There is no reason not to invest. Long-term investment brings tremendous benefits and it changes your life to better. All arguments against investing are just excuses.
Radoslav Kasík | Investment academy | 2. April 2018
People refuse to invest because of various reasons. The fear of losing one´s savings is the most common cause. Most of the arguments against investing are just myths you have to overcome, so that your wealth can grow, and your life can be easier.
As a matter of fact, for a lot of people it is not a problem to save money. Reasons why people should save money are well known. However, we unconsciously resist to efficiently invest our savings and consequently limit their potential growth
I had a closer look on the most common excuses that one can hear from the (non-)investors.
I do not trust the stock market, it is a rigged casino where prices fly up and down.
A lot of people perceive the stock market as something artificial and intangible whose value jumps up and down. This is, however, a distorted perception. Markets are not only graphs, curves and percentages.
Buying a stock, you gain a partial ownership of a certain company. Behind every stock stands a company, its products, turnover and profits. Through the ownership of stocks, we participate on entrepreneurship of established company.
We talk about companies whose products and services we buy on a daily basis. Thanks to stocks, you can profit from the consumption of billions of people worldwide.
Who would not be interested in, for example, ownership of Apple, with annual profit of 50 billion dollars?
Everybody can co-own any company in the world. Long-term profitability of companies will eventually be reflected in the growing value of their shares on the market regardless of their price volatility.
With Finax, using one portfolio, you invest in more than 6000 global leading companies, in whose growth, profit and know-how you can take a part.
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I prefer certainty; therefore, I leave my money in the bank.
It is riskier to deposit money in a bank than to invest them.
It sounds funny, but it is true. Holding your money in a bank, in every case, guarantees you real loss – depreciation of your savings.
Because of inflation and minimal interests your money depreciates on value, however via long-term investment you profit almost all the time.
Today a bank deposit of 10 000 euro that was made 10 years ago has a real value of 9200 euro (I take into consideration average interest of the deposits adjusted to inflation, source NBS/National Bank of Slovakia). Nevertheless, the same deposit to our funds has nowadays value of 20 880 euro.
The probability of losing money through holding your savings in a bank for 10 years is basically a hundred percent. The chance that you suffer a loss through investing in stocks within 10 years is about 2%.
Investing is risky
With Finax, you invest not only into stocks, but also into bonds. Prices of bonds are less volatile than those of stocks. They have fixed interest rates and they are guaranteed by companies or by governments.
During the registration process, we evaluate the level of risk that you are able to endure. Subsequently, we determine the best ratio of stocks and bonds for your portfolio based on your optimal risk level. However, if you would still consider your suggested portfolio mix to be too risky, you can decrease the risk level at any time.
Moreover, we use multiple instruments to mitigate risks:
- diversification – we distribute the risk by investing to shares of 6000 companies and 4000 government and company bonds,
- regular rebalancing of portfolios– we maintain the risk of the portfolios on the originally set level,
- regular investing – the risk of incorrect timing of the investment can be eliminated by regular investing on a monthly basis.
Stocks are unpredictable
Stocks are volatile, however, there are several ways to eliminate potential risk.
From the long-term perspective, stocks always grew. There are several reasons for this. The risk of stocks is eliminated by sufficiently long period of investing.
Secondly, it is important to set the portfolio strategy correctly. Using Finax Intelligent Investment, our automated system evaluates your risk profile and choses a portfolio suitable for you, so that you can feel comfortable with its risk.
For instance, if you would have invested in the last 30 years with Finax portfolio into 50% shares and 50% bonds for a 5-year period, you would have made profit with a probability of 99,4% (average yield was 44,5%). If you had invested into 100% shares portfolio for 5 years, you would be profitable in 85,8% of the cases. Average yield was 54,2%. If we analyze the same 100% shares portfolio for 10 years, the probability that you would be profitable increases to up to 94% (average yield is 113%). And the last example, a 13-year period have never been in red, in the last 30 years.
