Take Your 401K to Vegas
What does a cool-headed professional gambler do before she walks into a casino? She decides on the amount of money she’s willing to lose.
And that is the only amount she will venture at the tables. Why? Because a professional understands that gaming is as much about losing as it is about winning.
So why are 54% of us still depending on the stock market to build our financial security? Seems we’d figure out by now that pretending the market can provide a solid safety net for our golden years is analogous to grabbing our 401K and heading for the blackjack table. Yes, we had a President who very irresponsibly wanted to turn Social Security over to the stock market. But, we knew enough to not let it happen.
Then, why all the indignant talk in the business press about Americans losing their savings on Wall Street? The Fourth Estate does a huge disservice to their readership in promoting this particular public outrage. Indignant headlines citing big personal losses might attract an audience. But, they also give credence to the myth that a stock portfolio is a useful strategy for building monetary security.
We all know the market is impersonal. It does not have a soul. It is not the business of the stock market to help provide for senior citizens, or anyone else for that matter. It’s just a game – and it’s irrational to think of the financial markets as anything else.
Better is to pretend you’re the cool-headed pro gambler. If you have some extra cash above what you really need, then sure, go for it. If you win - great! If you lose, there’s no harm done.
Can stocks contribute to personal wealth? Sure. Just like blackjack, with the right bets and the right cards, you might get lucky.
It’s called “playing” the market. Don’t gamble what you can’t afford to lose.