The Stock Market
An Introduction to Building Wealth
It's actually quite easy for the average person to increase
their wealth. All that is required is an income, an investment
account and a determination to achieve financial freedom.
Read on to find out more!
Many people dream of financial freedom,
but unless you do something about it
you will never turn that dream into a reality
If you are serious about making money, you create wealth by allocating some of your current income and investing that to provide a future income stream. This is the basic concept used by the wealthy. Like the saying goes "The rich get richer". But the rich only get richer because they invest for the future.
" Wealth comes from knowledge.
You need to learn
how the stock market works! "
To illustrate the wealth creating power of investing for the future, an investor starts with $10,000 and adds $1,000 per year to their investment account and averages a conservative 10% annual return.
After ten years their portfolio would be worth over $40,000 and after twenty years their portfolio would be worth around $125,000. If the investor increases their annual returns by utilizing wealth creating investing strategies and achieves a 20% annual return then their portfolio would be worth a whopping $570,000 after twenty years.
A small amount of money added regularly to an investment account produces a lot of money in the future. Of course, if the investor starts with a larger amount or adds a greater amount annually then their portfolio will be worth even more in the future.
That's how you create a multi-million dollar portfolio! To illustrate this, if the investor starts with the same $10,000 but adds $1.000 per month instead of per year and averages the conservative 10% annual return their portfolio would be worth around $1.5 Million in twenty years time. Even better if the investor can increase their annual return to 20% then their portfolio would be worth over $6 Million in twenty years time.
That's how you increase your wealth! Getting the idea, now the next consideration is where to invest your money in order to create this future wealth.
Most people have Two main Investment Options
The average investor will either buy stocks (shares of publicly owned companies) or they will buy property (such as buying a house and renting it out). While there are numerous other investment options such as bonds, the two that usually provide the highest returns are stocks and property.
There are advantages and disadvantages with both stocks and property:
Investors can always invest in both stocks and property and there are plenty of investors that do. For stock investors who want exposure to the property market, they can buy shares in Real Estate Investment Trusts (RIETs) which are listed on the stock exchange.
While the stock market can initially be quite intimidating for beginner investors, it is surprisingly quick and easy to learn and does NOT require any accounting or financial background.
Most successful investors treated learning how the stock market works as a hobby. They found it relaxing and interesting to sit back and casually read while increasing their financial knowledge. It's amazing how money is a motivator - after all how many hobbies make you money rather than cost you money.
Beginner Investors in the Stock Market
Beginner investors are usually under the impression that a Financial Advisor is all that is required to invest in the stock market. Their impression is that the Financial Advisor will select all the good stocks to invest in.
" I would like to say thanks. You have given me the knowledge and confidence to invest in the stock market "
- Jacqui B, Colorado
Unfortunately for the beginner investor - this is NOT the role of the Financial Adviser, rather it's the role of the Stock Analyst and even then it's still an opinion as to whether it's a good investment - and opinions vary significantly.
The role of the Financial Advisor involves asset allocation, such as the percentage of a portfolio allocated to US stocks and International stocks or to Stock Mutual funds and Bond Mutual funds. These decisions are based on the investor's appetite for risk and their age.
Some investors believe that all they need to do is follow the buy and sell recommendations from stock analysts. While analysts do analyze companies for their future profitability, this is only an opinion and it's in no way a certainty that the analysts view will emerge in the future. Also different analysts have different opinions whether a stock is a good investment.
A lot of beginner investors are under the impression that if they buy mutual funds then they do not need to know anything about the markets. Their belief is that this is the fund manager's job - while this is true to a certain extent, most beginner investors actually end up selling their funds at the worst possible times.
Investor's who invest in mutual funds still need to understand the financial markets so that they can buy and sell their funds at opportune times rather at the worst times.
How to get Started in the Stock Market
People may well be educated, but most beginner investors are not financially educated. Unfortunately, the investors who are not financially educated tend to be the investors who lose money in the stock market. On the other hand, the financial educated investors are the investors who significantly increase their wealth by building a substantial investment portfolio over the long-term.
Financially educated investors are merely ordinary people who have learnt how the stock market works, which allows them to take control of their investments and succeed. Through market knowledge they utilize investing strategies to maximize profits and incorporate risk management tactics.
To avoid losing money, you need to learn how the stock market works - before you invest! Beginner investors are notorious for opening an investment account and investing with next to no market knowledge. The outcome is usually the same - losing money!
The simplest and quickest way to learn how the stock market works is to read articles on investing in the stock market.
StockInvesting.today has a large range of Free investing articles which you can read at your own pace. You can start with the articles in the Investing Knowledge section and then work your way through the more advanced sections. The articles in the How to Invest section shows you how to get started. You may also find the series of articles on the Famous Investors inspiring.
StockInvesting.today also produces Analysis Reports which provide fundamental and technical analysis for finance students and investors who are interested in analytical analysis techniques. There's also market update with access to the all of the previous market updates.
" I have been reading your monthly magazine and your insights have made me a lot of money - more than three times the market return "
- Geoffrey M, California
As your reading progresses along, your market knowledge continues to increase and you will know what market cycles are and how to tell the difference between a good investment and a bad investment.
Discover the investor in side of you and take control of your own investments - get the satisfaction of making your own decisions.
It's really quite easy and interesting to learn how the stock market works. With StockInvesting.today you will learn everything you need to know to analyze stocks for their investment potential and this allows you to invest confidently and profitably.