If you’re considering investing in stocks at this time, you probably want to know how to do it most profitably in the event of a pandemic or at any other time).
What may surprise you is that there isn’t really much of a difference between the stocks you should buy during the coronavirus pandemic and the stocks you should buy normally.
But let’s go back to the basics for a second. One of the most crucial financial skills you should acquire is stock investing. Stocks have typically produced an annualized return of approximately 10%. At that rate, your money doubles every 7. 2 years.
Let’s say you start with $10,000. That becomes at least $320K after a 40-year career from doubling five times. That’s from a single $10,000 investment.
I’m going to level with you. You can’t get rich off just your salary. Bonds and savings won’t work either because the returns aren’t significant enough to matter over the course of your lifetime. Stocks are the key.
You will become wealthy through stocks regardless of your income as long as you begin investing early, continue investing, and never sell.
Anyone can do this. You don’t require a lot of time, insider knowledge, or financial acumen. I spend a few hours per YEAR managing my portfolio. Time and consistent contributions will make you a millionaire.
For this reason, I’ve put together a list of simple stock market investing strategies that you can start using right now. Let’s get right into it. New to IWT?.
While it’s true that some people have made significant fortunes in the stock market, it’s important to remember that these are not the norm. Making a lot of money in stocks requires a combination of factors, including:
- Investing for the long term: The stock market is cyclical, and there will be ups and downs. However, over the long term, the market has consistently trended upwards. This means that if you are patient and invest for the long haul, you are more likely to see significant returns.
- Investing in quality companies: Not all companies are created equal. Some companies are well-managed and have a strong track record of growth, while others are poorly managed and may not be able to survive in the long term. It’s important to do your research and invest in companies that you believe have a bright future.
- Taking on risk: The stock market is inherently risky, and there is no guarantee that you will make money. However, if you are willing to take on some risk, you have the potential to earn higher returns than you would from other investments, such as bonds or savings accounts.
- Staying disciplined: It can be tempting to sell your stocks when the market is down or to buy more when the market is up. However, it’s important to stay disciplined and stick to your investment plan. This will help you to avoid making emotional decisions that could cost you money.
Here are some of the ways that you can make money in stocks:
- Capital appreciation: This is the most common way to make money in stocks. When you buy a stock, you are buying a small ownership stake in a company. If the company does well and its stock price goes up, you will make money on your investment.
- Dividends: Some companies pay out a portion of their profits to shareholders in the form of dividends. This can be a source of passive income, which can be reinvested to buy more stocks or used to cover your expenses.
- Stock splits: When a company’s stock price becomes too high, it may decide to split its stock. This means that each share of stock is divided into multiple shares, which makes the stock more affordable for investors. Stock splits can also lead to an increase in the stock price, as investors become more interested in buying the stock.
It’s important to remember that making money in stocks is not a get-rich-quick scheme. It takes time, patience, and discipline. However, if you are willing to put in the work, you have the potential to make a significant amount of money in the stock market.
Here are some tips for making money in stocks:
- Do your research: Before you invest in any stock, it’s important to do your research and understand the company’s business, its financial health, and its future prospects.
- Start small: Don’t invest more than you can afford to lose. It’s better to start small and gradually increase your investment as you become more comfortable with the market.
- Diversify your portfolio: Don’t put all your eggs in one basket. Invest in a variety of stocks across different industries and sectors. This will help to reduce your risk and improve your chances of success.
- Be patient: The stock market is a long-term game. Don’t expect to get rich overnight. Be patient and stay invested for the long haul.
- Seek professional advice: If you are new to investing, it may be helpful to seek professional advice from a financial advisor. A financial advisor can help you to create an investment plan that meets your individual needs and goals.
Here are some of the risks associated with investing in stocks:
- Market volatility: The stock market is constantly fluctuating, and there is no guarantee that your investments will increase in value.
- Company risk: The value of your investment can be affected by the performance of the company you invest in. If the company does poorly, your investment may lose value.
- Liquidity risk: Some stocks are more difficult to sell than others. This means that you may not be able to sell your stocks when you need to, which could result in a loss.
Overall, making money in stocks is a risky but potentially rewarding endeavor. If you are willing to take on the risk, you have the potential to make a significant amount of money. However, it’s important to remember that there is no guarantee of success. It’s important to do your research, invest wisely, and be patient.
