How to Make Money With Stocks
An easy way to make money is by investing in the stock market. But the stock market can be confusing. Here’s how to make money with stocks.
Every day, 5.1 trillion dollars are traded on stock markets. For millions of people, the stock market is a crucial mechanism for profit growth. Anyone thinking about retirement, or creating a robust investment portfolio should put some money in stocks.
If you’re looking to break into the stock market, but don’t what to do, we’ve got you covered. In this guide, we’re going to show you how to make money with stocks.
ECON 101: How to Make Money with Stocks
Beginners in the stock market generally have this idea that to make money, they have to constantly be buying and selling stocks every day. While this isn’t totally incorrect – day traders can make a decent living – it isn’t the only way to make money in the stock market.
Below, we’ll give you a few different ways to invest your money.
Realistically, the best way to make money in the stock market is to play the long, but boring game. The stock market can be pretty volatile, but mutual funds help counteract this risk by balancing your portfolio.
Mutual funds are a collection of stocks and other assets that you place money into and the value of the fund grows or shrinks with the growth of the stocks and assets you have in the fund.
Because a mutual fund typically so many different stocks in them, you’re unlikely to ever lose money investing in one.
Typically, a mutual fund grows slowly and sustainably over time, and don’t fall victim to day-to-day fluctuations in the market. It’s the only surefire investment opportunity on the market.
Exchange-traded funds, or ETFs, are a lot like mutual funds in that they’re a collection of stocks.
But, ETFs are traded like individual stocks and fall prey to day-to-day price fluctuations.
They’re a good investment if you’re looking to add some medium-risk investments to your portfolio.
Index funds are also like mutual funds, but they are constructed to grow at a quicker pace. The goal is of these funds are to outperform or match a specific trading index like NASDAQ or the Dow Jones.
These are also pretty safe investments if you’re looking to make money in the stock market.
Target Date Funds
When you open a mutual fund, you have to decide upon the balance of your portfolio. Some assets, like stocks with high beta, are high risk, and others like government bonds, are low risk.
A target date fund balances your portfolio for you based upon your age. When you’re young, you want your mutual fund to favor high-risk investments, so that you can make money faster.
As you age and get closer to retirement, you want your mutual fund to rebalance in favor of more solid assets.
A target date is a good investment if you don’t want to deal with this balancing yourself.
Need More Financial Advice?
With this guide, you should now know how to make money with stocks. It may be boring, but the only surefire way to be profitable in the stock market is to take the long, slow road towards financial security.
If you’d like any more financial advice, be sure to check our Money & Finance section.