Investing in stocks is one of the best ways to create long term wealth. If you are not investing in stocks or are one of those people who believes stocks are gambling, you need to read this.
I remember back in my early days of stock investing the criticism I got. I was working at a credit union and they finally allowed us to invest our 401k in stocks.
I jumped on it. I was thrilled.
I’m not saying you should do this with your 401k. I’m a super aggressive investor and am always willing to try new things. This isn’t for everyone.
I started building a dream team of stocks in my portfolio. I was super excited as any money nerd would be.
Later, I’m chatting with my coworkers about our new ability to invest in stocks. I was shocked to discover NO ONE was investing in stocks.
They said things like, “stocks are the same as gambling at a casino.” “You are going to lose all of your money.”
I couldn’t believe it and I just couldn’t understand the mindset.
I had the last laugh though as I doubled my portfolio over the next year and eventually quadrupled my money, all while they crawled along with 10% - 20% returns.
Don’t get me wrong, 10% - 20% is not bad, but you have the potential to make so much more in stock investing if done right.
They were wrong and it cost them a lot of money.
Here’s why stocks are not like gambling and why you need to be investing if you are not already.
#1 - STOCKS ARE 1 PART OF THE TRIFORCE OF BUILDING WEALTH
Stocks are 1 of the 3 ways that rich people build wealth. I call it the TRIFORCE OF WEALTH!
No that’s not some technical term. “TRIFORCE” comes from one of my favorite games, Zelda. ;)
It sounds good though!
The 3 main ways rich people build wealth are:
Lot’s of rich people got rich from investing in stocks. Lots of already rich people get richer by investing their wealth in stocks.
Do you think they are sitting that money in a bank CD? Highly doubtful. They’d be losing money.
#2 - “SAFER” INVESTMENTS ACTUALLY LOSE MONEY
Maybe you think, I’ll take the safe route and invest in my banks savings account. Maybe a certificate of deposit. Maybe even a bond.
It’s time to wake up. Those are going to cost you money.
Why? One word, inflation. Yes, you heard that right. The returns on those so called “safe” investments are actually costing you money.
Inflation on average is about 3% annually. Can you consistently beat your financial worst enemy of inflation over time with those “safe” investments?
The answer is NO.
You’re actually hurting yourself by not investing in stocks and taking the “safe” route. The buying power of your money is decreasing every year you stick with them.
This is not good, not good at all.
My purpose with this site is to teach you to be a Money Badass and that is not badass at all when you are losing money instead of making money.
#3 - HISTORY SHOWS THAT STOCKS ALWAYS INCREASE IN VALUE OVER TIME (THEY’RE NOT GAMBLING LIKE MANY THINK)
Ever since the S&P 500 Index (500 of the stock markets biggest stocks) has been tracked, the stock market has returned on average around 11% annually!
How does that CD, bond, or savings account compare to that? Nowhere near the same return.
There are down times, down years, in fact, but it still has returned 11% on average annually.
Now, with that said, some individual companies have collapsed, but that’s why we diversify, which I’ll go into much more in the future.
For now, I just wanted to point out that this is not casino gambling. This is a proven long term wealth building method of investing.
Stocks are one of the few investments that outperforms inflation and generates a real return.
#4 - STOCKS ARE ONE THE MOST PASSIVE FORMS OF INCOME AND WEALTH BUILDING
I’ve tried all 3 areas of the TRIFORCE OF INVESTING and I’ve found no easier method to build wealth and make money.
I’ve been in the real estate game and it’s tough, a lot of work. I’ve started several small business and it’s tough.
I’ve been in stocks since the early 2000’s and it’s been one of the easiest ways to make money.
While there is research and monitoring, there is no physical labor, no long meetings and hours.
#5 - STOCKS PROVIDE SMART INVESTORS THE ABILITY TO NOT ONLY MAKE MONEY, BUT, TONS OF MONEY!
Stocks provide insane opportunity for investors! 11% is just an average of the ENTIRE stock market.
Smart investors can make much bigger returns. Last year, my experimental stock portfolio, THE BADASS STOCK PORTFOLIO, had a 69% return while the stock market was up about 19%.
I’ve seen full time investors make over 100%, sometimes much more.
It’s truly amazing what a smart investor can make in the stock market by picking the best performing stocks, or just by trading well.
#6 - STOCKS ARE EASY TO GET STARTED IN
Out of the 3 areas of the TRIFORCE OF INVESTING, nothing is easier than stocks to get started in.
Back in the early days of stock investing, you had to call up a broker and put in an order for a trade. Every time you would buy or sell stocks you would pay a huge fee.
Those days are long gone…
Now, you can buy a share of stock for free with a few swipes on your smart phone. It’s amazing!
Thanks to apps like Robinhood, it’s so easy to get started, you could have a portfolio in just a couple days! In fact, “it’s hard to get started” is not a valid excuse with stocks.
#7 - STOCK INVESTING IS SO MUCH FUN!
Most importantly, investing in stocks is fun! So much fun!
There is nothing quite like sitting back during lunch and seeing from a screen on your phone that you just made $500 while sitting at home.
If that doesn’t excite you about stock investing, I don’t know what will!
CREATOR OF MONEY BADASS