The share market isn't gambling, provided you invest for the long term.
I'll prove it to you…
But first, remember that what I'm about to show you can't be done with a day-trading strategy.
That's gambling and probably has worse odds than a casino. The only difference is you can take a loan out to do it!
The big picture
By taking a 'big picture' approach to share market investing, we can turn a little amount of money into something truly life-changing.
But you don't have to take my word for it.
According to AMP Capital, the Australian share market has returned, on average, 12% per annum since 1900…
So let's say you invest $10,000 in the stock market today and don't touch it. Allowing profits and dividends to be reinvested. Compounding over time.
At the market's historical average, your $10,000 would grow into $96,463 over a 20-year timeframe.
Now, I'll be the first to admit, it's not easy to beat, or even match the market. 12% is a great return. Make no mistake.
So, going back to our example, let's say you achieved a 10% average annual return and added $500 per month to your account.
After 10 years, your initial $10,000 would become $121,562, but over 20 years it would be $410,925.
Which stocks should I choose?
When we consider Westpac Banking Corp (ASX: WBC), Telstra Corporation Ltd (ASX: TLS) and many other S&P/ASX 200 (INDEXASX: XJO) companies pay dividends well in excess of 5.5% per year, all of a sudden the 10% return doesn't sound so bad.
However, stock prices also fall. And dividends disappear.
That's where most would-be investors go wrong because they don't have the experience with falling prices and panic sell when they see red.
Remember, share market investing is a long-term pursuit. So if you're considering entering the market to provide for your or your children's future, take your time and learn from some of the best in the business. That's what I plan on doing…
