Bridgewater Financial Services

C'mon.............are you really surprised at the market loss yesterday!?! The market has losses, the market has gains. This has always been the case. Maybe it was just a reminder that you have no control over whether it goes up or down.

The four main enemies to your finances: 1. Risk 2. Taxes 3. Inflation... 4. Procrastination See more

Which of the following scenarios would you prefer to have happen to your investment over a 2 month period? 1. A 50% loss the first month followed by a 100% gain the second month. 2. A 0% gain the first month followed by a 10% gain the second month.... Hmmmmmmm.................... Let's look at actual numbers using $100 to start with. After the 1st month in scenario #1, you would have $50. After the 2nd month, you would have $100. After the 1st month in scenario #2, you would have $100. After the 2nd month, you would have $110. Clearly $110 is more then $100. When it comes to growing your money..................it's about minimizing loss.

If you have an investment that suffers a 50% loss followed by a 50% gain, have you really just broken even? Think about it................... Here what the number say: You start with $100 and lose %50, that's half which is $50. $100 - $50 leaves you with $50.... You now have $50 and gain 50%, that's half which is $25. $50 + $25 leaves you with $75 (clearly not $100). Actually, you would need to gain 100% (not 50%) on $50 to get back to $100. This is known as the actual rate of return!