Why Doing Nothing Makes You Money In The Stock Market

I often see Twitter users posting screenshots of stock market profits online.

They boast about it.

Many stock market telegram channels suggest they make 20–30 Percent profits yearly, even if markets are 10 percent down.

Many investors believe them.

Making money using trading in the stock market is not everyone’s cup of tea. I tried intraday trading and failed at it.

But I have no regrets.

Failing means learning something. For me, it was a lesson. I nearly lost around $10,000 in intraday trading.

Leverage ate all my money.

What if you invested when the market was discounted and you did nothing? You logged out of your account and opened it after 10 years?

S&P 500’s rolling returns are around 10 Percent. It means you invested at lows, and still your money is growing at 10 Percent as an average.

Why should you make an Investing journey boring?

As a financial advisor, my clients always want me to suggest some stocks or funds that will boom in the next 3 to 6 months.

Am I an astrologer?

I’m a financial advisor. I teach people how to manage their wealth.

Still, many investors want to buy something new and exciting stock. Which can be 2x, 3x in the upcoming months.

The reality is, you make money in the stock market by doing nothing.

Prime investors like Warren Buffett made money in the stock market by holding stocks for a long period.

Holding an index for a long time and focusing on your active income, and trying to grow it, helps you a lot. You can invest more when the market dips.

You start buying at a dip and end up accumulating more units of stocks and an index fund.

When you hold them for a longer period.The magic of compounding works.

Hold your stocks for at least 5 to 10 years to see the magic of compounding. You’ll end up creating a lot of wealth.

Why Trading in the stock market can’t beat investing

Time spend in the market is important.

Why shouldn’t we book profits frequently, and what’s wrong with it?

Many of my clients ask me this question.

And the answer is that compounding takes time. The market runs in 3 phases: bull, bear, and sideways.

In a bull run, you should sit tight, and later your investments grow. In a bear run, try to accumulate as many stocks as possible, and in a sideways market, do some profit booking.

You can’t time the market.

It isn’t easy to time the market. If you’re able to time the market, you will be the next billionaire.

Even top investors and hedge funds are not able to time it. Forget about common people like you and me.

One of the worst ways to invest money is to time the market. Buying stocks when they are getting at a cheap level is a way of investing.

But timing the market till the market falls 50 Percent is not an easy thing to do. Time in the market itself beats the timing in the market.

Invest for at least 10 years. Never stop buying when stocks are at low prices. This will help you create generational wealth.

Note: Story Already Published on Medium.