Why should I even bother investing in the market?
The market's extremely volatile. Even real estate is all over the place. Give me some good reasons why I should invest my money in the market when it's just so darn unpredictable.
Best Answer
951 points
Grudun answered one year ago …
The market will help you grow your money even if you start with just a little. Try investing $500 in real estate, you won't get far without risking your financial future. Invest $500 in the stock market and the worst that happens is you walk away with nothing. If you buy real estate you put yourself at risk of low or negative returns, rent is less than mortgage and taxes, and even total loss still owing the entire mortage amount. Not to mention the possibility of problems with the property resulting in huge repair bills or law suits.
I would go with the market because it is an almost level playing field. You just need to spend a little time to do your own research and investigations and you can have the same or better returns as the big guys. Try that in real estate and you will find out that insider trading is legal in real estate and you will almost always be late to the best deals.
And cash is a losing bet becuase it has been about a decade or more since you could match inflation, let alone beat it.
Answers
3680 points
MNSL answered one year ago …
It is always better to be in the market all the time irrespective of type of market we have.
I think if there is volatility in the market we can make use of this volatility to take investment decisions accordingly.
One such strategy is short term investing.
Another strategy: The investment strategy of regularly buying equities, regardless of ups and downs of the market via index funds
1130 points
sundarkambam answered one year ago …
My answer is the same as what I have answered in the "Buffet ......Index funds are better for ordinary investor" question...
My answer is :
It is times like these when markets are down / volatile that one finds really good bargains which Buffet and other intelligent investors are after.
These are the times when Fortunes are made.
For example , In India we are having a scenario right now where some overvalued ( good) stocks have come to ground whose trailing P/E matches the growth rate of the last 10 years.
Examples include Infosys Technologies having a 10 year CAGR % of sales at 57.47 and a trailing P/E ratio of 21.63 . Another example is Dr. Reddy's laboratories 32.42 vs 16.95.
Isn't it a bargain , friends ?
Simple logic : A 10 year period has witnessed all types of business cycles, Jolts from the market and other external and internal factor and it proves the caliber of the company , its business and its management.
With an Indian economy expected to grow at 8%, it is a reasonable assumption that we will have better growth and profitability and consequent increase in shareholder wealth from these companies.
2709 points
Oldman answered one year ago …
You have the opportunity to trade options and short things, which Buffet doesn't. And your positions can be in companies whose market valuations are below his vies, so don't use Buffet as an excuse.
Volatility provides opportunity.
265 points
MaverickInvestor answered one year ago …
Well, as the Fed and other central banks print money like it's going out of fashion, the dollar in your pocket is being diluted day by day, i.e. worth less.
So you do NOT want to spend too much time in cash!
You have to invest in something, and what you term "the market" is pretty much all there is!!
BTW - Oldman, Buffett does, in fact, trade options. He sells calls against much of his stock holdings in order to benefit from the premiums as an income stream.
145 points
amit answered one year ago …
because investment is for ur futur life .... if you investe some of your saveing money u will get the share of profite( may be not depand ur stock or investment) and the money u have it drag more money to you ....and from all of the saveing plan investment in share is good but risky too becase if u will invest ur money more carefully i will get more good return than any other saveing plans and ur get very soon unlike other banking saveing plans... and one think i was just planing that if i have good short term plans than u can use this investment perofite for u r smoll expances as travel .. or as festivale shoping and ur bills so that ur burden should be lesser
Read more from amit flag as abuse great answer
3970 points
EthanR answered one year ago …
I think you have to look at what the alternatives are. Are you going to put your money in the bank and get 1 or 2% returns at best? The returns from the stock market have beaten cash and bonds over the last 80 or 100 years by a vast margain. If you had invested in stocks the day before the crash of 1987, you would have suffered some short term pain, but since then you would be up quite a bit.
As for real estate, over the long term it generally averages about 5% per year appreciation. So on your primary residence, it will slowly grow in value over time, and you get a tax deduction for the interest that you pay on your mortgage. If you own rental property, your tenants pay the large bulk of your mortgage payments over time, so between the appreciation, interest being paid by the tenant, and your tax deductions on what expenses you do have, you can do pretty darn well.
So, while you can sit on the sidelines with cash short term, long term you will want to have money invested in the stock and real estate markets. Inflation just eats away at the meager returns from cash or bonds, which is one reason that senior citizens often struggle to make ends meet.
2172 points
ChaosNantuko answered one year ago …
The truth is, being in the market isn't always advantageous to everyone. If your long a market etf such as SPY in a bear market, you lose money, and would have been better waiting in cash for a better time to buy.
Whether or not you should be in the market at this point in time is dependant on two factors. How much you know, and what time period your trading.
If you know very little about the market, and don't have the inclination to learn, then entering the market for the short term isn't a great idea at the moment.
If you are fairly old already, or are going to need that money soon, now would also be a bad time to invest in the market, because you may have a negative overall return by the time you need your money.
That being said, if you have the knowledge to invest successfully in a market like this, or you have the time to hold out for the long term, or ideally both, then you can make money in the market. If you have the knowledge to make money in the short term, or you can stay in the market for the long term, then investing just makes sense.
If you lack the knowledge to make the short term gains, and you lack the time to stay in the market for the long term, then investing at this point in time is not a good idea.
