I've been investing for 40+ years, including 10 as a Wall Street financial advisor. If there's a mistake an investor can possibly make, rest assured I've made it.
As with most things in life, the fewer mistakes you make the better. But as opposed to other common tasks, mistakes in investing can have life-changing implications. For example, consider one of the prime mistakes investors make: underinvestment in stocks, or not investing in risk assets at all.
If you invest $500/month for 40 years and earn 5% -- a return you'd be lucky to get at the bank -- you'd end up with about $725,000.
If you invest $500/month for 40 years and earn 10% -- the historical return from stocks over the last hundred years -- you'd end up with $2,700,000.
I'd consider a couple of million bucks life-changing. Wouldn't you?
Risk management is one common investor screw-up, but there are plenty more, and we're going to cover as many as possible in this week's "Money" podcast.
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