First Person: I Am Not Afraid of the Stock Market

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Apparently, young people are experiencing some fear about the stock market. They do not trust the volatility of an entity that can fluctuate wildly depending the news of the day. As an investor, I can understand this mentality, particularly since the economy of the last few years has favored a fairly conservative approach to investing. That said, I still have a good deal of money tied up in the stock market. Perhaps it is fair to say that I am cautious about the market, but I am not afraid. Fear does not do me any good.

Age group

The tough part of these sorts of proclamations is that it can be hard to categorize age groups and ultimately track their attitudes and behavior. I am certainly not a baby boomer, but I am not a "young" person either. Instead, I am member of Generation X, and if I recall correctly, my generation was not really supposed to accomplish much when we grew up. As an investor, I grew up with the understanding that the American economy revolved around the stock market, and that I should make regular contributors to a 401k. Diversity was also taught, but ultimately there was still a steady encouragement of stocks, bonds, precious metals and other market-based investment vehicles.

It is hard to know

Granted, it is hard to know how the market will do in the years and decades to come. How can anyone predict the future, even if they are a seasoned financial mind? I can certainly understand how young people would rather avoid the market. However, where else is there to invest? Foreign markets? Precious metals? Real estate? Cash in the mattress? Unfortunately, investing has built-in risk, no matter what vehicle you choose. This is why I do not fear the market, even though it does make me nervous on occasion.

Not fear, but respect

Perhaps this is a semantic argument of definitions, but I think it is accurate to suggest that I do not fear the market to the point where I feel compelled to stay away. Instead, I respect the instability, and I try to invest accordingly. When you invest in the stock market, you have to operate under an assumption that you could lose absolutely everything. There are obviously ways to minimize your risk, but at the end of the day the stock market can be like a moody teenager. One minute they are your best friend and a great deal of fun. The next minute they are an emotional hurricane, ready to hit shore at any moment.

Funds, not stocks

To a certain extent, I will "dabble" with buying individual stocks and testing the ability of particular companies to grow. However, this type of investing is minimal at this point in my life. Most of my investments are in balanced mutual funds, which provide me with a mixture of returns and long-term growth. Perhaps I will miss out on some opportunities to maximize my money, but I will trade some of that potential for a more conservative approach to investing. I don't fear the stock market, but I am also not going to take it for granted. The market can bite you if you are not careful.

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