Have you ever wondered how wealthy people appear to grow their money with little to no effort? It may seem like magic, but in reality, the answer is very simple.
While there are many different types of investments you can choose from, the stock market is one of the best ways to grow your money over the long term. The stock market has an average return of 10% per year. For example, if you invested $1,000 in the stock market for 25 years and didn’t invest another dollar, you would have over $10,800 after 25 years. If you had invested more money during the 25 years, your returns would have been even more remarkable.
Although investing can seem complicated, it’s relatively easy. Here are four simple steps you can take to start investing today.
Step 1: First, decide how much money you want to invest. Since investing the stock market is risky, only invest money that you’re comfortable losing. Investing works much better when you invest for the long term (5+ years).
Step 2: Pick a brokerage. There are several brokerages you can choose from, such as Robinhood, Charles Schwab, and Fidelity. Many of these brokerages offer commission-free stock trading, a low beginning deposit, and plenty of research reports.
Step 3: Choose which type of stock investment you want. Popular first investments include individual stocks, mutual funds, and ETFs. If you desire to invest in a wide variety of stocks and diversify your risk, low-cost index mutual funds or ETFs are the way to go. If you want to select individual stocks, they offer increased profit potential, though they are typically riskier than mutual funds and ETFs.
Step 4: Finally, sit back and watch your money grow! It’s that simple. The stock market will fluctuate as time goes on, but don’t worry about this. As long as you stay patient and disciplined, investing is a fantastic way to grow your wealth.
About the author
I write about personal finance, wealth-building, and the stock market. I am a freshman at the University of Florida.
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