Why you should invest in Stocks
This quick little blog is going to explain why, if you want to invest, investing in stocks is one of the best choices you can make.
The fact is that, over the past 100 years or so, any long-term savings that you invested would have done much better in the stock market than anywhere else you could have invested, including real estate, gold, bonds and definitely collectibles.
Now, before you begin, and before you enter any ticker symbols, track the Dow or look deeply into a specific company’s cash flow, you should definitely set some expectations for yourself.
One of the very best rules of thumb when it comes to investing in stocks is to invest money that you’re not going to need for at least 5 years and, if possible, much longer. Any money you won’t need for the next 5 years should definitely be invested into the stock market for your best chance of a great return.
Any money that you’re going to need in the next one, two, three, four or less than five years, money for your son’s college tuition, a down payment on your first home or to open your first business, should be put into something like a money market account, a CD or simply a savings account. In other words, a short-term savings vehicle where you can access your cash quickly and with few, if any, fees.
And by the way, if you have high interest credit card debt of any kind, you should definitely pay this debt completely down before you start investing in stocks, no question.
Now, here’s the best, strongest, no questions asked reason why you need to put your long-term money into stocks; history.
Historically speaking, there was no better place where you could have put your money in the last hundred years, and gotten a better rate of return, then in the stock market. Since 1926 the historical average annual S&P return has exceeded 10%. Even though the S&P 500 only had a 6% annual return from 1997 through 2007, due to the bear market of 2000 through 2002, you simply can’t argue with historically excellent returns like these.
If you look at history, and you look at everything that’s happened in the last hundred years including depressions, bull markets, elections, recessions and so forth, the stock market has undoubtedly been the best place to put your money for excellent long term returns
And that, simply put, is why you should invest in stocks.
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