To make an investment is to create a financial responsibility, and there are thousands of options for which kind of investment you want to make. However, not all personal investments are ideal choices once you consider how it can affect the people around you, such as family and coworkers. Personal investments can be risky, but it shouldn’t reflect on those around you. When it comes to investing, the better individual choices you make will not only benefit you but the society you live in.
The Connection Between Risk and Return
You have heard the rule of thumb before: the riskier the job, the less risky the personal investment. Careers that have fluctuating incomes based on commissions or the stock market, such as investors, real estate, and entrepreneurship produce the greatest risk. Meanwhile, “safe” professions, like engineers and accountants, have a strong sense of job security. In other words, if you are working in a field where you could potentially lose your job or business, you should be focusing on making personal investments that would cushion you and those dependent on you in such an event.
When thinking about “risk” and what you can afford, it becomes clear that, just like all potential choices, the more doors you have to open, the better off you are. One bad investment can obliterate your portfolio, so avoid funneling all your wealth into a single stock. Diversity instead. Invest in mutual funds, bonds, stocks from different industries, and so on. This means that even if one investment plummets, the others will remain stable, keeping you and everyone dependent on you afloat.
Where do you see yourself in the next 10, 20, or 30 years? Even if you are unmarried and without children today, that may not be the case in 5 or 10 years. Even if you are just starting a business now and have one employee (you), it could become an enterprise in the future. A little foresight and personal responsibility goes a long way. Don’t just invest for immediate returns, invest in the future, such as retirement (IRA and Roth IRA) and college funds, liquid investments (open-ended mutual funds) for emergencies, and so on.
Remember: you’re not the only one making these plans. If everyone invests for today and tomorrow, everyone can share the same safety net and reduce the effect of an economic slump.
In short, better personal investment choices are equivalent to lifestyle choices. How you choose to spend and invest your money carries with it the same responsibility as deciding to go sky diving does—you never know if the parachute will open. Are you prepared for the repercussions if something goes wrong? Therefore, invest smartly so that down the road your friends, family, and beyond can share the benefits with you.
DAVENPORT LAROCHE, Shipping Container Investing Solution