Sunday, September 28, 2008

Where to Entrust Your Money

Getting down to the core of it, investing in stocks means you entrust people that work at public companies to get a better return on your money than you would be able to do on your own. In other words, when you have extra money sitting around, you can either spend it, put it in an interest bearing product (CD's, savings account, etc) or put it to use in another vehicle like stocks to try and get a better return. This entails higher risk obviously.

But with all of today's talks about bailout plans of financial institutions by the government, failing banks and investment companies, and a failing credit system, why should anybody trust other companies to get a better return than I can?

Okay, I'm being a little extreme, but all of this turmoil definitely has a negative reflection on the viability of blindly trusting other companies to do better than you can on your own in terms of getting return on investment. For better or worse the stock market is still the best system we have for building wealth, but now more than ever it's important to realize that you're still risking your trust in someone else to excel. Buyer beware and let's hope this whole thing shakes out soon and proves to be an improvement over where we've been.

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