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Investing is complex and I do not understand it.
Investing with Finax is as simple as to open an account in a bank.
We show you around the process of registration as well as the very process of investing, so that you get familiar with it. In case you still had any questions regarding the registration process, our team will willingly help you.
Investment legend and founder of the second biggest wealth manager in the world John Bogle once expressed an excellent idea: “Don't look for the needle in the haystack. Just buy the haystack!”
We do not try to choose stocks of the companies that will grow the most. That is a risky and complex business with long-term performance which lags behind the market. To put it simply, Finax is investing into all the biggest and most successful companies, which historically brings the highest profit.
Investing comes with high fees.
On the contrary, investing can be one of the cheapest forms to deposit your money. The only need is to choose the right investment and the fees are usually lower in comparison with bank accounts.
Finax has brought unmatched form of investing to the Slovak market. One of the main reasons for the high yields are low fees.
Moreover, Finax offers wide range of discounts, thanks to which our clients can invest free of charge.
For example, if you carry out the registration online, we will manage up to 500 euro of your investment free of charge. If you decided to invest 20 euro on a monthly basis, we will manage your investment for free for 2 years.
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We will help you get started and learn more about Finax.
I do not have money, I have low income.
Such consideration is wrong. If you want to change your life, investing is one of the ways. Without investing and building your wealth you will be forever in unfavorable financial situation.
Finax offers solutions for everyone. Regular long-term investing, even of tiny amounts, leads to miracles.
For example, if you invest 20 euro every month, let´s say for 30 years, you will have saved more than 30 000 euro by the end of the period. Learn how to use compound interest (interest from interest) and do not hesitate to start.
I do not want to tie up my money for a longer period.
Unfortunately, if you are not able to put aside at least part of your income for longer period of time, you will be financially dependent forever. Time is necessary to harvest the true potential of investing and to eliminate its risks.
Foundation of the wealth building and wealth growth is not to find the best investment or to come up with the unique business idea which would bring you a one-time profit of dozens or hundreds of euro. Wealth originates in capitalizing on compound interest. The longer the investment horizon, the higher is the effect of the compound interest.
the markets are currently too high; I will wait till they drop.
This motive is natural to all of us. All of us would like to buy when the markets hit bottom and to sell when they are at the top. However, none of us know, when will this situation happen, or even if it has already happened. Not even the best and the most successful professionals are able to determine the tops and the bottoms in the market.
Investing is about time on the market, not about timing of the market.
Quotes from the biggest investment legend, Warren Buffett, speak for themselves: “We earn more money when we sleep, than when we are active” or “Our favorite holding period is forever”.
Not to invest because of fear of possible market drop, is like to leave the best players of your team to sit on the bench because you fear that they could get injured. Would you rather lose every match, so that they do not get injured?
The fundamental idea of the risk management is not the effort to correctly time the purchase, but it is the correct composition of your portfolio. Finax has developed its own system of portfolio rebalancing, which maintains risk on a stable level by automatic sale of expensive assets and purchase of the cheaper ones.
Make a routine out of investing and you will make money. Learn how to invest regularly and the effort to time the markets will seem like a comedy to you.
Financial world is a bunch of thieves
We are not surprised that you can feel this way when you look at your bank statement. Indeed, financial sector is driven by profit creation. Nonetheless, we live in the 21stcentury, so quality and price of the services should reflect it.
Using modern technologies and passive investing we have eliminated as many unnecessary costs as possible. Finax offers Intelligent investing for one unrivalled fee and without any additional fees.
Markets offer you to stand on the side of the financial world profiting from consumption and money spending. It is definitely wiser to take part in this party and to profit together with financiers.
Everybody has this opportunity and it is just up to you whether you seize it. The party will go on with or without you.
Finax has introduced to Slovak market the most efficient investment service for every household. In Slovakia, there is no room for excuses anymore.