I met a good friend today. He told me something quite interesting that i really ponder.
He draw 2 scenario of investment return and let his customer choose and most people choose that. Here is the scenario
1) An investment that is for 2 years. They will pay you 2-3% per year as a payout and every year they can generate 12% return. So overall this investment can generate 26% - 27% return in 2 years time.
2) An investment that is for 6 years, and generate a return of 20% per year.No payout at all.
What would you choose??
Alot of people choose number 1, reason being the period is shorter and there is payout. To bring to actual fact, option 1 is a failure investment that is known to many people( i shall not name the company or the investment vehicle).
My friend analysis and told me that alot of people are fill with greed and not the interest in knowing how they give such return. People are overwhelm by greed and greed lead them to do things that is not so logical. If you have the interest to know how they can do it, you may question does this make sense. Does the process make sense?
I ponder and find out that is true that alot of people do not have interest in stocks but just want to make money out of it and thought that it is a easy money making tools. Is fatally wrong
Investing and trading in stocks, FX, Futures, options needs lots of patience, guts, analysis, emotion control, self discipline and what not. This place is the hardest place to make money if you do not know them well enough. It is a place that lure people into thinking is easy and when you put your money in, that it!!!
So for people that want to make money out of here, please get your self well prepare for the hard true market. Bcos nobody would thank you or say sorry to you when that person win your money. And worst, you can only see your money been lost away without your control.
As an advisor, i think investing in stocks is good. But not everyone is suitable to trade. Having long term financial plans fixed first, eg insurance, retirement. Then you can tackle short and medium term. It is the overall planning that is important and the intention to follow the plan through your life.
