We’ve already looked at the benefits of stop losses in a previous post on Monevator. Please do read that introductory stop loss article if you’re not sure what a stop loss is, or why you might want to employ one.
Personally, I rarely use stop losses nowadays, especially in the guise of an automatic sell orders.
Today’s article will therefore explain the drawbacks to employing stop losses when investing.
Every week I read a large number of personal finance and investing articles. Here’s my latest weekly shortcut to the best.
They say even dead cats bounce, and that’s equally true of markets. While I wouldn’t be surprised to see this week’s stock market rally turn into something more substantial over the next 18 months, I’d be shocked if UK house prices are higher in 2010.
I write this in the light of yesterday’s report from Nationwide that UK house prices had risen 0.9% in March compared to the previous month, taking the annual rate of house price falls from 17.6% in February to 15.7%.
That 0.9% rise is a seasonally-adjusted figure, too – the non-seasonally adjusted jump was much higher.
Nonetheless I suspect house prices still have someway to fall, and indeed am banking on that by further delaying my entry into the property market.
Back in the first post in this series on growing your salary or other work-related earnings, I mentioned I’ve really let my income stagnate.
While I currently work in a fun media industry that will never be among the highest-paying sectors, there’s no doubt I could be doing better.
In fact, I’ve earned around the same during the last tax year (2008-2009) as I earned back in 2001-2002!
There are some personal reasons (principally, I did very well in the early years, and also it took me a while to get re-motivated after exiting a start-up in 2007) but let it be a warning to anyone on a good salary. Don’t rest on your laurels!
Just as compound interest multiplies your savings pot, so climbing the greasy corporate pole becoming a happier, more productive employee and advancing your career will really boost your income after a few years.
If you live within your means, then the result can be more money saved, invested and returned to you in spades in years to come.
Focusing merely on cutting costs will never make you even modestly rich, at least not while you’re still young enough to enjoy it. (Compound interest will turn anyone rich if they save a little and live to 100, revolutions and wars notwithstanding).
