Do you invest in the stock market?
Buying and selling stocks... is it a legitimate way of making money? Or is it akin to gambling?
Stock investing is a legitimate way of investment across the world. However the risks are high and contrary to popular belief, it is not a get rich scheme. One needs to understand stock markets and the methods well before investing. In gambling, luck plays a role, however in stock market, cautious investing with good money management are important.
It is very close to gambling? You just can not go and invest in market, this is just like suicide.
In the long run, buying and holding stocks is a legitimate way of making money. In fact, if you hold stocks for decades, they usually offer the best rate of return of just about any investment. The stock market goes up in the long run because it mirrors economic growth that drives earnings increases in the long run. Keep in mind that more than half of the stock market gains in the long run are from dividends. Even when the stock market averages are flat for a period of time, those invested in dividend paying stocks are making money.
On a shorter term basis, trading stocks is just gambling. Because nobody knows for sure where the stock market is going in a given week or month.
of course it is legitimate but you would need to do your own research and know which stocks are worth buying.
It is legal so I guess that makes it legitimate. But, there is a difference between investing (finding good companies that you believe in and understand, putting money in for the long term) and trading (finding companies whose stock prices are moving in one direction or another and just trying to jump on to the price movement to earn a few bucks) Both use the same medium (stock market) to attempt to make investment gains.
The trading, in my mind, is a little more like gambling. But, so can investing in the market in the sense that there is risk involved. When traders clash with investors, the market can really seem like gambling. I am thinking of the "flash crash" of a few years ago.
It is absolutely akin to gambling and should only be considered when someone has excess money. Excess money occurs only after the following has taken place and in this order (1) all credit card debts have been satisfied (2) you own your own home (3) you are contributing the maximum amount to your 401 (k) or IRA plan (4) you have paid your mortgage off in your home.
Also, by following the four steps above you get a whopping guaranteed return on your money - as opposed to no guaranteed return when buying/selling stocks. Credit card debts? High rate of interest with no tax deduction. Stop credit card debts and that equates to an effective rate of return in the 20% range with zero risk.
Own your own home? Yes, we all understand what has happened to housing prices. But do you think paying rent is better. Over the course of a lifetime, if you do not own your own home, you will be paying someone else more in rent than you would be paying in a mortgage. And, if you rent, you will own nothing at the end.
401 K or IRA? You do that for three reasons. (1) You get an immediate tax deduction (2) The money you earn on your contributions is tax deferred and (3) When you retire you most likely will need that additional income.
Pay off your mortgage? Most people don't understand why this is a better investment than buying/selling stocks. I'll tell you why. No risk - guaranteed return. You are in essence paying yourself and in the end you will own your home free and clear. Just remember - not having to pay someone else a mortgage is the same thing as earning the money. This is often overlooked.
But what if you have met all the criteria above and you still have excess income that you could invest. In that case, check out my hub: Investment Strategy - Earn 20% Now
and do it the right way.
by Arian Won 11 years ago
I know the stock market is bad, but I'd like to start investing as I know there are a lot of great bargains out there. So if anyone can recommend any published books that they have read themselves, I would appreciate it.
by HarshitG 7 years ago
Hey,As many would be aware of that stock market is one of better way to invest and reap benefits from . So what i want to know is do you guys really invest in Stock market or stick with Fixed deposits and bank interest ratesHarshit
by Zara Rasul 5 years ago
Is it possible to invest as little as $20 in the stock market?How does one invest a small amount regularly in the US stock market? What is the best way to do this?
by Persson 8 years ago
I would like to start investing a little in the stock market. Use say about 1k. Any starting ideas?
by Kylar Williams 2 years ago
How do I invest in the stock market?I want to learn how to invest in the stock market and what are the best stocks to buy.
by jomine 8 years ago
we might be able to invest in different sectors, but how can we predict which industry or which sector will be going up?what are the indicators to say the stock market is not going to crash or what are the indicators to say it is only in a correction and not recession? minimum are there any...
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