Myth #7 The Best Investment Is…

Financial Myth’s Blog Series

Unfortunately, much of the information relating to money that permeates our thinking as individuals and as a society is based on myths. This misleading information has no factual basis and can actually prevent us from achieving our financial objectives. This week we’re dealing with the “Best” investment.

Follow along with us through the Financial Myths Blog Series. You may be surprised by what you discover about yourself and your financial plan!

Myth #7 – The Best Investment Is…

Many people would like to know the “best investment”, but whatever I told you would be wrong. Simply put, there is no such thing. Instead, you should evaluate each opportunity based on the following criteria.

1. Higher probability of success
2. Lower probability of failure

You can define success in many ways, but I think it should include the following.

1. Meeting Goals
2. Decreased Worry

So, how can you tell if an investment is beneficial? I suggest you vet it based on the following criteria. 

• Does it fit your allocation? 
• Do you get an appropriate return with a measurable risk tolerance?
• Does it lower the standard deviation with acceptable returns?

 

All investments have a place, but not necessarily in your portfolio.

 

Your unique financial DNA leads to a different solution than your neighbor or best friend. Think of investing like solving a jigsaw puzzle. Would you take puzzle pieces from your friend and try to use them for your puzzle? No, because your puzzle pieces are designed to fit your picture. 

So, the question is not whether an investment is best – it’s if it makes sense for your unique circumstance. That is what makes an investment great for you! 

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