Stocks are but one of many possible ways to invest your hard-earned money. Why choose stocks instead of other options, such as bonds, rare coins, or antique sports cars? Quite simply, the reason that savvy investors invest in stocks is that they provide the highest potential returns. And over the long term, no other type of investment tends to perform better.
On the downside, stocks tend to be the most volatile investments. This means that the value of stocks can drop in the short term. Sometimes stock prices may even fall for a protracted period. For instance, the 10-year return for the S&P 500 was slightly negative as recently as late 2010, largely due to the 2008 financial crisis and the early 2000s tech bubble bursting. Bad luck or bad timing can easily sink your returns, but you can minimize this by taking a long-term investing approach.
There's also no guarantee you will actually realize any sort of positive return. If you have the misfortune of consistently picking stocks that decline in value, you can lose money, even over the long term!
Of course, we think that by educating yourself and using the knowledge in this Investing Classroom, you can make the risk acceptable relative to your expected reward. We will help you pick the right businesses to own and help you spot the ones to avoid. Again, this effort is well worth it, because over the long haul, your money can work harder for you in equities than in just about any other investment.
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