The stock market can be a wild ride and super confusing. For example, what should we learn from the latest case with GameStop?
The video game store chain has had problems for a long time. However, in January 2021, the company’s share price rose 1,500%. Then it fell back to earth.
Some investors made fortunes. Others have lost a fortune. And all thanks to an odd mix of Reddit stock traders, hedge funds, short sellers, and thousands of individual investors – people like you.
What should we take away from it? We asked Robin Hartill, a certified financial planner and senior writer at The Penny Hoarder. This is what she says:
1. Don’t invest based on emotions or FOMO
The GameStop stock craze was fueled in part by investor FOMO – the fear of missing out. Thousands of investors didn’t want to miss out on the opportunity for big profits, and many of these people ended up losing money.
“Ask anyone who grew up wealth and wasn’t born rich how they did it. They likely won’t tell you a story about short positions or $ 2 stocks,” says Hartill. ” No matter how they feel on Wall Street, they would no doubt tell you not to make investment decisions based on emotion. “
2. Start early – buy and hold
How did these investors build wealth?
“Most likely, they will tell you they started investing early,” says Hartill. “You will value consistency and long-term investments in day-to-day business.”
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.
When you invest in the stock market, you get an average annual return of 7% over the long term, adjusted for inflation, according to agencies like the US Securities & Exchange Commission.
Not sure where to start? With an app called HideYou can get started for as little as $ 1. * You can invest in well-known companies like Amazon, Google, Apple and others. You can invest in fractions of stocks, which means you can invest in funds that you normally cannot afford.
3. Learn to do your own research on stock picking
Hartill recommends budgeting a certain amount of money for the investment each month, no matter what.
We like Stash because it lets you choose from hundreds of stocks and funds to build your own investment portfolio. But it makes it easy by dividing them into categories based on your personal goals.
Would you like to invest conservatively now? Totally understand! Would you like to dive with a moderate or aggressive risk? Do what you feel
It takes two minutes to Log Inand it is perfectly safe. Subscription plans start at $ 1 per month. ** If you use the link above, Stash will give you a $ 5 sign up bonus once you’ve deposited $ 5 into your account.
Mike Brassfield (firstname.lastname@example.org) is a senior writer at The Penny Hoarder. He’s a long-term investor who has never owned GameStop stock.
* For securities priced above $ 1,000, fractional purchases start at $ 0.05.
** You also bear the standard fees and costs included in the pricing of the ETFs on your account, as well as fees for various ancillary services charged by Stash and the custodian.
This article originally appeared on www.thepennyhoarder.com