There are a lot of different investment strategies. My favorite is to swing for the fences. The more speculative, the better. After all, if one of my trades hits, riches abound.
Crypto, penny stocks, jumping on the latest trend… I’m all-in.
If it doesn’t work out, oh well. It’s just money. I’ve been broke before. I can do it again. It’s worth the risk for the chance at a big score.
So when I find a big opportunity, I empty both barrels and put in as much of my available capital as I can. After all, it takes money to make money.
There’s nothing like the excitement of waking up each morning with no idea what my portfolio is going to be worth. Maybe I’ll be up huge, maybe I’ll be down. I don’t need coffee to get going in the morning. All I have to do is look at premarket prices on my screen.
Asset allocation models, well-balanced portfolios, dividends… Who gets rich that way? You need a big winner to move the needle in your portfolio, not a 5% yielder, am I right?
Besides, it’s a lot more fun to roll the dice and risk a crushing loss than sit back and wait for your dividends to come in or for your stocks to move 10% higher every year.
Now, if you know me at all, you may be wondering if I recently sustained a head injury. But all you have to do is look at the date to realize what’s happening.
Following the “advice” mentioned above would certainly make you the April Fool (and a fool in all the other months too).
Sure, gambling on some speculative investments can be fun and even pay off – if you have the ability to handle big losses and the stomach to ride out big swings.
Most investors do not. While many may dream of amassing vast riches from a penny stock or crypto (like the images in your head after you walk out of the convenience store with a Super Lotto ticket in your hand), the reality is, as you well know, there are no shortcuts in life.
Just like you worked hard for everything you have, your money has to work hard too. That means being invested the right way: in assets that will grow and generate income over time, which will help compound your wealth or provide the cash you need to pay your bills.
Over the past 100 years, dividends made up roughly one-third of the market’s total return. So if you’re not investing in dividend stocks, you’re likely giving up a meaningful percentage of the wealth that can be created by the stock market.
Furthermore, when you stay invested over the long term, your money has the chance to compound. When you’re throwing darts at the market via penny stocks or chasing the latest greatest thing, those losses add up and then require a longer amount of time to recoup.
There’s nothing wrong with speculating if you can afford it and you find it enjoyable. But if you’re like most investors and want your money to grow consistently over time, don’t listen to the April Fool I pretended to be in the first half of this column.
Own dividend-paying stocks for the long term to achieve your financial goals.