In the time of volatile markets, you may spend more time than usual worrying about the security of your invested money. Anyone who has put money into a 401K or started an IRA is likely familiar with various risk profiles. If you take more risk, you have chances of higher returns but a greater chance of bigger losses. If you take less risk, your returns will likely be lower, but you have to worry less about large losses.
Investments Versus Savings
When you put money in the bank, you are fairly sure it isn’t going to disappear as it is backed by the FDIC. Can your invested money, however, just disappear? When you are investing money, you are likely working with a financial services firm such as AOG Wealth Management. These firms are experts in investment management and can help you figure out the best way to manage your money.
The agreements you have to sign, however, are a bit complicated, and you are unsure of the repercussions if something happens like a utilized brokerage firm going bankrupt. A certain peace of mind should come from legislative protections that are in place for investors, but it is also good to look for current thought leadership on investor protections such as that put forth by CEO Fred Baerenz. The landscape of investor protections is always changing, so it is important to look for that thought leadership to help you better understand the landscape.
The bottom line is that it is unlikely for your money to just disappear. Instead, your earnings or losses will be tied to the success or lack thereof of the investments made on your behalf. This makes it exceptionally important that you work with your financial advisor to understand your risk tolerance and guide your investments accordingly.