You might of heard the old adage 'money doesn't grow on trees' and it certainly doesn't (money is actually made out of cotton and linen) but money definitely does grow on the stock market. Now before your heart rate goes up and you click away, hear me out. We have all heard of that person who lost it all on the stock market and went from being a millionaire driving a Ferrari and owning yachts to shaking a cup for change but I can guarantee you that is a rarity and that person was certainly trading in a high risk product. We don't want to be shaking cups so lets be smart and play it safe.
All the stock markets of the world have shown growth averaged out over their lifespan. Yes, the 2008 financial crisis definitely created a dip and the Great Recession most certainly caused a significant dip but the markets always recover. The stock market is entirely controlled by the fundamental law of economics, supply and demand. When there is lots of people selling, the price drops because nobody wants the stock so people keep lowering the price to find a buyer. When there is lots of people buying stocks the price rises because why sell for 10 when you can get 20 and so on. Remember those iconic tracksuits of the early 2000's the 'Juicy' brand? At the peak you'd struggle to find a pair below $250 because everyone wanted a pair so the company could keep increasing the price. Fast forward a few years and you would struggle to find a pair going for $50, nobody wanted them and everyone was selling. This is how the stockmarket works and fortunately for us, over time, people always want stocks.
The S&P 500, just the title for a group of the 500 best performing companies in the United States, has risen on average, roughly 8% a year since its inception. Now, this does not mean every single year without fail the stock rises 8%, its an average. The rise been an average means that we need to utilise time to take best advantage of ensuring that our rise is as close to 8% as possible to maximise our income.
"But i'm scared of the stock market" "its too complicated" whatever thought is going through your head that gives you reason to not invest, let me tell you this, you already are invested in the stock market, if you have ever worked that is. Your pension? That is just a stock market account to live off when you retire. Even your money in that measly 0.1% interest savings account is ultimately in the stock market, its just your bank not you earning that 8% return.
So, I have finally managed to convince you that the stock market might not be the demon you thought it was and now your next question is "how do I even invest? I'm not Warren Buffet" No, unfortunately you are not Warren Buffet but fortunately you dont need to be. There's companies that will do the buying and holding of stocks for you. I would always recommend Vanguard. They are a non profit organisation that is at time of writing, the largest single holder of investment funds in the world. Not only do they have immense market power and by being a non profit not trying to swindle you for every penny you have, they also offer to do all the work for you for a tiny % fee. I would recommend reading the terms and conditions yourself to fully understand the fees but trust me when I say, they are miniscule, especially when compared to their competition.
I hope this post has given you some insight into the stock market, how it works and my recommendation for the best investment firm to use to start growing your wealth and take ownership of your financial future.
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