People are self interested. This expresses itself in a whole bunch of different ways (including doing things that make us feel like we’re not self interested), but we are all trying to do things that benefit ourselves in some way. Making more money in the stock market without taking any extra risk sure fits the bill.
But like pretty much anything else, if it seems too good to be true, it probably is. Most people understand this. If you offer to sell someone a brand new car for $500, they’re going to assume there’s something wrong with it.
But this doesn’t seem to track to investing. Everyone is always looking for some trick to make huge profits, but it doesn’t work that way. You can do things to raise your expected return, but doing that also raises the level of risk in your portfolio. You can’t get one without the other
Unfortunately, it’s not surprising that so many people think there are “investing secrets” Wall Street isn’t telling them. Most people know they need to invest their savings to reach retirement, but they don’t really understand what’s going on – some days they have more money, and some days they have less.
Most of the financial services industry is complicit in this situation. Many advisors and fund managers actively tell people they can get outsized returns – but only if the investors pay them.
Most of the advice given out by the financial services industry (and financial media) is both bad and self serving. There’s simply no reason for most of them to help investors understand what is going on and provide good advice – if they did that, they wouldn’t make nearly as much money.
This is one of the many reasons you want an advisor who puts your interests first. Good financial advisors will help you understand what you can reasonably expect from the financial markets, and how investing helps you on your journey to retirement. There are no shortcuts, but a trustworthy advisor can help point you down the right path.
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