With No Experience How Anyone Can Profit Off Of The Stock Market Guaranteed
By: Mia Gradelski
Tags: Money, Stock Market, Wealth, Business, Finance

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Since investing became a popular passive income source to help individuals maximize their returns after realizing that having a full-time job will never make you rich, there has always been this stereotype that you have to either major in finance and be a quant nerd or be a trust fund baby with the help of your parents. But with only half of U.S. households own some sort of stock in the market, mainly for retirement purposes, we need to find an easier reason to destigmatize that investing is only for the privileged or IVY grads.

Part of the reason why most Americans are skeptical of investing isn’t due to their lack of knowledge or assumptions but rather where the knowledge comes from. Since we aren’t taught financial, digital literacy, or mental health in school it is difficult to entice those that believe there are only proven strategies that leaders of the business world can master when it comes to building wealth in the markets.

On my own investing journey, I’ve made but most importantly learned the most from my mistakes down this windy road testing out retail investing apps and lending. I’m more than thankful for these mistakes or else I would’ve had to have gone through the hard ache when I’m more risk-averse and have a shorter time span on Earth. The best lessons are taught through experience. We all know that and it is taught in every field but when it comes to the stock market, there is only one strategy that you really need to know to consistently make money and stay out of trouble.

Sure, you could read the Buffet philosophies, self-help guides, and tinker with algorithms to predict the future, but as we’ve seen in 2020, the future is unpredictable and so the only thing that is certain is uncertainty and you must ride with it. What differentiates a smart investor versus a lousy one is that smart ones don’t wait for consensus that the market is down to start making moves on their trades. At the start of March when the V-shaped collapse kicked in, if you were hungry and starting buying instead of being fearful selling like everyone else, you would have made a handsome return by now that no one thought could be possible.

The economy and the stock market are two different things and separating those two frameworks are key to understanding that just becuase the world is in turmoil, doesn’t mean it is the worst time to make money. In fact, it is usually the best. The second reason that differentiates a good versus poor investor is that they are impatient during the short term and patient during the long term, where real gains happen. If you want to play the short-term win or lose game, might as well go to Vegas and gamble. You will have more fun and get wasted in the process. Being diligent, patient and hands-off are the best traits for any investor. Doesn’t seem typical but with personal finance, it is your best friend when it comes to managing your portfolio.

There is no reason for anyone not to take advantage of the stock market. There is an average of 7 billion shares traded each day making people richer without needing to be fanatic day traders, attempting to time the market or be in the risky boat with options and buy on borrowed money which no one has time or the energy for.

All it takes is a bundle of stocks to start seeing returns, one won’t get you places, unless it is a timeless classic such as Coke or Gold. If you are tight on budget, pick a stock that makes sense, you use, has positive historic cash flow, blue-chip, non-cyclical defensive stock and looks profitable in the future. The earlier the better so what are you waiting for?

Let’s start with the fundamentals that everyone should know that require no experience, technical, or financial background to understand and grasp. If I did this at 16, anyone can. Let’s get into it.

Over Time, The Market Will Always Be a Bull Market

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If you are patient with anything and let it go, your money will bring you more positive returns than keeping a close eye on everything all the time. The S&P 500’s performance over the last 90 years tracks the performance of the 500 biggest companies in the US and is used an indicator for the stock market’s health as a whole. There will always be recessions and bearish periods in history, but overall the trend shows the market value rises. Remember to distinguish the difference between individual stocks and the market. Stocks by themselves are much more volatile and will show periods in the red and green much more than the index as a whole. That’s why index funds which are portfolios, groups of stocks that track the index as a whole are much more stable than individual stocks that can go bankrupt anytime. This has historically yielded (earnings on dividends) about a 10% annualized return to date.

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Finance Is Personal

What works for someone else may not for you. There are a variety of factors that play into what trades are best for you to maximize a return. Everything from your age, life expectancy, budget, risk tolerance, what you use, household income, net worth, current job, and experience, the most common factors that play into every investor’s considerations when attempting to make the best trades to earn more income. When it comes to the management, there are some who prefer to spend high fees on brokers to manage it on their behalf valuing opportunity cost. While others like myself don’t mind spending a couple of hours per year, yeah, that’s it monitoring their portfolios, testing out the market themselves and making sure everything is going the way they like. And your last resort is a Robo-advisor, very similar to a real broker but with lower fees and commissions as it is a robot making algorithmic predictions for you not a real human behind a desk that needs a salary. See what works best for you because you know yourself best. Don’t let a broker persuade you into working with them just so they can make a nice juicy bonus and you end up losing your money based on a poor, not thought-out decision.

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Time is of the Essence

The earlier you start investing, the more opportunities arise. Not only you make more dough, but you can also take more risk which yields even more returns in the future. When you are young, the best avenues you can take in investing is opening up a ROTH IRA, a tax-free account that you can contribute up to $6k per year to and through its magical power of compound interest, it can easily make you a millionaire by retirement. Other investments that pay off include, investing in yourself (learning personal finance), starting a company when you are young since you have fewer responsibilities of taking care of a family or full-time job as a student, and lastly, building up your credit score through managing your budget responsibly so you are eligible for better and lower mortgage rates to earn even more passive income through a possible rental property one day. All of these actions can really help you get ahead and level up your returns for the future but just because you need to hop on it doesn’t mean you should rush. Take things slowly, talk with an advisor or consult someone, not a sales guy with a different perspective because it is your money on the line after all.

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Alternative Investments Aren’t Hidden

There is a lot of jargon and options tossed around with investing but the beauty about it also means that you aren’t beholden to only the classic investments of stocks, bonds, and cash, what a majority of investors seem to cash in on. Expand your horizons for more illiquid options that can maximize your returns. According to the endowment money that universities trade upon, they are all invested in international stocks, dividends, P2P lending, private equity, hedge funds, international stocks, BitCoin, commodities, and real estate to name a few. These are all great opportunities that seem to outpace traditional stocks. Diversify your portfolio so you aren’t stuck in 1 place, the worst thing you could do as an investor. You don’t need much money, you just need to be open to investing in more places and be a little uncomfortable to see higher returns with stability over time.

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Don’t Go Crazy Nor Make That Much Fun

There is no need to become a day trader or fanatic about how your stocks are performing. That is no way to live nor make money. What if every time you posted something on social media, you checked how many likes you got? Only those who want to waste time do that. Do you think that Bezos checks how Amazon stock is performing every minute of the day? He would get no work done nor it isn’t representative of how Amazon is really doing overtime. Closely every day Amazon looks terrible but overall, it is the highest market cap company. The stock market is just speculation and the future is already built into the market. If you want to have fun with your money, gamble and lose it all. This isn’t a game, it is your hard-earned money. When you trade, you are trading for 3–7 months down the road. Crazy right? So look ahead and keep your distance away from becoming addicted to your gains and losses because, at the end of a set of time, it will all even out and go up guaranteed.