To some people the stock market is an endlessly exciting place where fortune or ruin can be made. However, to the vast majority of people it is a rather boring slog to learn about. Many view it as something only for business nerds to really care about. It is easy to tune out the person at the cocktail party who starts to talk about his stock investments in favor of thinking about that cute dog video you saw on YouTube. However, you should try to pay attention to learning how to invest for a few key reasons.
1. Investing Is The Easiest Way To Make Your Money Work For You
There are several ways to get your money working for you. You can buy up real estate, start your own business, even buy and sell things online. However, the easiest and least frictional way to get your money to work for you is to learn how to trade stock.
Stocks are easy to buy and sell, and they are built to gain in value over time. You purchase some today in the hopes of selling it at a higher price in the future. If you choose wisely, that hope can become a reality in no time.
2. There Are A Lot More Profits To Be Made While You Are Young
The younger you are, the more profits are on the table for you with your investments at a later date. Compound interest helps to grow out the accounts of the young even more than those who get a later start on things. While there is no age that is “too old” to get started, the sooner that you can put your chips down on the table the better. You want to give your investments time to grow and mature. They can only do this if you have plenty of years of runway stretched out before you.
3. There Is A Lot Of Life Ahead
In an article about why millennials need to invest in stocks, Kiplinger reminds us all that the younger generation has a long life ahead of them in all likelihood. Modern medicine just continues to get better as does the standard of living for most people.
Those who might have expected to pass away in their mid-60’s to late 70’s may now enjoy a lifespan that runs into their nineties or even later. That is a long time for one to plan their financial life around. It is even possible that you will be alive for decades beyond the time that you are still able to work. If that becomes a reality for you, then you will want to have a lot of money saved up for that eventuality.
4. Bonds Do Not Perform As Stocks Do
You have a serious problem on your hands if you think that you can invest in alternatives like savings bonds and be just fine. The truth is you will not be just fine. Perhaps you grandparents could get away with this, but don’t even think about it if you are a millennial.
The New York Times points out that the problem with bonds is that they do not pay nearly what they used to. Older generations could reliably count on a steady and decent return from bonds. These days bonds are yielding a lot less interest than they used to, and some would suggest that they have also gotten riskier.
Stocks are the only place where there is still strong returns to be found. People who put money in stocks may have some bad years here and there, but overall they tend to come out well ahead of both inflation and those in invest in bonds today.
5. Offset Wage Stagnation
Do you feel like you have not gotten a raise in forever? That may actually be closer to the truth than you realize. A lot of people have not seen an increase in their paycheck in a very long time. This hard truth means that investors must look for ways to offset that stagnation. One way to do so is to have some solid returns on stock investments.
Putting away at least a little of your money right now into stocks is a good way to give yourself a raise so to speak. You can gain some return on those investments and perhaps see that as your best way to gain a little more into your bank account.