Stocks allow you to own shares of successful companies such as Apple, Amazon, MasterCard, Toyota, Google, Exon mobile and others. It is much easier and less risky to own part of an already successful company vs. establishing a company. Also, stocks have been one of the best investments over time. For the past 90 years, the USA small and large stocks returned 12% and 10% a year respectively whereas Government bonds returned 5.5% and treasury bills returned 3.4%. If we zoom into the last 10 years, the US stock market, as measured by the S&P500 index, returned 13.7% while banks interest rate was 0.6% on average! In other words, if you left 10,000$ in the bank for the last 10 years, you would have earned 600$ of interest but if you invested the 10,000$ in the stock market, it would be worth 36,100$ today!
Net, NEVER leave your cash in a bank as you will be losing a significant opportunity to increase your wealth via investment.
- How do you make money owning stocks?Through capital appreciation and dividends, you make money owning stocks. Capital appreciation is the profit of buying the stock and selling it later at a higher price. Dividends are the sum of money paid regularly by a company to its shareholders out of its profits. The total return of a stock is the sum of the capital appreciation and dividends. For example, if you bought an Apple share at 100$, sold it a year later at 150$ and you received an annual dividend of 2$, your total return is 52 $ (50$ appreciation and 2$ dividends or 52% total return).
- Where to Invest?The chart below shows the progress of 5 stock market indices. In the past 5 years, USA S&P 500 return is 67.7% vs. 44.0%, 22.9%, 8.1% and -5.2% returns for Saudi, Switzerland, Australia and UK stock markets respectively. Clearly, the US stock market, as represented by the S&P500 (SPY) is the best performers.
- Wealth Heights’ “ready to use” portfolios:
During my coaching courses, I share with my clients ready to use portfolios built based on my over 20+ years of experience. For example, the “Growth portfolio” delivered 23.5% CAGR (Compound Annual Growth Rate) for the last 7 years while the S&P500 delivered 12.6% CAGR ! This is almost double the return of the best stock market in the world. All Wealth Heights portfolios fulfill the following criteria:
- Developed based on the legendary investors’ learnings
- Beating the market (S&P 500) for multiple years without excessive risk
- They meet the 5 Dimensions of Diversifications for extra safety
- I or my coaching clients personally invested on them
- They fit all type of investors
What are you waiting for?! Take action today and start your investment journey
All the best