If you log on to Twitter or Youtube today, you’ll see an endless amount of people raving on about NFTs or cryptocurrency. Most will have you believe that the stock market is no longer a great option to invest your money in today. They’re wrong. The stock market has been around for over 100 years with a proven track record of building wealth. In news today, you’ll see headlines how the markets are being rattled by international conflicts and an all time high inflation rate.
Let’s take a look at the chart below to see how the market has been performing in the last 50 years.
Dow Jones – DJIA – 50 Year Historical Chart
Between 1960 and 1980, the country suffered many crises including the Vietnam War, the assassination of a president, and high levels of inflation. The markets did not perform very well in this era and if you were a current investor during this time period, you might have believed it as well. What most people forget to consider is the fact that the markets never stop moving and they always come back up. From 1980 to 2000, we saw one of the best bull runs the market has seen. During this time period, you would’ve missed out on some big returns if you did not invest your money.
No one knows what part of the timeline our current economy stands on. If you invested your money in 1960, you would’ve thought the stock market was the biggest money waster man has ever invented. If you had invested in 1980, you were probably wondering why everyone isn’t doing it since you were seeing some high returns on your money. The point I’m trying to make here is that no one knows what part of the graph we stand on or which way the line will go.
I invest my money for the long run. I understand the markets frequently go up and often times move down. When money is lost, I don’t panic and sell off my entire portfolio. I continue to buy more shares but at a discount price. I would also have to share that a big portion of my portfolio are a mix of index and dividend ETFs. Investing is not risk free like any other investment but it is a great wealth building vehicle compared to letting my money sit in the bank collecting dust.
So why do I still invest in the stock market and not go all into cryptocurrency? Some digital assets like Bitcoin and Dogecoin have literally created millionaires overnight. It’s hard not to take a chance on these assets yourself in the hopes of making some big returns as well. So when a community on reddit like Wallstreetbets is pumping up AMC, Gamestop, or Dogecoin why not jump in and make some gains right? Because that is no longer investing and you’ve officially joined the gambling club like everyone else.
You’re not an investor just because you download the Robinhood app, make your first $100 dollar deposit, and purchase 0.000000000000001 bitcoin. It’s as if you pick up a basketball, shoot around for an hour and then call yourself a basketball player. It takes times and consistent efforts to develop the skills needed to become a smart investor.
I am in no way saying that you shouldn’t invest in crypto, I allocated a small portion of it in my portfolio as well for the long-term. I just don’t believe you should go make up 90% of your portfolio in crypto. If I really wanted to make some gains in crypto, I would day trade it but continually monitor its progress on day to day schedule.
Making money in the stock market is like cooking eggs. It’s easy to cook eggs but everyone has their own recipes. It’s the same with investing your money. What could work for one person might be entirely different for another. People have varying risk tolerances with different goals in mind. Some individuals would love to make high returns in a week while others prefer a slow and steady way to the pot of gold.
Don’t mix up your goals with someone who has $100k to spend and goes all into cryptocurrency. They might be able to afford the loss but you might not. It’s no wonder when their money returns a whooping 15% in one month, they’re telling everyone online that crypto is the future and you’re silly for being part of it.
The reality is no one knows for sure how this technology will play out in the future. I know for a fact that in the last 100 years, the stock market has existed. I’m not 100% sure if the current crypto market we see today will be here for the next 100 years. I see some regulated version of the crypto market in the future with many digital assets but to say that bitcoin will still be relevant in the next 100 years is difficult to predict. Even some of the biggest companies in the world did not last 100 years in the stock market.
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This article first appeared at: https://www.thesimplestockmarket.com/why-i-continue-to-invest/
Read more by Ricardo Gutierrez at https://www.thesimplestockmarket.com/