Investing articles usually tell people who want to
make money in the
stock market to only invest money that one can afford to lose. Now what does this actually
mean? On the surface, it just means that one should only risk money which if lost, will not significantly alter your lifestyle or put you in a difficult position. However, deciding which monies actually fall under this category can be very tricky.
For example:
Joe makes minimum wage, gets by enough, has a few nickels going into a 401k or some other financial instrument that will (hopefully) allow him to retire one day. Last week he wins $5,000 in the lottery. As we have seen that he has managed decently with his living wage job, some would say that this money is something he could afford to lose, money that he could very well risk in the stock market for possible gains way beyond any gains possible from the current financial instruments he is invested in.
But Joe is actually pushing fifty, the retirement nest eggs he has made are little more than eensy weensy quail eggs which, should he rely on them, would basically just allow him one session with the soylent green end of life care machine.
Can he still afford to lose the $5,000?
What's my point, the stock market, like life, is filled with uncertainty. People can gather educated advice, or uneducated advice, but in the end. Nobody really knows.
Remember those monkeys with darts?