Don't Let the Facebook Debacle Damage Your Retirement Plan
Few things in the investing world have gotten more attention than the much-anticipated Facebook (FB) IPO this month.
Yet unfortunately, the lesson that millions of hopeful investors learned the hard way from the misadventure was that when it comes to promises of getting rich quick, you can't rely on the stock market any more than you can trust that prince in Nigeria who wants to send you $10 million to help restore his family to its former glory.
Facebook's was a highly unusual IPO in that many ordinary investors were able to get their hands on the initial offering of shares. When those shares didn't produce the pop that many other IPOs have experienced on their first days of trading, many concluded that the Facebook IPO was just another Wall Street setup designed to take money away from the little guy.
But the true tragedy of Facebook relates to the crazy expectations that many people had about the IPO in the first place.
Some investors put big chunks of their life savings on that single stock, hoping that they'd found the one way possible to get ahead after years of suffering through plunging stock markets, high unemployment, and eroding safety nets.
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It's far too early to conclude that Facebook will never be a good investment. Yet for those who expected a quick doubling of their money, the current loss of more than a quarter of their investment in Facebook shares comes as a major shock.
Inevitably, many will simply take their losses rather than waiting for a rebound that may take years to come.
The Facebook debacle serves as a reminder that as appealing as it is to make a quick score on a hot stock like Facebook, long-term financial goals take a long time to achieve.
%Gallery-146255%Successful savers rarely hit it big with a single stock. Instead, they put small amounts aside month after month, year after year, and let their modest gains add up over time. If you follow that strategy, you'll suffer setbacks along the way, but in the long run, you'll have a much better chance of getting the retirement security you want.
For some more tips on smart retirement strategies, read on:
Motley Fool contributor Dan Caplinger stayed far, far away from Facebook. You can follow him on Twitter here. The Motley Fool owns shares of Facebook.
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