If you find a company you want to invest in, you shouldn’t invest a huge chunk of your portfolio at once. I recommend that you find companies that are still in their early stages and which are doing something that is exciting or promising, you can get recommendations at https://www.sofi.com/invest/. You should be willing to invest $50,000-$100,000 at most in any one of those companies, at the risk that they don’t do well. The more invested you are, the more likely you are to lose your money. It might seem too risky to put that kind of money into anything that doesn’t have a solid track record or that has a very high price tag, but it is actually very risky to let the stock market do your thinking for you. The idea is to buy and hold for a very long time, and to let things move around, in the hope that you will come out ahead.
After that, I think that there are a few other good reasons to invest, not all of which relate directly to my point about buying low. If you live in a small place and can’t afford a home, or you have a family that is dependent on you, or you just want to invest more than you can afford, then you have that option. And if you have a large family and you want to buy a house for your kids, you can also do that.
But I think it is also a very good idea to look at some of the alternative investment strategies that are available to you. There is no question that the traditional stock market is highly overvalued, but there are a number of alternative investment vehicles that you can use.
There are a lot of options out there. We have the Wealthfront platform that you can use to invest your money and access the Wealthfront dividend and tax-loss harvesting service that I have just described. But there are other platforms out there that may provide you additional income streams. You may be able to use a CD, or a low-cost or no-cost bond, or you may be able to use some other instrument to obtain income that may be more suited for your long-term investment. That’s why the Vanguard All Bond list provides you with additional options. So if you’re looking to obtain income, there’s a lot of different ways to do that.
Now, with the stock market, we tend to be looking for earnings. I have been very outspoken about this, and I just think that you get less out of a stock market that’s undervalued than you do if the underlying financial markets are performing well.