Why Stocks?
Stocks, more specifically the S&P 500 has returned approximately 10.5% on average since 1926. These are returns on your money without having to lift a single muscle. To me that’s pretty dang good, even while sleeping your money is making you money. Investing a small amount into the S&P 500 every month and after some years, (depending on how much you invest) your portfolio could very well match your income or even exceed it! VTSAX low cost index fund is a perfect fund to purchase to create wealth, and it has a low fee of 0.04%. High fees when buying and selling stocks will really kill your profits, and short term profits are taxed higher as well. When it comes to investing, I am a firm believer in long term investing. Too many people have a gamblers mentality when it comes to money. We are not gamblers… we are investors.
Starting small today could lead to financial independence. $500 a month invested for 30 years would turn into a little bit over a million dollars. The sooner you start the better. We want stocks in our portfolio due to higher returns, now with higher returns there is also higher risk for drawdown and corrections in the market. Some corrections in the past have been drawdowns of even 48 percent! As we saw in the 2008-2009 crash. Market corrections are great buying opportunities since the market will always revert back to it’s original prices and then exceed them. Good money management and being flexible with spending is key. Over the long term there is great deal of money to be made but be prepared for market corrections. When market corrections come, just see it as a storm passing by, it is not permanent. Buy more and continue on.
Here is a link to the S&P’s historical returns for the last 100 years.