Hedge fund managers, financial journalists and other self-described experts have tried to get an edge on the stock market for more than a hundred years, but research shows that even the most well respected active investment funds struggle to outperform the overall market. For individual investors, trying to beat the market can prove disastrous as individual stocks and targeted funds are more like bets at a casino than actual investments. There are safer alternatives for retirement investing that doesn’t involve putting hard-earned money at risk.
How Active Investing Is Like Gambling
Investments in the stock market that don’t include dividends rely on speculation for profit. While the overall market has shown a steady return over a long period of time, the predictive value of any individual stock is low. Buying shares in one company, or even one type of fund, is like betting on roulette. The return could be high, but so is the risk. When researchers measured the performance of targeted investments, they found that only a very small percentage benefited from any supposed market expertise. Data suggests that investors are better off investing in the market as a whole rather than specific parts. It’s like betting with the house rather than against it.
Alternatives to Investing on Wall Street
Common investment wisdom is dominated by ideologies that benefit big Wall Street players because, like casinos, the house always wins. Investors who want a guaranteed rate of return, liquidity and protection for their assets are better off with more stable and predictable alternatives. They should seek a financial portfolio that uses the crediting method to take advantage of market growth while eliminating risk from downturns.
One alternative to speculative Wall Street investing is wealth builder accounts. Unlike pure gambling on the stock market through a broker or active fund, wealth builder accounts maximize cash flow before and during retirement without down markets hindering accessibility. They also give investors the ability to gain more value with dividends. These accounts allow families to save funds that they won’t outlive while leaving something behind for heirs. Contact us today to learn more.