Making money from the stock market
Out of the millions who try investing their hard earned money in the stock market, a very small number succeed in making money, in my previous article Making money from stocks I mentioned that the only way to make money out of the stock market is to learn how not to lose it. By making sure that you are only increasing your wealth you will certainly be one of the winners.
Even though this appears as if it’s a simple advice, still no one follows it. The get rich quick, I want to be a millionaire over night and I want to double my money in three months mentality are all ways of thinking that lead people to catastrophic loses.
How much money can I make from the stock market?
Having invested my money in developing and developed countries and having invested my money in different markets around the world I can confidently say that you can never turn 10,000 dollars into one million in the stock market in few years. Even if a miracle happened and you bought a stock before it headed to a price bubble you most probably won’t know the right time to exit and you may end up losing money.
Yes the stock market can make you rich but not quickly, a 20% yearly return is even considered a very generous number. Come to think of it, gaining an average of 20% per year can let you quadruple your money in few years. Thus the 100,000 dollars can become 400,000 without much pain.
The get rich over night mentality is a big dream that most new comers to the stock market try to realize. However, after they end up with painful loses most of them either close their accounts or forget about investing their money in stocks all together.
There is only one way to making money out of the stock market which is getting rich slowly but surely. If you followed other’s promises or hyped systems you will only waste your time and money, then discover the same fact in the end, making money requires patience and discipline.
How to make money from the stock market?
In simple words, if a mobile phone costs 100 dollars and you saw a friend selling it for 50 dollars, won’t that be a good chance for making profit? Sure it is, you will buy it from him for 50 dollars then sell it to someone else for 100 dollars.
You realized some profits in this case because you knew that the mobile has more value than the price it is being sold for, and this is exactly the same way of making money from stocks. Suppose that someday you realized that a certain company’s shares were worth 40 dollars yet they were selling for 25 dollars, won’t that be a good chance for making money?
Making money out of stocks is very simple, you just need to realize what stocks are selling for less than their worth then buy them and holding on to them until they reach their true value.