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The long-term investment strategy solution to stockphobia

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Michelle Blog PhotoEconomic events over the last decade have caused many Americans to take a pass on stock market investments. Reluctance to take on any risk could hurt investors in the long run, especially the 20 and 30 somethings who will need to save more on their own to fund their retirement. Unlike those who retired before them, the youngest investors will pay a higher price tag for retirement thanks to increased longevity, the shift away from employer funded pensions, uncertainty about Social Security, and inflation.

Certainly, avoiding the stock market will prevent you from experiencing the market downturns, but it also removes any possibility of benefitting from market gains. These market gains can play an important part in building up enough savings for retirement. To save enough without employing stocks will require you to sock more away each pay day—a lot more.

Employing a long-term investment strategy offers a balanced approach to both risk and reward. To work, it requires a well-diversified investment portfolio (including stocks), the willingness to ignore what’s going on in the market day to day, and a focus on your end goal.  Stocks are a portfolio’s heavy hitters. They can hit home runs and they can strike out. But investors who are willing to ride out the volatile returns of stocks over long periods of time generally have been rewarded with strong positive returns.

If you just can’t stomach the thought of stocks, be prepared to direct more of your money toward retirement.

Michelle Slawny, CFP®
Worksite Benefit Consultant