Article Category: Stocks

With each and every investment that you make, you're going to be giving up one benefit in exchange for another. Most of the time, this trade-off is between risk and potential return. Understanding this trade-off at a conceptual level will go a long way in helping you to select the right investments (or strategies) on your path to retirement.

Anyone who's been around for longer than a couple of decades knows that stocks can lose a lot of value quickly. These periods, when stock prices are falling, can be classified into two types of declines: corrections, and bear markets. Understanding the difference between these is critical, because the former represent minor speed bumps on the way to higher prices, while the latter can wreck your entire portfolio and set you back years from reaching your retirement goals.

If you're going to sail into retirement with a nice fat portfolio and big sacks of money strewn across your deck, then you're going to have to deal with some ups and downs along the way. Financial markets are volatile by nature, and how you respond to these critical, anxiety-inducing periods can make the difference between a meager retirement, and a life of luxury.

For most investors, the idea of "getting out at the top" is as illusive an idea as winning the lotto, or licking your elbow. The chances of picking that one magical day just seem too low to be probable. But is it really that tough? Or do most investors simply have a poor understanding of how stock market tops develop?

Investing is very much a mental game. It requires an intellectual toughness and fortitude that is not only uncommon, but very difficult to develop. In this article we discuss the mental resilience that investors need to cultivate in order to stomach the fluctuations that come with being a successful investor.