![]() ![]() You want to be playing a long-term game if you want to make money. You don’t want to be forced to take it out because you need it, and you don’t want to react emotionally when it dips, which is one of the biggest investing mistakes people make. ![]() ![]() The trick is not taking your money out when the stock market goes down, which is why we really emphasize the importance of having an emergency fund in place before you start investing. If you can put your money in the stock market and not touch it for 5+ years, you will likely make money. Stock Market Investing Strategy: Buy and Hold That brings us to our first stock market investing strategy: buy and hold. Why? Because this means that if you can stay invested - as in, not pull your money out when the value goes down - you have a good chance of making money over the long-term. This is an important fact to know about when you’re starting to invest. And over the past nine decades it delivered an average rate of return between 6 and 8%. Even after the worst stock market crashes - in 19 - it still came back to record highs in the years after. In fact, there hasn’t been a single 20-year period in which it had negative returns. The S&P 500 is an index that measures the performance of the largest 500 companies in the United States.Īnd you can see how the S&P 500 has changed over time. Now that you understand the lay of the land, let’s dig into what you need to know about investing in the stock market. First, a quick history lesson.īelow is a historic look at the S&P 500. You can think of that like going to the farmer’s market during COVID-19, when you couldn’t touch the fruit yourself and the vendors had to hand you what you want, which would make the vendors like the brokerages you have to use to place your trades - the buying and selling of stocks. ( Trying to figure out the best brokerage for you? He re's everything you need to know.) Instead, you have to go through a broker, like eTrade, Robinhood, or Vanguard. If you were to think of the stock market like a farmer’s market, the stocks would be the fruits and vegetables and the exchanges would be the vendors’ stalls.īut unlike picking up an Instagram-worthy bouquet of sunflowers at the Saturday morning farmer’s market, you can’t just go in and buy stocks. The stock market is a place to buy and sell small pieces of public companies, called shares or stocks. These shares and stocks are organized into exchanges - like the New York Stock Exchange or the Nasdaq. ![]()
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