You Need Stocks And Shares
It’s impossible to create freedom if you’re not invested in stocks.
Perhaps “impossible” is too extreme.
There are people who have created their wealth and freedom without having a large chunk of their invisible net worth invested in stocks, but they are the exception.
When I say “invested in stocks” this can be in the form of a simple portfolio of index trackers, or by holding shares in listed companies directly, or the best way – a combination of both.
So why is it almost impossible to create your financial freedom without this and why is it so important to invest in stocks?
Before we dive into this topic, I did
a comprehensive deep dive three part training series on
“How to Successfully Invest in Stocks” with stock
investing expert Nic Oldert. It was recorded and you can get
the recordings, the transcripts and the supporting tools.
Go ⏩ here ⏪ to get more information and to sign up.
Back to why it’s so important to invest in stocks…
The stock market has created an enormous amount of wealth over the years.
On average, the S&P 500 — which consists of 500 of the largest U.S. publicly traded companies — has returned, on average, 8% to 12% per year (long term, over decades, depending on period).
At that rate…
A lump sum of $10,000 invested in the stock market 50 years ago would have grown into more than $380,000 today without another penny added.
Or $1,000 invested monthly for 25 years would give you almost $2 million.
Remember, when you invest in stocks (also called shares or equities), you are buying a share in a company. You become a business owner (called a shareholder) and you benefit from the increased value of the company, the profits the company makes, and the portion of its profits which it pays out in dividends.
What are the benefits of investing in stocks?
There are many benefits to investing in stocks. Seven big ones are:
- The potential to earn higher returns than other asset classes and hence achieve your freedom faster.
- The ability to protect your wealth from inflation, as stock market returns usually outpace the rate of inflation by a wide margin (and in the rapidly increasing inflationary environment that we are in right now this is super important).
- The ability to earn regular passive income from dividends.
- The ability to own a slice of great companies from around the world without leaving your house.
- The ease and low cost of buying and selling, which makes stocks a very liquid investment compared to other options like real estate.
- The ability to diversify a portfolio across many different industries, markets and geographic locations.
- The ability to start small. Thanks to $0 commissions – and the ability to buy fractional shares, now offered by many digital investment platforms – investors can begin purchasing stocks with very modest amounts of money.
Why should you start investing ASAP?
If you’re in the wealth-building stage – investing monthly – it is always a good idea to invest in stocks, even when the market is at an all-time high.
Studies have shown that what’s more important than timing the market is an investor’s time in the market.
Holding out for the right time to buy stocks can be costly, because missing out on bull runs and dividends negatively impacts returns.
Meanwhile, stocks tend to recover from corrections — declines of more than 10% — in a matter of months.
Thus, the longer an investor is in the market, the lower the probability of losing money.
Nic shows in the Successful Stock Investing
Masterclass how the volatility of stocks almost
disappears after a three year holding period.
Equally important to time in the market is picking the right stocks to buy.
Nic also demonstrates in the masterclass why “it doesn’t matter when you invest if you are investing in great companies” – and we show you how to find those great companies.
One reason to augment an ETF portfolio with a few select stocks is that a minority of stocks account for the majority of the market’s overall return.
A small number of stocks on top of a solid base of broad market index tracker is often the big needle mover for your portfolio returns.
Although as a general rule we say that “trying to time the market is a fool’s strategy” (it’s a good foundation principle), there are simple tools and rules you can use to buy your conviction stocks at better prices, which in turn increases your portfolio’s return and gets you to freedom faster.
Nic shares these tools and rules in the Stock Investing Masterclass Series.
The time to be a stock market investor is NOW.
Your money needs to be put to work and you need to know how to get it working if you ever want to live life fully on your terms.
Here’s the link to find out more about the three part Stock market Investing Masterclass Series.