The stock market is an intimidating place right now. Many investors have lost 50, 60, even 70% of their investments. Every day drops of other 100 points in the Dow have become common. Businesses are clamoring for government handouts and even many states are looking for money.
Despite this time of economic uncertainty the stock market is still the best place to invest. If history has proven anything it is that the market is incredibly resilient. Yes, it has its ups and downs, but over the long term it has always rewarded investors.
The stock market is still the best investment vehicle to grow your money and outpace inflation. Playing it
“safe” with investments outside the market only guarantee that you will not beat inflation and exposes you to inflation risk; seeing your purchasing power steadily decline.
Many people use the safety excuse for not entering the market. Their argument is that the markets are inherently risky, and they cannot afford to lose the money that they wish to invest. This excuse is just that, an excuse.
There are two primary reasons why this argument is flawed. The first is the market’s track record itself. If you are investing responsibly for the long term there is actually a very small chance of losing all your money. The market is risky and volatile over the short term- over the long term the market has consistently produced a profit.
The second flaw in that excuse is diversification. In any economic market there are industries that are doing well and those that are doing poorly. By diversifying your investments in the market you spread the risk out, ideally profiting from at least some of your investments, if not all.
Diversification can be quickly and easily achieved through purchasing mutual funds or exchange traded funds. With a single investment in these products you are purchasing a pool of investments- instant diversification.
Ultimately, an investment in the market is a statement of support for the free market. Investing in the stock market supplies capital for businesses and stimulates economic growth.
There are many reasons for investing in the stock market. There are many reasons why you should invest. The stock market can provide you with earnings that outpace inflation and can do so with relatively little risk.
Diversification can ensure safety and market exposure and is easily achieved, even with small investments, using mutual funds and exchange traded funds (ETFs).
For long term investment growth, the stock market is still the best investment vehicle.