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The Risks of NOT Investing and How to Overcome Them

The risk of loss in NOT participating in the stock market can mean working past the traditional retirement age.

Investing is risky, and that’s the inherent basis for returns. You invest in the stock market, hoping the investments will grow. And sometimes it doesn’t. However, it is essential to achieving your goals.

It can be challenging to look forward and make sacrifices or changes now to better your future self. There is a lot to deal with in the world. And indeed, you are busy with everything going on in your present life. However, the importance of financial planning for your future self still stands.

The risk of loss in NOT participating in the stock market can mean working past the traditional retirement age.

In this article, you’ll learn why it’s vital for you to invest, the power of time, investing opportunities already available, and how to determine your risk tolerance.

Pensions and Defined Benefit Plans

Don’t count on pensions. Employers previously assisted with retirement through pension plans and robust retirement plans. At times even continuing employee benefits. These generous plans are not common anymore. Companies realized the high cost of this loyal responsibility they provided to their employees and swiftly made cuts. 

With the company plans unavailable, your next thought might be social security benefits.

Social Security Benefits

We hear a lot about SSA benefits for retirees. But have you ever looked at how much social security benefits would provide to you? 

According to, the maximum amount of SS income a person can receive is $3,895 per month if that person waits until the age of 70 to begin collecting. Social security benefits are determined by your earnings history (as you will only get a percentage of that) and the age you start collecting. Keep in mind that you may see a smaller amount compared to the maximum SSA benefit allowed. 

What can you do? Create an account on to see what you are estimated to receive. My current estimated benefit at full retirement age (67) is $2,672 a month.

Are you still feeling secure with SS as your backup plan?

Time is of the Essence in Investing 

As you read this and feel unsure of your financial future, there is still a crucial piece to your benefit–time.

Start investing now.

As a result, you will be able to feel the positive impact of compound interest over time to build your wealth. As you add to your investment account, that money has time to grow. Gains will accrue on the money you have put in, as well as on any previous growth.

Of course, the time factor depends on your current age and when you plan to retire. I’ll review this detail further down to decide what risk tolerance level is best for you. The key takeaway here is to start now and allow time to be on your side.

What can you do? Get started and learn more about the basics of investing.

401k Match: Are you leaving behind free money?

If you are employed with a company, they may offer a 401(k) plan. Some companies will even match a percentage of what you put into these accounts. Hence, ‘”free money.” 

What can you do? Reach out to the HR department about contribution matches. 

Additionally, they can provide you with the contact of the 401k plan administrator that manages the company’s 401k program (Ex: Fidelity, Vanguard, Charles Schwab, Lincoln Financial, ADP, etc.). This employer’s plan administrator can assist you with setting up a new account, rolling over any previous funds you may have out there, and answer questions about investing into your 401k.

The 401(k) plans most often offer target-date funds, which base your risk level and potential return on time periods. For example, if you’ll retire in 30 years, your level of risk may be higher, and you’ll find your investments include individual stock and exchange-traded funds with a historic long-term positive rate of return.

Now, let’s discuss risk and how to assess your risk tolerance.

Risk Tolerance in Investing by Age

Risk tolerance may sound like an oxymoron, but it’s an accurate tool to use when making investment decisions. To determine your risk tolerance, you take into account: how old are you now? And at what age do you plan to retire?

Your current age and retirement age will help you evaluate how much time your money has in the market to grow. This information is useful to help determine the types of risks you can take in the financial markets. The earlier you start, the higher the investment risk you can take. That’s because it provides you time to ride out any dips in the market and see an overall upward trend of your funds. The longer amount of time your money is in the market, the more growth will occur.

So younger people are often advised to be more aggressive as they do not need to pull out their funds soon. You can become more conservative with your investments to mitigate losses as you anticipate utilizing those funds sooner as you get older. 

Investment Risk Tolerance is Personal 

Another element of determining your risk tolerance is your personal comfort level.

The risk tolerance levels range from conservative to moderate to aggressive. You have to decide how aggressive you want to be with your invested money. The more aggressive you are in your investment strategy, the more significant the gains can be. Just as the profits can be substantial, the losses could also be more than a conservative plan. This is why it is called a ‘risk’ tolerance.

There are other considerations when evaluating your risk tolerance. You can work with financial planners who can assess risky investments and help you with a diversified portfolio. You don’t have to do it alone.

Now What?

If you made it here, you might have gained more knowledge and have a lot more questions. That’s great. It means you are in the beginning stages of learning about investing and hopefully closer to making a decision that will benefit your future self. With increased knowledge, you can calm those nerves and fears surrounding investing. 

There are tools and resources available to help you on this journey. Keep going. Get curious and ask questions. Then make the necessary decisions now, to help yourself out later. You deserve it.

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