Should you be in the stock market after early 2020? Is that going to be an avenue to wealth?
Almost certainly not from where we are at the end of June 2020. The Bull Market is on it’s final legs. But of course final legs still can walk.
The price of the stock market is as high as the price of oil is low. It doesn’t mean that people are going to stop buying expensive stuff like stocks in 2020, but taking money and placing it in stocks in summer 2020 is a risk significantly greater than the likely reward. Everything in life is seasonal in some way. It’s HOT summer time right now.
Meanwhile the season of the stock market is mid autumn. Come November, the leaves will have fallen and although the weather is nice on a specific day, the winter of the stock market is around the corner. When does the first snow fall come in late autumn? It’s never on the same day. But it does come generally between the end of October and the end of November here in Minnesota.
No one knows nor can predict stuff like that with any accuracy. But there are some absolute facts you can know about traditional investing.
The time to buy stuff is when it’s cheap. The time to sell it is when it is expensive.
We’ll talk about investing in this series of articles, but let’s return to wealth creation.
I like to reduce risk in any project. In fact, I prefer projects to have very little risk at all.
I’ve got my pocketful of stories of almost no risk that end up with big rewards. I also have a few stories in another pocket of high risk ideas that were a waste of time.
Your desired outcome is to reduce risk while increasing probability of success and reward.
In my world, I focus on projects where both of those elements come under my control. One avenue for wealth that has reduced risk is writing.
Writing requires time, creativity, energy, self motivation. But those things are going to be needed in any venture. If a project fails that had almost no money involved, nothing dramatic is lost that can’t be replaced.
Another avenue for risk is in the services. For example, a plumber doesn’t have a lot of risk. He may not make a lot of money, but it takes some effort to lose a lot of money. And any plumber with a market that’s willing to work for as many hours as he can, is going to have a high return on time and money investments.
When I write about risk, my greatest concern for you is risking your money.
There’s plenty of money “out there” but it’s in places where you and I can’t instantly access it without significant risk. Thus because money is in great abundance elsewhere but probably not in your house or office, you want to risk modest amounts of your money in return for something YOU can turn into significant amounts of money.
Certain vehicles of potential wealth creation include taking big chunks of money (say $100,000) for the purpose of chasing small return on investment.
“Give us your money and you are guaranteed a 10% return on your investment.”
That’s my idea of a BIG RISK.
No one can guarantee something like that. There is NO investment that can guarantee a 10% return on investment. It’s not real. People who are wealthy know that. People who are not, don’t.
Controlling Risk Factors
I like projects that require me to make a decision. I like projects that need my approval to go forward. It certainly doesn’t guarantee that there will be great success, but it does mean that it was my decision and I maintained control.
And, obviously, you want to have someone very wise in your corner who is watching what you are doing and not doing, who can play the role of assistant director (your mentor) in your life. It’s immeasurably valuable to listen to someone who has successfully accomplished what you are doing. Their experience is priceless. Their seeing you in a different light that you see your Self is invaluable.
It’s not that you want to do precisely what they did in the past. That rarely is helpful.
But you can learn principles, strategies, tactics, approaches, concepts from a world class coach or consultant. Buyer beware. Most of the people in this world aren’t world class anything except world class average.
Building wealth requires effort, time and generally a little but not a lot of money. If you don’t have a lot of time, it requires more money so you can have people do what you can’t do. You WILL invest effort and then at least TIME or MONEY if you choose to have wealth.
There are people who are cut out to open a tire shop or bakery on the corner and attempt that approach to building wealth. It can be viable for the right person.
That person isn’t me. It requires a dramatically large amount of money AND time and putting BOTH time and money at risk in large quantities, which is not in my Risk Wheelhouse.
I want YOU to consider small risk, potentially large rewards, and a time/money ratio that is heavier on time until you have wealth. Don’t gamble life-time or life-money on projects that will almost certainly fail after dramatic inputs of that time and money.
Everyone who is going to build wealth, everyone, will have a learning curve.
No one gets on a two wheeled bicycle and rides off into the sunset the first time on the bike.
Turn the page for properly assessing risk…