Let’s talk money, shall we? There is a financial epidemic that is taking hold of a certain type of people. It’s not so much a problem with the rich nor is it a problem with the poor. This epidemic is after a certain type of victim: the middle class.
The advent of electronic trading has opened up a new portal for the everyday person. I’m talking about the person who has a full time job, works hard to earn a reasonable living but isn’t exactly excited about the amount of money they’re making. It’s simply not enough for the lifestyle that they want but their current job doesn’t give them the option of being in the high earning category.
These people do the right thing. They start a savings account and rather than spending every dime of their check, they start to save. Over time, that large amount of money begins to stare them in the face and they take the plunge in to the world of investing. These same people heard that others were getting rich by investing in the stock market. They smell the sweet scent of freedom and dive in.
Now that we know the type of person we’re dealing with, let’s get down to it. Let’s talk money. The epidemic is this: the stock market is stealing peoples’ savings at an alarming rate. It’s not because the stock market is rigged, it’s because these well meaning people are uninformed and uneducated.
The stock market isn’t exactly a fast track to riches. Why not do the same thing with medicine? Medical specialists are making a lot of money. You don’t have any formal training as a specialist but why not take the plunge and go for the millions? Start practicing medicine? You’ll need a license to do it formally but you could hand out advice.
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Of course that doesn’t make sense. If you agree that taking the plunge and being a for hire specialist, why not apply the same logic to the stock market? You don’t have any formal training so why do so many people think they will strike it rich with no training?
Let’s do it. Let’s talk money. More money! It’s possible for the outsider to make money in the stock market, though. It involves being safe. Invest with the idea of making money over time. Do a lot of reading, take a class or two, learn everything there is to know. It will take a lot of time, though. If you look for the companies that have a proven track record of success you will make money. Find stocks that have a dividend. That means that you are guaranteed a payout simply for holding the stock for a longer period of time.
It comes with a price, though. The price is your time. Learning enough to make money is going to take at least an hour per week for every stock that you own. If you want five stocks, that’s at least five hours per week just learning about those stocks.
The people who lose the money are the ones who invest in risky stocks with no training. These are the people that talk about penny stocks, startup companies, and things called levered etfs. These are stocks for the pros. Those with a lot of training and a team of research professionals. Unless you have both of those, stay away.
If that’s not enough, let’s talk money. Smart money! If you don’t believe me, believe the statistics. The stats are clear. Those that chase the fast gains may win today but not over time. You may win the battle but you will lose the war. The statistics prove it.
There’s money to be made as long as you’re in it for the long haul. No getting rich quick! It rarely happens. Let’s talk money. Not today but tomorrow. Read more entries in our let’s talk money series. Check out our No hassle portfolio for stocks that represent a responsible investing approach. Everybody that invests in the elementary-finance.com No Hassle Portfolio is making money. Don’t believe me. Believe the statistics. Click here to see the portfolio.