How to Make Money in Stocks?

- Three reasons to keep you from investing your money -

The highest return you can gain when investing in the stock market is the soaring average of 10% annually, still better than those in banks and other account bonds. This makes it for investors to track the market like of the S$P 500 index fund.

So what makes a lot of people hesitant in investing in the stock market, despite the 10% earning annually? Sad to say, it is fear and greed that hinder people from investing their hard earn money.

Most people don’t realize that the key to gain profit in stock is the length of time you are willing to stay in the market.  This improves your overall performance. So, it is important that you are in control of your emotions specifically – your fears and greed. Letting these emotions will just trigger you to move in and out in your game.  The worst case is losing the opportunity in getting higher annual returns.

It’s given that it’s hard to get your feet to get wet easily when doing stock investment. Time won’t just let you win in a critical market.  If you heard “time is the market” this refers to the number of years you are willing to wait to get most of your investment.  More time equates to a more opportunity for your investment to grow. If you are lucky enough, some companies increase their profit gain over time.  This means greater earnings for investors and a higher stock price.  In fact, time indicates improvement and increase in the value of earnings.

In addition, more time allows you to get more cash dividend.  If the company where you put your investment trade in and out on a daily, or weekly basis, better not expect for dividends for it is surely hard to take control of your payouts at the critical points of each month. To simplify, let’s consider this.  For the expand of 15 years through 2017, the stock market returned goes high as 9.9% annually to investors who continued their investment.

However, you can earn twice of your investment as long as you keep your investment. Not even an expert investor can predict which hours or days you’ll gain or loss.  That is why the longer you invest your money the bigger the chances you get that 10% return.  Since it is fear of loss and greed of winning that keep investors to trade in and out, which eventually lessen their chance of gaining that 10% of the annual return.  Here are tricks to keep you optimistic in investing.

Three reasons to keep you from investing your money

1. ‘I’ll wait until the stock market is safe again. This is a perfect consolation to console yourself to keep investing after stocks have declined when things aren’t fine it is when you should stay into the market. Just think that this is temporary and stocks will change in a few days. So when investors are waiting for it to be safe, this means they are optimistic that prices are soon to climb. So staying at the verge of slowing down will eventually pave your way to higher prices, and it is merely an insight of protection that shareholders are paying for.

Let’s decipher the things that drive investors to feel this kind of behavior. Fear is weak but it’s a strong emotion, psychologist denote this behavior as “myopic loss aversion”. In a practical sense, investors are more likely to accept the loss in a shorter term but hard to accept in long term. So to stop the hurt they don’t buy or sell stocks even when prices are at its lowest rate.

2. ‘I will invest back when it’s cheap.’ This plea is common to “would-be buyers” as they are willing to wait until the stock drop. However, as per Putnam Investment, no one knows which day stocks will move up or down, especially when investing short term. The stock could just rise or fall within a given day or week. Experienced investors tend to buy stocks when cheap and hold them for a long time till market stabilize.

Let’s decipher the things that drive investors to feel this kind of behavior.  This can be trigger by both fear and greed.  Investors tend to think a lot on the rise and fall of stock over the week but wait, while greed is shown on how investors anticipate a fall but plan to buy on a better price the next day.

3. Bored so I’m selling my stocks. You will hear this plea from investors who just want nothing but excitement for their investments, like a poker player in a casino. However, the ugly truth is that smart investing is boring, or it can be boring depending on how stocks work for each year. In fact, investing is not an instant win game.  When investing, earning comes while you wait, it is not a quick trade in and out of the market.

Let’s decipher the things that drive investors to feel this kind of behavior.  The predominant behavior is excitement.  Ultimately, guided by the desire to get most of the investment within a given trading day or week.  For some investors, it’s all excitement that drives them to invest, and not making money in a long period of time.