Additional Resources:
- NerdWallet: https://www.nerdwallet.com/article/investing/make-money-in-stocks
- Reddit: https://www.reddit.com/r/stocks/comments/14fsard/just_got_into_stocks_and_realizing_i_need_big/
FAQs:
- How much money do I need to start investing in stocks?
There is no minimum amount of money that you need to start investing in stocks. However, it’s important to remember that the more money you invest, the greater your potential returns.
- What is the best way to invest in stocks?
There is no one-size-fits-all answer to this question. The best way to invest in stocks depends on your individual circumstances and goals. However, some common methods of investing in stocks include buying individual stocks, investing in mutual funds or ETFs, or using a robo-advisor.
- How long should I invest in stocks?
The stock market is a long-term game. It’s important to invest for the long haul and not try to time the market. If you are patient and stay invested, you are more likely to see significant returns.
- What are the risks of investing in stocks?
The stock market is inherently risky and there is no guarantee that you will make money. However, if you are willing to take on some risk you have the potential to earn higher returns than you would from other investments, such as bonds or savings accounts.
- How can I reduce my risk when investing in stocks?
There are a number of ways to reduce your risk when investing in stocks. One way is to diversify your portfolio, which means investing in a variety of stocks across different industries and sectors. Another way to reduce your risk is to invest for the long term, which will give you more time to ride out market fluctuations.
Making money in stocks is a risky but potentially rewarding endeavor. If you are willing to take on the risk, you have the potential to make a significant amount of money. However, it’s important to remember that there is no guarantee of success. It’s important to do your research, invest wisely, and be patient.
The first step in making money through stocks
Equipped with this novel understanding, you are ideally positioned to generate profits from stocks.
The first step is to set up a brokerage account to buy stocks or index funds. We recommend Vanguard, TD Ameritrade, or Fidelity. All are great options for opening your first account.
How to pick individual stocks (if you must)
I am aware that you will feel compelled to purchase individual stocks.
But I am not going to sugarcoat it. Buying stocks is brutally hard.
The odds of successfully picking individual stocks are very low.
From 1926 to 2015, there have been 25,782 distinct stocks.
During these 90 years, the stock market rose $32 Trillion in value. Half of the gains came from JUST the top 86 companies. 86 out of 25,728! The remaining wealth was generated by the top 1000 stocks. That’s only 4% of all the companies.
Purchasing individual stocks has very low success rates. Just 4%.
This is the reason I advise you to purchase individual stocks with the remaining 10% of your investment capital.
I select a small number of stocks on my own, but I keep them below 2010%. I satisfy my desire to go stock-picking, indulge in a lot of humble pie, and then resume my day.
Enjoy working with the 2010%%20of your portfolio; just don’t go beyond that Keep the other 90% really boring. You’ll make a lot more money.
Advanced Tip: If you are extremely intelligent, you could use the money left over from 2010 to invest in yourself rather than buying individual stocks, which have a very low chance of success. If you invest in a business or your career, you might get even bigger returns. Additionally, when you put money into yourself, your gains are limited to 10% of what you make between 2010 and 15%. Instead, you could earn 1,000% or more.
I’m a huge fan of automating investments. Navigate to your investment accounts and designate a monthly automatic transfer amount.
Automating achieves three purposes.
First, you are not trying to time the market. If you invest every month, you can average your gains and losses. It also makes for smoother returns. Even in a bull market, your monthly investments increase your portfolio. When the market is down, you are purchasing stocks at a discount to their eventual value.
Second, you don’t forget to actually invest. You are genuinely adopting the “set it and forget it” approach when you set up automatic investments. You’re not relying on yourself to invest. We all forget to do things. When it comes to investing, procrastination will cost you more in returns than any recession could. Rather than depending on your memory or willpower, automate it so you never have to worry about it again.
Third, you can spend freely on the rest. It never feels as though you had the money in the first place when you set up an automatic transfer to happen as soon as you get paid. Establish transfers for your savings and investments, budget enough for large expenses like a mortgage or rent, and then spend the remaining funds at will until the following month. After putting up the automatic investment and doing the hard work of taking care of your future, go enjoy your rich life. Investing automatically lets you take advantage of the present while safeguarding your future. You can have it all.
Once you’ve successfully saved enough money (and then some!) to retire, it’s important to find opportunities to enjoy the fruits of your labor. In episode 77 of my podcast, we meet a couple that has a huge nest egg, but can’t bring themselves to spend it.