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- Does investing long term in the stock market mean buying now and selling years later for profit? (4)
- where can i start to learn about the stock market? like buying, selling and making profit? (2)
- Which company gains the most in the stock market? and will you profit if you invest in it? (3)
- How does the stock market work? I would like to invest a small amount in a company and see if i get any profit (7)
- If you invest in the stock market and you make profit, you pay taxes but …? (6)
- Would now be a good time to invest in stock for long term? (6)
- What is a good long term stock or stocks, that I can invest in for my family? (6)
- I would like to invest some money in stock. What company would be the best ? I expect 20% profit? (13)
- What are 3 good stocks to invest $100,000 USD all in at once for a short period term with the most profit.? (4)
- AS of 4/15/08 what are some good stocks to invest in for a profit – I am doing this for the stock market game? (8)
- Are there any books that educate you on how to invest in the stock market, and make a profit? (5)
- If you invest in a company on the stock market and own stock. Do you get any kind of profit sharing.? (8)
- Is there any way to invest in the stock market while guaranteeing profit? (11)
- What would be other ways to invest money and make a profit other than the stock market? (2)
- 5 Tips For Long Term Success in the Stock Market (0)
- How good an investment is buying stock in North American car companies over the long term? (0)
- How to decide what business to invest in on the stock market? (8)
- an economy people invest money into a privite company in hope of making a profit? (1)
- What is the best stock to invest money in and earn some profit on it? (8)
- I’ve got $5000 to invest in the stock market? (6)
Tagged as: Buying, House, Invest, It's, like, long, Market, most, People, profit, stock, term
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For the last century, the stock market has averaged a return of 8% annually -that is why they say people who invest long term make a profit. In addition, since 1921, there has never been a 10 year period where people have lost money across that 10 year period. Can you lose money? Of course – and as people have found out, you can lose money buying a house also. The trick to investment is to diversify your holdings so your profits are not tied to one or two firms in which case, if that firm goes bankrupt, you lose.
because the value of stocks increases over time.
The idea is that the company you are investing in has a good business and competent management that are trying to add value to the company so you have a lot of talented people working towards increasing the value of your holdings. However there is risk, the average life expectancy for a company in the Fortune 500 is 40 to 50 years and the average life expectance of a company in the S&P 500 is 13 years. That means that a Fortune 500 company probably has a 2.5% chance of going out of business in a given year whereas companies in general have a 7.4% chance of going out of business in a given year. Diversification spreads the risk but the more you diversify the less potential gain that you’ll receive. Wide diversification is good if you’re uncertain of the company’s prospects and their management teams but if you are confident they have good people and a good business then there’s no need to diversify between more than 6 or 7 stocks. If you can quantify the probabilities and the returns, you can actually calculate a reasonable guideline to how much diversification is appropriate for you by assuming the log utility of wealth and evaluating the geometric mean of the outcomes.
The reason is that companies make money, produce income, value, that they either give to you as dividends or invest in to the company to grow it and make it worth more.
Why do you think homes are an investment? They don’t produce income and have high costs in taxes and maintenance. Houses depreciate. I have heard homes called piles of lumber that rot while sitting on valuable land. Living in a home is consumption, not investment. Odd we got that screwed around for a while.
If people figured in inflation, the cost of mortgage interest, and all the other costs they would find homes aren’t much of an investment and can be a cost, owned at a loss.
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