Investing means putting your money to work to potentially earn a better return over the longer term than by keeping it in savings or in some other investment. Visit https://www.sofi.com/investing-101-center/ to learn all you need to know about investing!

I would not invest more than 4% of my current net worth into something that has a return that is equal to 5%/year, and I think many people do not do this. But if you think you might be in the market for an investment that might outperform the market over a long period, then investing 4% of your net worth in that investment might be a reasonable investment.

Many investors have trouble with this because they feel that their money has to be put to work for them, but they are not putting it to work for themselves by doing something that earns a higher return than 4%/year. This is why I’m in favor of making sure that the money I earn from an investment is invested in stocks that earn a 5%/year return on average, because then the potential returns from the investments go up over time. To me, an investment that pays me 4%/year is a good investment and an investment that earns a 5%/year return is a great investment.

I’ve had a hard time telling people my actual plan of action to achieve a 5% return. I’ve done plenty of reading and some research, but I don’t have a clear-cut answer. There are a few theories.

Why Is It So Hard To Reach 5% Return On Investments?

Before you take my word for it that this is possible, you need to look at the fact that investing doesn’t always pay off. There is no guarantee of that 5% return, no matter how good you are at the investments or how diligent you are in tracking your progress. There are three main reasons this happens. You make more money in one year than in 10. Investing can be very risky. That’s why you need to be diligent. If you get some money, then lose some it will cost you. Once you reach a certain level, it takes a long time before you get that return. And once you get that money, it’s not yours to give back. Once you get a return, you have to spend it or you’ll have to start all over again. You can’t hold on to it forever. There is no reason to keep the money for as long as possible. You should sell it when you can get enough interest.

I know this is the main reason many people don’t invest. The long term. It takes a lot of time to earn enough to pay the return. If you take the time to accumulate a good amount of money you’ll have plenty of interest. I know this is the reason many people don’t invest. Because they don’t want to spend too much time in making it work. But this is a wrong way. It is dangerous. You can run the risk of losing a lot of money too. There is no good way to make money. It’s not about how much you make.

January 9th, 2005
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One Response to “What you need to know about investing”

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