As life gets longer, longevity risk, i.e., the risk of not having enough resources in the latter part of life compared to what would be needed to ensure a good quality of life, is a problem that affects an increasing number of people. Especially the new generations, starting from generation X and Y (Millennials) and soon from generation Z.
Young people and the new longevity risk
We can mainly counter longevity risk by leveraging two factors:
A – How to properly invest the provisions that we can allocate to this objective.
B – How to increase today’s provisions which for many people are insufficient compared to the objective.
Activating the contrast to the risk of longevity also gives the immediate advantage of more significant daily serenity, thus immediately raising the quality of life.
In addition to this, he makes himself aware that with the same method, it is possible to face two other important commitments: to have the children study and to have a life jacket in case of totally unexpected adverse events that could occur during life.
The solution lies in adopting the right strategy; let’s see how:
A – Choose the most effective investment model: shares
The profitability
History teaches us that the stock market is the most reliable investment, capable of overcoming all crises and continually growing. Otherwise, the world would stop, and your problems would be much more significant. You can start with small amounts; it does not require maintenance, and you can immediately liquidate in case of need. The probability of suffering losses on the stock market decreases as the investment time horizon increases.
For example, the Standard & Poor 500 index recorded these average annual results:
The stock market is destined to grow, and any falls must be considered as transitory events. The very concept of the stock market glimpsing a high is incorrect. Is there a maximum value for world economic growth? The world follows a continuous process of development, nourished day after day, to which we all contribute, working, producing, and consuming. Whatever the level the market reaches, none of us stop going to work, produce, or consume. So the tendency to grow is continuous.
By checking the truthfulness of this data on the web, you will find documents that will further increase the value of this strategy.
The unique bundle of features
No other type of investment aggregates so many useful features, all together:
- Liquidity: immediate, total, or partial, according to your needs.
- Small figures: you don’t need significant capital; you can start and continue with practically any figure.
- Less timer: neither to invest nor to disinvest
- Low personal competence: easily compensated by having you assisted by an experienced and qualified professional, with minimal costs.
- Strong reliability: easily obtainable by investing in reliable companies
- Strong solidity: readily available by choosing solid, liquid stock exchanges, and solid companies
- Relocation: readily available by moving, when needed, accounts, shares, etc.
- Diversification: easily obtainable by dividing the investment on many different stocks, according to any criterion you want to adopt.
- Updatability: you can easily update your investment over the years to meet your needs for high reliability, solidity, diversification, etc.
The optimization of the flow over the years of provisions
You have a flow of small monthly amounts to invest (those you generated thanks to our algorithm) for an extended period of years.
So you have the advantage of being able to apply the historically very effective method, called DCA Dollar Cost Average, which allows you to reduce the impact of the expected volatility typical of the stock market, increasing the overall results.
It is a method widely used in the management of personal finance by the most astute people. It consists of paying small amounts into your investment account monthly, just the ones you have, month after month.
This method allows you to balance the quantities purchased each time concerning the moment’s value, rebalancing the stock market’s natural highs and lows.
The tactic to generate the best possible result
Buffett describes compound interest as the only way to make your money worth more and more. It consists of making time work and reinvesting month after month so that the income produced is added to the capital, increasing the amount invested each time. The longer the time, the more it works in your favor, so the sooner you start, the more the small amounts you pay, produce great results. Grafts the snowball effect: many years available, with recurring monthly payments, with compound interest, are the key to meeting your goals. Just like when using a small 1hp engine to start a powerful 500hp one.
B – Choose how to increase the resources to be set aside
The reference is to revenue streams unrelated to your intervention, meaning that they do not require time and energy. The central position that the web has progressively occupied in our lives already makes it possible to activate some channels that can already monetize.
Cashback – that is, the premium that e-commerce is willing to pay to buyers who follow particular procedures. It has the defect of not being democratic as it is linked to purchase volumes and makes those who already have wealthier.
Forced saving – that is to say-that I appoint a third party authorized to withdraw from the current account systematically, irrelevant sums (cents?) But which together can constitute bricks for the future.
Statistical stock trading – investing in the stock market so that it doesn’t take time and work. It is undoubtedly democratic as it is totally disconnected from the economic status of those who practice it. You don’t need expertise but choose a reliable partner.
It starts from having shares in which to invest that derive from mathematical evaluations that exclude knowing the stock market scenario and the single stock. These actions are extracted using algorithms based on selected parameters that also indicate the timing suitable for the investment. You can also purchase the shares mentioned above by subscribing to the service provided by the owner of the algorithm. The track record of the results indicates whether the algorithm refers geographically, sectorally, and profitably to expectations.
C – The financial culture as a source of discrimination
The problem of longevity risk, the study of children, the life-vest for any unforeseen events concern the generality of people where financial literacy is not homogeneous and very often inadequate.
Statistical trading is not culturally discriminating and can therefore be used by all people. In addition, in favor of those who know little about finance, it highlights how it is convenient to learn more.
Knowing the basics of finance is a valuable skill for anyone. The invitation is to go further, strengthening your knowledge whenever you have the opportunity because you should be fully aware of everything about your investments and how they develop. More so if you don’t follow them personally and rely on someone you trust. For this reason, we suggest that you have these issues apparent:
1 – How to strengthen your financial training
2 – How it works and what are the advantages of compound interest
3 – Investing in the stock market is the most advantageous method to grow capital over time
4 – How to avoid the risks of financial scams
5 – How to predict retirement
On these issues, you can find essential information on institutional sites such as https://www.investor.gov/introduction-investing
If you want to learn more, on the web, you can find free courses of any level
(Coursera, etc.)
It is always advisable to be accompanied by an advisor to invest your savings. In the beginning, when your training is still low, it could be helpful to diversify on several advisors to have the consequence of being able to compare between different experiences and points of view to absorb practical knowledge.
D – Cripto & blockcain
The world of blockchain, Bitcoin, crypto coins that are very fashionable today can be seen by some as the miraculous solution to their future needs, without the need to set aside. There is no doubt that the digitalization of finance is now an irreversible fact, but at present, it has only just begun; it promises well, but today the security aspect is still decidedly in favor of stocks. Security is one of the main features of any investment, and the crypto world, in many ways, still looks too much like a bet. It can certainly be taken into consideration as a residual portion in the context of diversification, but not as a passive income on which to rely mainly to substitute provisions and build a reliable future.
Conclusion
The future is built in the present, taking great care to prevent something from going wrong over the years. The conditions for this not to happen are all there; it depends if you want to exploit them with constancy and commitment, knowing that there will be no appeal in the end, it will be the one-shot of your life.
Then it’s up to you
MPW does not do finance, or trading, only math. If you create funds, you have to set them aside and make them grow over time, taking care to invest them well. Be sure to carefully choose your trusted expert advisor..