Financial Literacy - How to Prosper
How to ruin your chances of prosperity

Think inside the cubicle

Keeping your head down and your nose clean is a good way to stay employed, but it's not the best way to get rich.

While company executives rake in the dough, the rank and file often get the short end of the stick -- they're subject to layoffs and pay freezes while CEOs make millions. Even for star employees, there are no guarantees of ongoing employment, hence, very little control and security.

The big money is in entrepreneurship. The big losses are also there. Some people who may be inclined to start their own business may never actually do it because of the perceived risk.

"When you talk to the average person about starting a business, they find the idea very risky. When you talk to people who have started a business, they didn't find it very risky because they had special gifts or talents or skills and never thought that it would fail," says Dan Danford, chief executive officer of the Family Investment Center in St. Joseph, Mo.

"Most people perceive a higher level of risk than is actually there," he says.

Invest in the hottest sectors

Everyone has heard of someone who's made a mint in the market -- the guy who bought Apple when it went public or Caterpillar in the 1990s.

But for just a little more luck and investing savvy, any of us could have a pot of gold in our brokerage account. More likely than not, the average investor is not doubling or tripling her money in a year. Instead, he or she is likely earning less than the market return.

"The average investor return is two-thirds of the S&P," says Reutemann.

Kelly Campbell, a Certified Financial Planner at Campbell Wealth Management in Washington, D.C., has also found that to be true.

"When the S&P lost 38 percent in 2008, most investors lost 30 (percent) to 60 percent of their portfolio. Why someone would lose more than the market did is a mystery to me," he says.

Once a sector or a stock is hot, it's a fool's bet to jump on the bandwagon. But it can be hard to resist the siren song of massive returns in a short period of time.

Investing is difficult -- people devote their lives and careers to studying markets and finance. There's no shame in admitting that despite skimming a book and some online articles about investing, you still don't know everything there is to know.

"People have to educate themselves and find their way to a competent adviser who will help them buy low-cost index funds," Reutemann says.

If you're not up to doing it yourself, an ethical adviser can shape your investing strategy and also help you see the big picture and attain your financial goals.

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