Stock Talk

My take on the best ways to invest in the stock market

My entire life, my grandpa has always stressed to me the importance of knowing how to wisely save your money.

“There’s no better way to do it than investing,” he would say with a smile.

As a child, his old saying went in one ear and out the other. But as I get older, I am seeing the meaning and value behind his words. 

Since then, I have taken an interest in investing and the stock market itself. 

I realize that as high school students, saving and investing may not be at the top of our to-do lists. However, I want to encourage you to give investing the benefit of the doubt. 

With my grandpa’s words ringing in my ears, I have been researching the ins and outs of investing, as well as the stock market. So let’s dive in!

When it comes to the stock market, there are many different tactics and strategies you can use to determine the right companies to invest your money in.

However, actually going forth and investing can be difficult. Don’t worry, because that’s exactly what I’m here for…to be your personal guide through the stock market. 

So, let’s start with the basics: what exactly is the stock market and why should you invest? 

In simple terms, the stock market is where buyers and sellers trade stocks of public businesses. 

As for why you should invest, where do you even begin? Whether you are just looking to grow your money, want to gain financial experience, or you’re simply looking to get a head start on expanding your savings, investing can help you achieve any, if not all, of these things.

There are obvious pros and cons to each and every company on the stock market, which you could spend hours and hours researching. But why do that when I have a way easier suggestion that screams simplicity?

This leads us to index funds, which happens to be my best and safest recommendation. And believe me, by the time I’m done explaining the advantages of them, you’ll be sold.

 Index funds are a group of companies that fit together in a certain category. An example is the S&P 500 Index, which includes the top 500 largest companies in America.

The benefits of index funds appeal to many investors, making them a piece of cake to buy and sell. Their reliability and low cost make them not only affordable but also practical.

Not only that, but in 2021 the S&P 500 Index gained 27% with a very modest amount of risk. Meaning that if you put $100 in that index, your $100 would be worth $127 at the end of the last year. 

At this point, you might as well invest in one right now. I mean what do you have to lose?

Let’s talk individual stocks. I would not recommend individual stocks for anyone who does not have lots of investing education and experience. 

Why? It’s a lot riskier to put all your money in one stock than it is to have it spread out over 500 stocks (such as the S&P 500 index).

Also, a lot of things could go wrong in singular companies. One of the most recurring is that the company’s competitors may have better and more affordable products and services.

 On top of that, supply chain issues are common. The supply chain is defined as a group of people that work to transport goods from production to consumers.

These issues would cause the company’s revenue to significantly decrease, allowing one to lose more money. So yeah, if you can’t tell by now the S&P 500 index fund, or a similar index fund is one of the most prime and prudent ways to invest. 

Now, after all that, I hope you are inspired to go forth and invest!