The stock market can be a very wild and confusing journey. Just as an example, what are we supposed to learn from the last case regarding GameStop?
The video game store chain has been struggling for a long time. But in January 2021, the company’s stock price rose 1,500%. Then it fell back to the ground.
Some investors made a fortune. Others lost a fortune. And it all happened thanks to a strange mix of Reddit stock traders, hedge funds, short sellers, and thousands of individual investors – people like you.
What should we take away from this? We asked Robin Hartell, certified financial planner and senior writer at The Penny Hoarder. This is what you say:
1. Don’t invest based on emotion or fear
GameStop stock mania was driven in part by FOMO investors – fear of missing out. Thousands of investors did not want to miss the opportunity to make huge profits, and many of those same people ended up losing money in the end.
Ask anyone who built wealth who wasn’t born rich how they did it. “They probably won’t tell you a story about going short or buying $2 stock,” Hartell says. “No matter how they feel about Wall Street, they will no doubt tell you not to make investment decisions based on sentiment.”
2. START EARLY – BUY AND SAVE
So how did these investors build wealth?
“They’ll probably tell you they started investing early,” Hartell says. “They will focus on consistency and long-term investment in day trading.”
In other words, don’t try to “time the market”. Just start investing and keep investing for the long term. This is how you build wealth.
In the long run, investing in the stock market will bring you an average annual return of 7%, adjusted for inflation, according to authorities like the US Securities and Exchange Commission.
I do not know from where to begin? With an app called Stash, you can get started with as little as $1. * You can invest in parts of well-known companies, such as Amazon, Google, Apple and more. You can invest in fractions of stocks, which means that you can invest in money that you would normally not be able to afford.
3. Learn how to do your own research on stock selection
Hartill recommends setting aside a certain amount of money to invest each month, no matter what.
We love Stash because it lets you choose from hundreds of stocks and funds to build your own investment portfolio. But it makes it simple by dividing them into categories based on your personal goals.
Do you want to invest conservatively now? Totally get it! Want to indulge in moderate or aggressive risks? Do what you feel.
Signing up takes 2 minutes, and it’s completely safe. Subscription plans start at $1 per month. ** In addition, when you use the link above, Stash will give you a $5 sign-up bonus once you deposit $5 into your account.
Mike Brasfield ([email protected]) is a featured writer for The Penny Hoarder. He is a long-term investor who has never owned any shares of GameStop stock.
*For securities over $1,000, partial stock purchases start at $0.05.
** You will also be responsible for the standard fees and expenses that are reflected in the pricing of the ETFs in your account, as well as the fees for various additional services charged by Stash and the Custodian.