounts that they regularly increase their interest rates for an average of 1% per year. Meaning that, over time, your savings will then be unable to keep up with the inflation.
In other words, your money would instead be losing value with every day’s passing, not gaining as much as it could be.
Compare this to a bond investment, in which they earn an average return of around 4% and 6% yearly— even going up to a return of 10% per year.
To expand upon this, pretend you are currently working with a bond with an annual return of 6%. Let’s say you invest up to $300 each month. In a matter of 5 years, you would instead earn around $20,000 from this venture alone.
Imagine your possibilities within a longer time frame or even a higher return percentage. Do keep in mind that, in this particular case, that we would technically still be playing it safe.
Let’s now ask ourselves: what if you were to allow for some riskier investments?
There’s no reason to fear just a little bit of risk
Again, investments always come up with their fair share of risk.
However, any high-performance company that’s worth investing in would eventually prove itself capable of overcoming any prospects of loss.
Likewise, any company resilient enough would also be able to raise itself from the ground just enough to make any previous losses meaningless.
If several investors were to do proper research and play their cards strategically, they could easily find a company that reflects just that in the best way possible.
If done correctly, even at times of high market volatility, they would manage to lose as little money as possible and effortlessly recover from it in due time.
In essence, the market will always have its ups and downs, but a properly made choice will always make your savings resistant to the most common risks in the business.
Even if it might seem scary at some point, it will more than surely provide a more significant and steady profit than any “safe investment.”
So do feel free to open yourself to some investment risks from time to time. As long as it comes in digestible amounts, you’re good for it.