Back to Blog
The stock market is not as complicated as everyone makes it out to be. In fact, someone can invest into an ETF like VTI and get exposed to the entire stock market without having to do anything else. Making money in the stock market isn't that hard either. Often, people tell me that making money through stocks is too complicated and that they can't figure it out. The problem is that people do not realize what the stock market actually does.
The stock market is not designed to get people rich overnight. It's not designed to turn a few dollars into millions. That is not how the market operates. The market goes up around 10% a year. If one invests 100 dollars into the market, they will, on average, make 10. That is how the stock market actually works.
To take advantage of this, one needs patience. a 10% return per year over a long period of time can build wealth. If one did invest 100 dollars into the market and got a 10% return they would make 10 dollars. The next year, however, they would make $11 as 110 dollars is what went up that year. Now they have $121 going up 10%. Now, if they left that money in the market and never put a single dollar more into it for 40 years, they would have $5,373. Through 40 years of compounding at 10%, 100 dollars became $5,373. That is incredible.
Compound interest is absolutely powerful. Everyone wants to find a way to turn dollars into millions through the stock market. Unfortunately, this strategy usually leaves them with absolutely nothing. If one invests into low risk index funds that go up, on average, 10% a year. they put themselves on a much better path to financial freedom.
If one can start investing at 200 bucks a month starting at 20 years old, they can retire at 65 with over a million dollars. That is the power of 10%.
Follow us on social media down below.
Join our stock picker at patreon.com/financebycwt.