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On the way to the million bag you have to master three losses

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Rich man holding money bags millionaire stock market

There are at least three losses that will pave the way for you to your first million in the stock market. Some take time to get used to, others are painful. Some may just be annoying.

But if you want to know what you’re getting into in this long-term effort, listen up. This can help you better manage your ambitions.

Accounting losses on the way to the stock market millions

The first loss you have to master on the way to million in the stock market is accounting losses. In the early stages of your approach, these losses may even be real. In a correction or a crash, perhaps also in the first two or three, it happens that the portfolio slides into the red for a short time. The possibility exists and it is at least an emotionally difficult market phase.

But even in later years it is not easier. With the increase in volume, book losses become painful again. If you have a portfolio of 500,000 euros at 20 years, it no longer hurts so much when 250,000 euros have been added for profitability and the portfolio falls. At least not anymore in terms of relative loss. However, if €150,000 or €200,000 of market value is destroyed (which would correspond to 30-40% of the portfolio in relative terms), this is also a challenge.

Accounting losses are therefore an obstacle on his way to the first million on the stock market. Or at least annoying. But in any case a feature that must be mastered.

The loss of alternatives.

A second loss is really a bunch of alternatives. On the way to the first million in the stock market, it is important to save and invest firmly. Maybe that’s too hard. But it definitely requires discipline and perseverance. Theoretically you could do other things with the money.

Reducing consumption is something that some people find more difficult than others. For some, saving and investing is in their blood. Others tend to live on the edge. However, if you want to break into the first million dollar market, you will have to hold back. Sometimes even more than you are used to.

Whether that’s a challenge or an annoyance is another question. However, over time and especially in volatile phases, opportunities are challenging. If I had… is very often the beginning of reflection if the losses feel very real.

The first million in the stock market: Passive waste of time…?

The first million in the stock market is at least a passive waste of time. Very few have the means to build such a portfolio on the fly in a few years. This means that this goal will shape your own financial ideas for a long time.

Can you pay it? Should you allow it? Do you have to pay it for retirement or financial freedom in old age? Definitely relevant questions. However, time is also something that is lost when accumulating wealth. However, it is better not to lose too much, the effect of compound interest is stronger the earlier you start.

The article You Have to Face Three Losses to Make a Million in the Stock Market first appeared in The Motley Fool Germany.

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Motley Fool Germany 2022

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