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Imaduck posted:Don't fall for the hype; the stock market is not a way to get rich quick. Study after study have found that no trader does better than average in the long term. If you have money to invest and want to make a long term investment in something diversified to save for retirement, it's great. If you want to turn a little money into a lot of money quickly, it's basically no better than playing roulette. This is all correct but it's worth pointing out that not beating "the average" is still very good - the average will always, in the long term, outpace inflation. It will certainly beat your bank's interest rate as well. For example in Australia I bank with Westpac and my dedicated savings account gets an interest rate of 1.84%. Over the past five years, the value of shares in Westpac increased by 49%. This holds true for almost any major bank worldwide. Citibank? Up 94%. Barclays? Up 12.1%. Bank of America? Up 271%. Scotiabank? Up 51%. I don't mean you should shove every cent you have into financial stocks, it's just a useful illustration of the divide between growth in cash savings and growth in the stock market. I know people who are hugely diligent savers and have enormous amounts of money just sitting in a savings account, who would never dream of buying shares because they just don't understand how they work or they think it's too volatile. If you're managing to put away any savings at all, you should absolutely be putting 10-30% of them into index funds and bluechips. Of course as Imaduck points out, that's a slow and steady plan, not a get rich quick scheme. If I put $1000 into Westpac shares five years ago they'd only be worth $1490 today, or an extra $490, which is the amount of money I can make by picking up about ten hours of overtime at my office job. What you earn will always be more important than how you invest your savings, but how you invest your savings is still enormously important in the long run and - in my experience - is bafflingly overlooked by a lot of people.
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Dec 4, 2016 23:59
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| # ¿ May 2, 2024 14:49 |
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