{"id":13840,"date":"2021-02-04T15:43:26","date_gmt":"2021-02-04T23:43:26","guid":{"rendered":"https:\/\/canary.kcprod.info/blog\/?p=13840"},"modified":"2022-01-11T17:12:16","modified_gmt":"2022-01-12T01:12:16","slug":"unsure-about-investing-because-of-gamestop","status":"publish","type":"post","link":"https:\/\/canary.kcprod.info/blog\/unsure-about-investing-because-of-gamestop\/","title":{"rendered":"Unsure About Investing Because of GameStop? Don\u2019t Be"},"content":{"rendered":"\n<p>You\u2019ve probably seen some recent headlines about a handful of stocks \u2014 in particular, GameStop. The prices of these stocks have risen and fallen in dramatic fashion over the last two weeks. As a result, investing is top of mind for many, and for some, it may seem overwhelming. If you\u2019re new to investing, you might feel like it\u2019s too risky, unpredictable, and complicated to bother with. Maybe it feels like a bad time to start investing.<\/p>\n\n\n\n<p>If so, we\u2019re here to change your mind. There is no \u201cbad time\u201d to start investing \u2014 it\u2019s nearly&nbsp;impossible to consistently time the market, but time in the market is one of your biggest allies. The sooner you start, the more time your returns have to compound. As we\u2019ve written before, <a href=\"https:\/\/canary.kcprod.info/blog\/saving-for-long-term-goals-use-an-investment-account\/\">investing is the right way to build wealth and save for long-term goals<\/a>. Despite the headlines, now is a great time to get started.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why invest at all?<\/h2>\n\n\n\n<p>If you\u2019re saving money for your future, you want it to grow. But if you\u2019re saving for your long-term goals in a savings account (or something comparable), it\u2019s <a href=\"https:\/\/canary.kcprod.info/blog\/your-high-yield-cash-account-shouldnt-be-your-only-savings-vehicle\/\">unlikely to keep up with inflation<\/a>. This means your savings can actually lose buying power over time. Because of this, it\u2019s important to take some market risk with any savings you don\u2019t plan to use within three to five years.&nbsp;<\/p>\n\n\n\n<p>Taking <a href=\"https:\/\/www.investopedia.com\/terms\/m\/marketrisk.asp\">market risk<\/a> is what allows your savings to grow faster, but that doesn\u2019t mean you need to buy individual stocks. A low-cost, diversified investment account of index funds is far more likely than a savings account to keep up with the rate of inflation so your wealth grows over time. Of course, this means you\u2019ll need to tolerate some volatility. But your ability to do that is why your investing returns should be so much higher than those from a savings account. This is called the \u201c<a href=\"https:\/\/www.investopedia.com\/terms\/e\/equityriskpremium.asp#:~:text=An%20equity%20risk%20premium%20is,higher%20risk%20of%20equity%20investing.\">equity risk premium<\/a>.\u201d&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Risk and return<\/strong><\/h2>\n\n\n\n<p>So you know investing is important if you want your long-term savings to grow, but what does it actually look like? Not all investing means betting on an individual company, buying their stock, and checking on it every day. Buying individual stocks and trading them in the short term is time-consuming, risky, and tax-inefficient. We think picking stocks is fine but it\u2019s smart to keep it to 10% of the money you have left after setting up a <a href=\"https:\/\/canary.kcprod.info/blog\/build-emergency-fund\/\">healthy emergency fund<\/a>.<\/p>\n\n\n\n<p>Research shows that buying and holding a diversified portfolio of low-cost <a href=\"https:\/\/www.investopedia.com\/terms\/e\/etf.asp\">ETFs<\/a> is a&nbsp;better option than picking stocks. When you do this, you own collections of investments that track the performance of different indexes. And because your money gets spread out over a bunch of different assets and <a href=\"https:\/\/www.investopedia.com\/terms\/a\/assetclasses.asp\">asset classes<\/a>, your portfolio shouldn\u2019t suffer too much even if some of those investments have a bad day. Diversification can help insulate you from dramatic losses and make it easier to stay the course.<\/p>\n\n\n\n<p>If you\u2019re still worried about risk, there\u2019s plenty you can do to mitigate it. You can invest with a service that lets you personalize your portfolio for your risk tolerance and periodically rebalances your portfolio so you don\u2019t inadvertently drift to a much riskier asset allocation over time. And don\u2019t forget that time is on your side \u2014 as your investing time horizon lengthens, the likelihood that you\u2019ll lose money goes down.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Investing is easy when it\u2019s automated<\/strong><\/h2>\n\n\n\n<p>When it comes to investing, getting more time in the market can really help boost your returns. Because of that, it\u2019s important to start investing sooner rather than later so your returns have more time to compound.&nbsp;<\/p>\n\n\n\n<p>Getting started doesn\u2019t have to be a hassle. The rise of robo-advisors has made it possible to set up a portfolio based on <a href=\"https:\/\/www.investopedia.com\/terms\/m\/modernportfoliotheory.asp\">Modern Portfolio Theory<\/a> (a Nobel Prize-winning strategy) in a matter of minutes. Of course, there are lots of robo-advisors to choose from, and they aren\u2019t all equally good at maximizing your after-tax, net-of-fee returns. For more information, we recommend checking out our blog post about <a href=\"https:\/\/canary.kcprod.info/blog\/what-are-robo-advisors-and-how-do-they-differ\/\">choosing a robo-advisor<\/a>. We hope when you decide to start investing, you\u2019ll choose Wealthfront.\u00a0<\/p>\n\n\n\n<p>Our taxable Investment Accounts make smart investing easy, and your portfolio is personalized for your risk tolerance. You don\u2019t have to research stocks or make any manual trades, and our <a href=\"https:\/\/canary.kcprod.info/blog\/how-wealthfronts-tlh-pays-for-itself\/\">industry-leading Tax-Loss Harvesting makes our service basically fee-free<\/a>. We also remain unshakably committed to our mission: building a financial system that <a href=\"https:\/\/canary.kcprod.info/blog\/wealthfronts-new-mission\/\">favors people, not institutions<\/a>. The last several weeks have been a reminder of the importance of that vision, and we\u2019ll keep working hard to make it a reality.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>You\u2019ve probably seen some recent headlines about a handful of stocks \u2014 in particular, GameStop. The prices of these stocks have risen and fallen in dramatic fashion over the last two weeks. As a result, investing is top of mind for many, and for some, it may seem overwhelming. If you\u2019re new to investing, you [&hellip;]<\/p>\n","protected":false},"author":129,"featured_media":13842,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1282],"tags":[],"coauthors":[82],"class_list":["post-13840","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Unsure About Investing Because of GameStop? 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