Over the last year I have been investing in the stock market. some in Israeli stocks, and some in the NASDAQ.
I haven't got rich just yet, but I am learning a lot about the importance of patience, and the belief in what to come.
There are two types of investors, and this is not my idea (it's quoted from many other texts):
The first type is the one that's in it for the quick buck. He buys stock, waits for it to rise by a few percent, and sell fast. To be referred to as "The gambler".
The second type, is the one with the long outlook. Meaning, a year or more into the future. These investors are not deterred by the stock value going down, even by high percentage. They look further ahead than the 5 percent revenue.
I belong to the latter. And I must say, it's scary. Even though I am (by no means) not a big investor, over time my portfolio grows, and these days, value changes are more difficult to ignore.
The temptation to sell is great, and the losing stock pose the biggest tempt. You want to stop bleeding money, and the fastest way to do that is to severe the bleeding bit. But it's not necessarily the smartest way.
The desire to make a profit over time gets you thinking and weighing many times over - in which company to invest your money. Check it's history, make sure that even a company that looks good on paper today, is not bound to tumble due to bad management in the future. Stock market investments come before casino gambling in their level of risk (generally speaking), but the difference is that the house does not always win. Also, you can put your money on the chance that a company's stock will lost money (what's called "Short").
One of the stocks I bought, made about 60% in the first week after purchased. By face value, logic dictates that you should take the money and run.. but if you look a bit further than your nose, It's worth keeping this kind of stock over time. Even if the stock will fall from that value (and it did), in years to come the profit will be significantly higher.
Someone did the math, that a person at his thirties, who invested a percentage of his salary, since 2003, each month buying Mcdonalds stocks, would, after about 25 years be a Billionaire. (about 3.1 Billions to be exact). This has been calculated by the stock true figures that shows an average 30% rise a year, every year since 2003.
This is, of course, assuming that he would not spend some of this money before retirement, and that he actually has the money to invest in the first place. Many find themselves needing available funds at one time or another in their lives, and that's why their financial planning is flawed to begin with, or even non-existent.
When you have money in the bank, the temptation to make use of it is higher the less you are used to the fact of having money in the bank. And even when you are used to having a positive sign next to your bank statement, the higher the number is, the bigger the motivation to use it.
When you raise a family, the needs are obvious, and the ability to put money aside and save, is small and under constant pressures.
When you don't have kids, the ability to save is higher, but the need to fill your life with things (maybe as a replacement for the need of kids) is bigger and that also makes it difficult to save.
In short, create a habit, and stick to it. Just like brushing your teeth, or wearing clothes. If you got used to something, there's is a good chance you'll stick with it over time.
So, we might not all become millionaires, but this raises the chance to retire in a respectable and maybe earlier way than expected - many folds over.
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