There are thousands of ways to make money but I can’t think of any other way better than investing in the share market.
There may be a shorter-term time period where gold, property, antiques or oil outperforms the share market, but shares will continue to grow strongly and reflect the growth in the value of those businesses.
Here are four reasons why you should invest today in shares over anything else:
No need to take on debt
The share market’s biggest competition for investment is the property market. Investors wanting to invest in a property will usually have to take on a huge amount of debt which will take decades to pay off.
An 18-year-old could start their investment journey with as little as $500 into shares and not be up to their eyeballs in debt.
Consistent, growing income
The share market has generated impressive capital growth for shareholders over the long-term.
An underrated side of shares is how much income it can generate. Most shares will pay out a dividend every six months without fail.
Property owners are at risk of having a tenant fail to pay, or even there being no tenant in the property at all. Gold doesn’t generate any revenue. Bitcoin doesn’t generate any revenue.
I think shares are the best way to create a solid income stream.
Once you’ve bought your shares you don’t have to worry about being bugged by your property agent. You don’t have to pay the latest rates bill, stress about a leaky roof or research what the best landlord insurance is.
Being a shareholder allows you to sit back and let a whole business of people do the work for you and generate a profit. That sounds easy to me, plus you could use your saved time to make more money, or spend it with your family.
It really depends what you invest in, but most shares have generated impressive returns for shareholders.
The Australian and USA share market has roughly returned around 10% a year if you look at the performance over a number of decades. This doesn’t include the great franking credits that Australian investors receive, making Aussie shares even more attractive.
Why you may not want to invest today
Some people may say that shares are risky, I say volatility is the price you pay for long-term returns.
Some people say property is better, I say when you include the negative gearing losses and stamp duty it makes property returns less attractive. Plus, don’t forget franking credits as a positive for shares.
I think the best reason why you should avoid investing today is that share markets are currently quite expensive. The iShares S&P 500 ETF (ASX: IVV) and Vanguard Australian Share ETF (ASX: VAS) have both risen far beyond their historical averages. However, there are still a large number of individual shares that are worth a buy today and should beat the market.
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Motley Fool contributor Tristan Harrison owns shares of Altium, RURALFUNDS STAPLED, WAM Capital Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Altium, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.