If you’re wondering how you can start building your wealth in the stock market? You’re not alone. On average, the return of a stock market investment is about 10% per year. That’s a number that’s much better than anything you can find from any local bond or bank account. In fact, you don’t even need to be an expert investor to get that 10%, all you need is a low-cost fund based on the S&P 500 index. So, if earning money on the stock market is so simple, why aren’t more people doing it? The simple answer is that we’re overwhelmed by two issues: greed, and fear. Most people are too frightened to start using the stock market in the first place, and those that do sometimes make the wrong decisions based on greed, which means that they lose more than they earn. So how do you overcome these problems?
Time in the Market is Important
You don’t need to take an online course, read a StockTwits review, or be an expert investor to know that time in the market is essential when you want to trade stocks successfully. In fact, “time in the market” could be the most important component in making money through the stock market. This phrase simply refers to how long you’ve been investing in stocks.
While some people assume that the best thing they can do with their stocks is get in and get out as quickly as possible, the truth is that the more time you spend in the market, the more opportunities you have for the price of your stock to go up. Most companies increase their profits over time, and this eventually rewards you with a higher stock price. Additionally, the more time you spend in the market also means that you get to collect any dividends that may be available from your stock. If you’re constantly trading stocks on a weekly or daily basis, then you’ll never see those dividends because you probably won’t own the stock you need at the crucial points in its calendar.
How to Get Started
As bizarre as it sounds, the stock market is currently the only market in existence where people start to panic and avoid buying when goods go on sale. As soon as the market begins to dip by a few percentage points, some investors let fear get the better of them and start selling rapidly when they should actually be buying. If you want to be successful in making money through the stock market, then you need to leave the enemies of greed and fear behind you and take advantage of that all-important 10% annual return on investment. An excellent way to get started is with an index fund. Index funds are generally made up of hundreds or dozens of stocks that reflect indexes like the S&P 500, so you don’t really need a lot of individual knowledge about each of the companies you invest in to be successful. On the other hand, if you want to spend your money in a specific individual company, then you’re going to need a great stock broker to help you out. The good news is that with a personal investment, you can potentially earn higher returns, but you’ll need to research the companies yourself first.