Is It Safe to Invest in the Stock Market?
Opinions about the stock market range from unreasonable fear to ridiculous optimism. Reports of people who made incredible amounts of money in the stock market as well as those that lost everything can be found in publication after publication. So what is the reality? Is it safe or dangerous to invest in the stock market? And if it is safe, what is the best way to invest? Here is the truth about positive returns and the stock market: the longer the time horizon of investment, the safer the stock market is. Since 1928, on a yearly basis, the stock market has resulted in a positive return 61 times and a negative return 29 times. Therefore, if you plan to invest in the stock market for only a single year, you have a roughly 30% chance to lose money and a 67% chance to realize a profit. Those are not good odds. I do not recommend investing in the stock market for short term gains. The average stock market return since 1928 is 7.6%. The average return in a positive year is 18.5% and th...