So many people are scared of the word investing. A lot believe investment is for only the rich, some believe it is a way of taking their money from them, few people have the mindset that investing is complicated, while others believe that the market is for gamblers.
Truthfully, investing in stocks is like a gamble but this time around it is a calculated risk and it is advisable to invest using index funds where there is a low profit and low risk. Never mistake an investment for a get rich quick scheme. In investing, you need to understand that it is a gradual process of calculated steps.
Stocks are percentage fractions of a company that anyone can buy so owning that portion of the company. People have the choice to buy a single stock or invest using index fund.
Index fund is the investing in not just one stock but several stocks. You’re actually putting a small chunk of money into many stocks in a market equally, thereby reducing investment risks. Putting money into an index fund means your money will grow with the market or drop with the market. If a company goes bankrupt, your entire funds will not be lost. When choosing index funds, it saves you from the stress of picking the right stock and the risk of losing your entire funds if the stock crashes.
If you invest in S&P 500, it is believed that your money would have grown an average of 10% per year, although there are years when it could give a 20-30% growth while for some years it remain the same. This is because you have invested in several stocks which compliment one another. Never forget that no one can predict a bull or bear but investing for a long term guarantees great profit