How necessary is investing in stocks and other ‘high risk, high return’ scenarios for your financial well-being? Can you be well-off without that? The possibility that my money could all be lost is extremely unpleasant/nervewracking/other negative adjective……

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Posted by Julie (MONEY FORUMS: 4, Answers: 2)
Asked on February 21, 2016 4:49 pm
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Hi Julie,

In order to become a successful investor it’s appropriate to ask, “What is risk?” and more appropriately, “What is risk to me?”

To me, risk means the likelihood that I won’t have the money when I need it. When I define risks this way, it makes actions like investing in a well diversified portfolio, or investing in a disciplined manner seem less risky. (Don’t get me wrong, human emotions still make this hard).

If you can’t beat inflation, you are extremely unlikely to grow wealthy over time. The only way to grow wealthy over time without investing is to grow a business that sells for multiple millions or billions or to strike it rich winning the lottery.

There are higher and lower risk avenues for stock investing. I like Total Stock Market Indexes plus International Developed Indexes plus International Emerging Indexes to give me a nice diversity without too much thinking. I am a buy and hold investor. I also have some bonds and real estate to give me even lower volatility.

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Posted by Hannah Rounds (MONEY FORUMS: 1, Answers: 54)
Answered: February 22, 2016 4:01 pm
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We believe that a tactical approach that adapts to the current market environment is superior to a buy & hold approach that subjects investors to large losses. We believe that a quantitative approach that uses objective data to make investment decisions is superior to a qualitative approach that is based on the subjective opinions of others. We believe that the formula for investment success includes an objective investment strategy, but more importantly the discipline to follow one’s rules.
The global tactical approach that we use is not market timing and it is not about picking market tops or bottoms; it is about getting in line with the major market trends. Our approach does not require us to predict the future, but rather to objectively interpret the present.
Discipline is the key to investment success. Many investors make poor decisions because they succumb to the emotions of fear, greed, hope and denial. They become courageous when they should be fearful and fearful when they should be courageous. We realized a long time ago that if we could eliminate human emotions and biases from the investment process, it would give us a big advantage. This is the primary reason why we use quantitative models to objectively guide us through the ebbs and flows of the financial markets.

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Posted by Eric Follestad (MONEY FORUMS: 1, Answers: 3)
Answered: February 22, 2016 10:12 am