Indexes or Stocks?
One theory of stock investing is that it is impossible to beat the stock market average, so your best bet is to invest into an ETF that tracks a major stock index. The other theory is that it is better to pick stocks yourself and attempt to beat the average.
Of course settling for the average return in the stock market is like going to a large tournament and hoping to come in 50th. As long as you are going to invest into the market why not at least aim a little higher.
Supporters of just buying the market average will look at things such as the stock market history graph of the largest indexes like the Dow Jones, NASDAQ, or the S&P and compare that to the average mutual fund.
It is true that most mutual funds do not beat the market. After all if you look at the Dow Jones closing history graph it has done better then nearly every mutual fund out there. However this is not an indicator that you cannot beat the market, but rather an indicator of how mutual funds perform.
Mutual funds have several huge flaws which hurt their return. These include charges, over diversification, picking “safe” stocks rather than good investments (with keeping their job as their first concern) and too much enfaces on selling.
The sad truth about the world is that marketing is the factor that really makes or breaks a business. You don’t need to have the best product, just the best marketing plan. And this is true in the mutual fund business as well.
There is one other way of investing money. Why not learn the markets for yourself? You are the one who cares about what happens to your account the most.
I do better than the market and I am not alone, thousands and thousands of people use the stock market to make them money. Some have even become millionaires and billionaires through the stock market. So how do people make money in the stock market? These stock market basics can help any new trader learn what the market is about and how to use it to profit.