A Case For Investing In Stocks

Some advisor’s claim that stock investing is too risky for the average investor.  They insist that no average person can learn stock market techniques adequately enough for long term success.  The first point the insurance companies have already proved false, and the second point has been shown that the mutual funds may actually hinder returns when compared to conservative stock investors.

If stocks as a whole were generally too risky and unpredictable to invest in than the financial instrument called the variable annuity would never have come into existence.  While this articles isn’t annuities explained,  the variable annuity is essentially an insurance policy on mutual fund investments.  The insurance company guarantees a minimum return per year if the annuity is held for so many years.  The exact terms vary from annuity plan to annuity plan, but the guarantee can be as high as 7% per year.  If you insurance company can promise 7% you know they are confident they’ll earn at least 8% on your money.  That is a much better deal than 4% in a bond right now.

For individual investing versus mutual fund investing a case can be made that the added cost of investing in mutual funds (front load fees, annual maintenance fees, and hidden fees like share churning) can remove any gain experience may have held.  As long as you maintain a diversified portfolio or even just buy an index fund with fees as low as 0.5% per year, you should match the average mutual fund over the long haul.  If you don’t enjoy investing I would leave it to professionals, but if you feel a calling to attempt to invest for yourself there is not a strong link between extra education and success.  Most of the education is geared for better marketing and managing of the business than picking better stocks.

You should add some stocks to your retirement account to boost returns it’s not as risky as they say.