Why You Should Invest in the Stock Market
A lot of people fear the stock market even though historically it has performed well. In fact, it has always its upward trend. In other words, every bull market was stronger than the bear market or "recession" it had previously experienced. Why are people so hesitant to invest and grow their money? There are really stable investment vehicles that the stock market provides like Roth IRAs and 401k. Overall, people just have to learn to ride the market. In this article, I'm going to be breaking down the top reasons why it's smart to invest in the stock market. Let's get started. 1. History: Like I said earlier, the Dow and S&P 500 have historically been on an uptrend rather than a downtrend. This is due to the fact that every time there has been a recession in the economy, it has been followed by a strong and more powerful growth and expansion period. If all signs are pointing to a recession and a downtrend, just take the money out of your stocks and invest into something that will hold its value like gold or real estate. At the end of the recession, this is the best time to buy as stock prices are at their lowest. All in all, you should get to know the basics of investing before you invest at all. Focus on investing in quality picks that are experiencing growth and that you know the pattern of. 2. Retirement: Retirement is probably one of the best reasons to invest in the stock market. Unless you operate a very profitable business or some other asset that will give you consistent cash flow when you retire, it's probably a good idea to invest in the stock market. Like they say, the sooner the better. The sooner you invest, the more time you give your money to compound. The more times your money compounds and the more you add to it throughout the years, the more you will have when
retirement comes. Make it a goal to invest a certain amount of money every month into your portfolio. Even if it's only $100 invested every month, it will make a big difference in the long run. Also, take advantage of retirement accounts like 401ks and Roth IRAs. For a 401k, your employer will match your contributions. As for a Roth IRA, it grows tax-free every single year. 3. Returns: The returns that the stock market has to offer are pretty great. Is it a "get-rich-quick" or "Bitcoin" type of investment that is going to show massive returns over the next few years? Probably not. The only ones who truly make large sums of money are those guys on Wall Street in hedge funds. However, you can make a great deal of money the larger your portfolio is. Like they say, it takes money to make money. 10% earned on 2,000,000 is a heck of a lot more than 10% earned on 20,000. Work ever month to consistently grow your portfolio so that the returns you see are much greater.
Edward Schinik has been with the Investment Manager since 2009 and has been with one Affiliated Investment Manager since 2005.