Gone are the days where people had careers for life and only depended on their salary from that job as their sole income. People used to start working for a company at a fairly young age and stay with that company for decades. And the income from this would help them support a family and build their 401(k), which was likely the only way they ever got to invest in stocks.
These days, we’re more likely to make a career change anywhere between three and seven times throughout our lives. But more importantly, we’re also more likely to have a side hustle. The idea of having multiple streams of income is becoming more and more prevalent. Some turn a hobby or passion into a way to earn money. Some work a second job. And some invest.
Investing. If this word makes you think of buying and selling stock to make some money now, then stop thinking. If it makes you think of people going crazy on Dogecoin then definitely stop thinking. Buying and selling stock to make money in the short term is actually trading.
Can you make money from trading stocks or stock options? Of course you can, but we’re not about short-term gains here at WealthStack. We’re more interested in creating wealth and keeping it. The thing with trading is that you have to have superior knowledge of the short term.
How confident are you in your belief that your stock of choice will do what you want it to do over the next hour? Or day or week? Andrew Glaze, founder and CEO of WealthStack, believes that getting rich quickly is a good way to get poor quickly while getting rich long term is a good way to get rich. Periodt.
Why Should You Invest in Stocks?
We’ve got more than five reasons why, but here are some of the most compelling. Drop a comment below if you can think of other reasons that motivate you to invest in the stock market.
1. Compound Interest
If you have some money in your checking account or your savings account, your return is likely to be anything up to 1%. Any amount of interest is better than no interest but why would anyone want 1% if they could have 10%?
The average annual return on investment in the stock market is 10%. Now imagine if you left your investment over a long period of time. That 10% really adds up. This is the beauty of compound interest. It’s even more beautiful if you can add a little to the original investment regularly.
As Jamaicans say, “every mickle mek a muckle”. A lot of small contributions equate to a large amount. Compound interest can see $1,000 grow to over $12,000 in ten years with regular monthly contributions of $50.
It’s important to note that a return of 10% is not guaranteed as investing does come with some risk. But it is equally important to point out that returns of 30-40% are also possible depending on the investment.
You’re probably wondering how you’re supposed to know which stocks to invest in to get decent returns. Don’t worry. We got you. WealthStack will actually curate a list of stocks to remove the guesswork for you. And we’ve committed to sharing some of our revenue with our users. 10% of the revenue earned from partnerships with financial institutions will be redirected to the brokerage accounts of our users. That’s even more money for you to invest with!
2. Investing in Stocks = Passive Income
Working for your money is admirable. Creating wealth with minimal effort is just sensible. There are those who live by the mantra ‘“go hard or go home.” Then there are others who strongly advocate for a good work-life balance.
Wouldn’t you like to wake up one day knowing your net worth is higher than it was five years ago and you didn’t have to punch a clock for it? The pandemic has shaken things up professionally and financially for many of us. A lot of people who thought they had job security and financial security received a rather unpleasant jolt this past year.
So many of us have now come to realise the utter importance of two things: having multiple income streams and having time to spend with those we love. Investing is a way to kill those two birds with one stone.
3. You Can Own Piece of a Company You Love
Investing doesn’t have to come from purely financial motivation. Maybe you just want to have a slice of the pie of a company you love. Imagine technically being an owner in the entity that owns Baskin Robbins!
Okay, so maybe it wouldn’t mean having a lifetime supply of ice cream but there is a certain satisfaction to be had from knowing that you are part owner of a company you love or admire (whatever the reason). That also comes with the potential to vote on certain issues. As part owner in a company you have the right, depending on the type of stock you own, to vote on issues like mergers and hiring a board of directors.
4. It Can Be More Lucrative Than Cash
Let’s say you have $500 in cash. Or maybe this money is in your checking account. This $500 won’t be worth the same in a few years as it is now. Thank you, inflation. The things you can buy for $500 now will cost you more in a few years. The spending power of that cash will be diminished. But the returns you get from investing in stock can be inflation-beating, which will render your $500 much more useful in a few years than if you had kept it in cash.
5. Lower Starting Capital than Other Investment Options
It is entirely possible to start investing with less than $100. If you want to make a start but you don’t have much spare cash to do so, you can start with a small amount. Remember ‘every mickle mek a muckle’?
Small amounts add up over time. But if we think about other investment options, how many of them can you get involved with using just $100? Some other investment options include real estate and investing in a business. But which of those can you do with $100? The average price of a home is $408,800. With an FHA loan, you’d need a minimum down payment of 3.5%. That’s around $14,000 for an average-priced home. That’s quite a step up from $100.
Investing in Stocks Isn’t Just for Rich People
There’s the saying that “it takes money to make money.” And that is definitely true. No one can start a business without having to spend on products or various systems/software (in the case of a service-based business). No one can invest in real estate or the stock market without first having something to invest.
But we’ve ascertained that you can start investing with a small amount of money. A lot of rich people grow their wealth due to their ownership of stock but you don’t have to be a millionaire to start. Long-term investment in the right companies will help you generate wealth. There are no ifs, ands or buts here.
Since the inception of the stock market over 100 years ago, the general trend has been up. With this general upward trend, your original investment will appreciate as long as you aren’t looking to get rich quick.
If you want to learn more about investing before you take the leap, there are loads of free resources on our website. You can also download the WealthStack app for free on the App Store or on Google Play.