Archive for August, 2011
The Stock Market – Gambling Or Investing?
During my 20-year career in human resources, I have tirelessly promoted 401K plan from my employer as a benefit rated employees. Unfortunately, many employees refuse to participate. When asked, these employees say, is that they consider investing in the stock market as a gamble. You hear the news of spectacular gains in a stock or the overall stock market and then a few weeks or months later, they hear the new report as spectacular losses. For them, these reports provide increased a picture of the market, then decrease, then increase again, which seems to be an unpredictable, random.
Some of these people are real players, the time in the local Indian casinos or on the weekend in Las Vegas. These staff members know, this game is. Many others are not hardcore gamers, but still considered investing in stocks risky business. The effect is that many of my colleagues refuse in our 401 (k) plan to participate – even given the favorable tax treatment and a contribution from the company. Others have given me over admitted that they see all the money in their 401 (k) account, they not afford to lose.
I understand their conclusion. I’m no market “timer”. I agree that predicting what the value of the shares is done in 3-6 months is impossible. However, I do not know the story. This knowledge gave me a high degree of confidence that given enough time, I expect my stock-based mutual funds in my 401 (k) plan worth more – much more if I withdraw. Purchase of shares in a well-run camp in mutual funds is not to play. It is to be invested. Although the value may fall short in the stock market, the overall trend was up. I rely on that action.
For example, consider how difficult it is to find a period of ten years, where shares have not risen in value. I can not quote statistics, but to tell you – I recommend you pick yourself. Just a quick search on the Internet for stock performance charts. Taking into account the investment periods of ten years and trying, 20-year periods in which the shares can not be found to rise in value. You can not.
Investors, especially investors in 401 (k) accounts, the years are going to need before you take this into account before the neglect of their 401 (k) plan. Put money into an equity-based mutual funds in a well run employer-sponsored 401 (k) plan is as close to a “certainty” that can be achieved – given that history repeats itself, and there is enough time for investments to grow.
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