A recent survey shows that 44% of people plan to never invest money in the stock market again.

TEH : Because their first experience(bad one) CONVINCED them that stock-markets are for losers and gamblers. Indeed, they are partly right ... just that ignorance in them control their emotions.

'Prudential, which polled more than 1,000 investors between the ages of 35 and 70 online earlier this year, found that 58% of those surveyed have lost faith in the stock market. Even more alarming, 44% said they plan to never invest in stocks. Ever.'

TEH : Size sample of 1000 is too small for us to have a good gauge of the actual percentage. I believe a sample of at least 20,000 is needed to convince me. But, I do believe the validity of the statistics ... majority of them LOST faith ... and still holding to many paper-loss.

Think about that for a minute

That decision is not the well-reasoned response of someone who has carefully evaluated the risk and reward ratio of investing.

TEH : Majority of them DO NOT know what is R-R ratio(my triple R). Before we move into markets, we SHOULD be taught about R-R concept. Yes, managing our risk so that the reward could take care of itself.
It is an emotional response born out of fear ('I don't want to lose my money!!!') and ignorance ('this stock market is a crock!').

TEH : Fully agreed. How else do you explain the up-down of the stocks or markets? How else could you see many hai-ya-hai-yo written in forums etc etc?

Here are a few notes to consider:

Perhaps the worst financial move you could make would be to withdraw from the stock market. These are some of the same people who will complain about money their entire lives, never stopping to realize that their own behavior ' decades prior ' caused their financial situation.

TEH : Yup, I was one of the many stupid-idiots when it comes to financial. I admitted that many of times(if you are my NEW readers, you might need months to read my previous posts!! 1815 posts so far). You loses in stock-markets are due to your IGNORANCE. It is your behaviours that you have implanted in your financial-brain which deter you from profitting ... change that mindset and attitudes, you will know what I mean, one day. Yes, it is not the failure of systems ... take a HARD look into the mirror. Then, you might find the answers ... why are you losing money in stock-markets? THINK. I am VERY critical with myself ... and I hope I will ease my critics towards society, overall. I wish to help ... I have my attitude problems too. I am just a human?

If you're truly risk-averse, you have other options to mitigate risk, such as investing in lower-risk investments or changing your contribution rates. However, this assumes you are rational and will 'understand' the options. The truth, of course, is that discontinuing investments is anything but rational.

TEH : Yup, learn to choose lower-risk investment vehicles. They are boring but give you good returns(and good sleep too). AVOID at all cause high-risk irrational movements of stocks. Be rational. Your inner voice "the idiots" are talking to you, luring you into greed ... then ... fear ... we dont need that in investing.

I don't only blame these people, by the way. Although we are responsible for our own actions, the financial education in this country has failed us.

TEH : Please READ rich-dad-poor-dad to understand why your Master-degree will not make you educated, financially at least.

Ironically, as the Wall Street Journal notes, 'It looks as though many of the retail investors now getting back into stocks are the same people who bailed from the market just before the start of a historic bull run.' What's the takeaway? You will never be able to time the market accurately over the long term.

This is where some crackpot commenter will say, 'DUH RAMIT, I SAW THE HOUSING CRASH COMING A MILE AWAY AND PUT ALL MY MONEY IN RED BRICKS!! NOW IT'S SAFE!! HA HA AHAAHAHA.' You may get lucky with timing once. But eventually, you will lose

TEH : Please explain to me WHY 90% of them LOST money or still losing money in our simple KLSE? It is their MINDSET. Change that, they could learn how NOT to lose money.
If you're in your 20's and 30's, your time horizon allows you to withstand temporary downturns and still come out ahead by retirement age .

TEH : Yup, to my younger tratles, you have the TIME to recover your loses. But, learning good habits, learning from MISTAKES ... tho painful, could do you WELL in future. Why in hurry?

The idea that 'I don't want to lose my money' ignores the fact that by not investing, you will also lose money ' it will just be an invisible loss that will only be realized decades later

TEH : Inflation rate is higher than your bank interests?

Older people who lost everything in the stock market should never have been in that position ' their asset allocation failed them

TEH : To my older tratles, unless you are loaded la, do not lose money(capital) is our MAIN concern.
The investment strategy for the vast majority of individual investors should be passive, buy-and-hold investing. There's no need to obsessively monitor investments or day-trade. I check my investments every 6-12 months as I have better things to do than micro-monitor these numbers.

TEH : I dont agree with the buy-n-hold part. You trade with certain time frame!! But obsessively monitorly is NOT necessary IF you are buying good fundamental stocks.

http://myinvestingnotes.blogspot.com/2011/10/44-of-people-plan-to-never-invest-again.html

Posted by : BB

TEH