This is the perfect moment for this message. The Corona virus is taking bites out of the world economy and the stock markets are reflecting the global panic. And for good reasons sales of goods and services will decline as more people stay home and China quarantines entire cities.
The market has never before dropped more than 1,000 points in a single day. But that day has come.
This episode of panic goes to show just how intertwined the global economy has become. The United States relies on China and China relies on the Unite States.
First, you should be invested in the stock market.
If you are not invested in the market that you are losing money. There are all kinds of assets you can invest in. It can be in stocks, bonds, commodities. But you need to have skin the game
If you leave your money sitting in your bank it was be worth less and less each year due to inflation.
Even investing in land we be worth more than just letting your money sit there in the bank.
Now do start yelling at me. I know that we all need money for a lot of things.
We need cash to get things accomplished
Right now I am saving money to build a new rental house. I already own the lot. I bought the lot at a rock bottom price and everyone told me I was crazy. But it has appreciated nicely and soon it will be a gorgeous dwelling for a nice family to live. And little do they know that it will also be a part of history as one of the building blocks of my business.
I will have a successful business with lots of employees one day. Its not matter of if, but when.
Back to the market. I love the stock market. There is nothing like it. You can buy into the Ford Motor Company and get paid for life. You didnt have to lift a finger and come up with a new idea or product or new class of product. You just went to your online discount broker, which you should have, bought a few shares and now you get to collect dividends for the rest of your life.
And if management does their job and grows the business revenue and net income the shares will appreciate and you get the benefit of capital gains, share appreciation.
My current fave stocks are:
But Collin, how does the stock market never go down? Look at 2001 and 2008. The market took serious stumbles. People lost their homes and their jobs. The DJIA dropped as low 6,547.05, according to CNNmoney. Check out the article here. Today that market sits at 26,440.48. The market has quadrupled in a little over a decade.
The stock market has been around a long time. Not as long as religion or anything. But the IS market has been around since 1800s. Thats more than a century. It has gone being worth $0 to today it is worth $30 trillion and growing.
Why does it always increase. Because there is a constant stream of new business that are coming online in the market. IPOs.
It does not matter if these business are good or bad. Investors believe in them and are putting their money into. Some will win big: Apple, Walmart. Some will lose: Sears…
But the biggest winner is the market. If you own the entire market over the past century it has averaged a 12% annual increase.
Once upon a time you had to be rich to invest and go through a stock broker and they took a fee. Today you just have to download an App. It has never been easier.
I implore you, if not for yourself then for your chuldren and grandchildren: Invest.
Invest all the time. The market will continue to grow and you will be riding that wave.
Just buy a low cost index fun.
These are just 2 Vanguard index funds. Vanguard and Fidelity have the lowest fees. There are a million different index funds out there. Research did ones and choose one that you like.
You can also get good at picking stock, but do it at your own peril. Many have tried and failed to beat the market.
I still do it. I like support companies I love and vote with my dollars.
But that is the not thw main reason you should be invested in the market. You should primarily choose stocks that are the best value and will give you the best return for your money. So if you a business like Netflix continuing to grow at a rapid pace, then jump on the bandwagon and ride it up. But remember that you want to be a long term investor.
You dont want your money to only last a year or 5. You need money for decades. For healthcare, to buy a home, buy a car, send kids to college, travel in retirement, buy that boat you have always wanted.
You can become rich without the stock market, but it is a more difficult path. Businesses can be tough and demanding of your time and effort. But they do work as cash generators.
Most of the rich people we see and hear about got their through the stock market. All of the richest people in the world got their through creating a business and then owning the business stock. Bezos, Gates, Buffet, Mao. All got their by owning stock in the market and then allowing that stock to appreciate in value.
Look at the Waltons. Sam Walton created an empire that will pay his heirs for generations. You have just as many resources as he did. He was no smarter than you are. He was more determined and took more risks. He even went bankrupt and did not give up.
This is not rocket science. Don’t try and recreate the wheel.
Use the tools you already have.
Follow the path that other successful people have taken.
Keep making smart choices over time.
Don’t go into personal debt.
Pay off your student debt or mortgage debt as soon as possible.
You will be rich before you know it. You need to be rich. You can make a bigger impact if you are rich.
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