Time is your friend; impulse is your enemy. — John Bogle
Have you dealt with the conundrum of finding easy ways to make money in the ever-changing stock market? You are not alone!
You can easily get swayed by the so-called slick stock market advisers who barely know any more than you know about investing, or become a street smart to find easy ways to make money in the street full of those who have no vested interest in your financial well-being.
Invest in an Index fund
Enter the world of Jack Bogle. This sage of the investment world has proven that paying 2-5% in fees to so-called experts will be a surefire way to earn mediocre return on your hard-earned money. Vanguard’s philosophy of investing in the entire market is the first of the three easiest ways to make money in the market.
Invest for dividends
The might of America is not due to its almighty government; it’s greatness is symbolized by those entrepreneurs who invent exceptional products and services to improve the quality of life.
You may have spent thousands of dollars in chewing gums, made by Wrigley, over the years; or you may have spent thousands of dollars to buy light bulbs from GE. The list is too long to choose from the likes of JNJ, Pepsico, Emerson Electic, Abott Labs and so on.
Do you know that these fortune companies also increase dividend over the years to create wealth for their investors? I know a friend who makes over $30,000 just in the dividend income alone. He has mastered one of the easiest ways to make money by investing in the finest fortune companies that have consistently increased their dividends over the years.
The easiest way to make money in the market
If you had invested just $4,000 in Apple’s stock after buying your first iPhone back 2007, you would have made $128,000 from that investment alone. Millions of its die-hard fans buy any new product this company makes.
***Cisco Systems Stock Chart***
You don’t have to the smartest analyst on the Wall Street with a degree from Wharton to find a revolutionary company such as Apple. You just have to follow the advice of the legendary fund manager Peter Lynch to invest in a revolutionary company as history unfolds in front of your eyes.
For the last five years, consumers have used mobile platform to make most of their online purchases. Apple has been at the forefront of this revolution.
Every decade has given birth to a revolutionary company to change our way of life.
In early 1900’s, RCA was dominating company as radio was the media of mass communication back then. In the decade before the crash of 1929, RCA stock returned over 1000%.
Microsoft and Cisco systems are two leading companies to revolutionize the high-tech industry during mid 80’s till late 90’s.
Cisco Systems returned a breath-taking 75000% from its initial public offering in 1990 till the dot-com burst of 2000.
Imagine, if you realized that Cisco systems was the biggest beneficiary of the Internet boon, you’d have made $2.2 million from the initial investment of mere $3,000 by purchasing just 100 shares of this great company. Even if you were not as savvy to sell the stock at its peak in year 2000, you would have $252,009.36 in your bank account from the initial investment of $979.
Google invented a new market for selling ads using its contextual text ads, and then leveraging millions of websites with its Adsense program. With its virtual domination of the search engine market, Google was poised to offer an easy way to make money for anyone who had common sense and wisdom to invest money in Google’s stock.
While its performance is not nearly as staggering as Cisco’s 75000%, your investment of merely $8500 in early 2004 would have become $76000 now. That’s fabulous by any stretch of your imagination.
The beauty of the capitalist system lies in its power to allow a common man to invest his small fortune in a groundbreaking invention, by a great mind, and profit from it handsomely while that invention makes our world a better place to live.
You may not have genius mind of Leonard Bosack who co-founded Cisco in his garage with his wife or Steve Jobs who co-founded Apple Computers with Steve Woznik, but all you need is to have a common sense to recognize their revolutionary inventions and invest even a small amount in their ventures to build wealth.
The easiest way to make money in the market is to find a revolutionary company and invest just a small amount of money — for a decade or longer — to profit from it while the company transforms the world in a meaningful way. Do you agree?
Common sense is as rare as genius, – is the basis of genius. — Ralph Waldo Emerson
Elsewhere:
The Fund that beat The Market 9 times Since 1999 @ Money Cone
How Do You Envision Retirement @ Modest Money
A Two Letter Key to Financial Success @ The Free Financial Advisor
Can Everyone Really Retire a Millionaire? @ Jlcollinsnh
Photo by: nmcbean
Hi Shilpan….
Pondering your point #3, the problem for me has always been picking the Apples, Ciscos, Mircrosofts and Googles out from the crowd before they’ve had their spectacular runs.
Then there is the question of when to invest. Looking at the Cisco chart, had I invested anytime between around 1999 and 2003 I’d be sitting on, at best, a break even. And what a stomach churning ride those four years would have been.
Apple, now the most valuable and lionized company in the world, came within a whisker of total collapse. In the early 2000s it was nobody’s darling.
What I’ve never been able to figure out is how to know they were about to turn the corner and run to the stars. Others, much like them, died on the vine.
Facebook. Horrible IPO and initial run. Is this a blip on the way to making its shareholders mega rich or a warning that it’s already past its prime. Beats me.
My friend, I’d love a post from you on how to pick ’em before their race is run.
Great thinking, my friend! My next article will explore those factors that can help you identify these investment well before they reach their tipping point.
Sometimes if you just take a step back, the most epic companies are right in front of you. I remember when I bought Apple a year ago, I thought “isn’t this a no-brainer?” Almost a year later when I sold it for 70% more, I’d say I was right.
You’ve done well with your investments, MMD! Congrats!
The problem is picking the revolutionary companies. Apple existed long before the iPhones and the iPads. The 90s were a horrible time to be an Apple shareholder. No one could’ve predicted the Apple of today.
Netflix used to be the darling of Wall Street. There were lame powerpoints on how Netflix recruits employees and their work culture and how every other company should emulate them.
Then they tripped and made terrible rookie mistakes, showing no regard for the customer. The result was a wipeout of its market cap. (And gone were the powerpoints)
Amazon is great not because it is a bookseller, but because they are actually a technology company selling books. Who could’ve predicted that? If you did buy Amazon when it was young, you were incredibly lucky, not because you were a great stock picker.
I like Buffett’s approach of buying boring companies where very few things can go wrong as opposed to Peter Lynch’s approach of trying to pick the next best thing.
Well said, MC! I agree with you that everyone should have index fund and divided stocks(JNJ, Pepsico, Wrigley, GE) in their portfolio.
My viewpoint is to invest a small amount — even 5K or less — when you see craze for an iPhone and slew of developers jumping on the app development work. Of course Apple was in terrible shape in 90’s. But, that’s my argument. Apple is a spectacular investment now; that’s not a guarantee that it will be in the future. As long as they execute well, it’s fun to invest a small amount and let it grow. I want to write more about factors to consider when identifying a revolutionary company.
My challenge has always been recognizing opportunities like Apple beforehand, rather than in hindsight. I always beat myself up–“why didn’t I see Company A’s prospects??”–about missing the proverbial boat. But then I look around today and I have the same challenge: Which companies are the next Apple or Google or even RCA? That’s the hard part.
Agreed. I intend to write next article to focus on what common factors attributed to these phenomenal investments in the past.
History always repeats itself!
I totally agree.
But there’s a bigger problem than just finding a revolutionary product. It has to have the right tailwind and a management team smart enough to recognize how to “surf” the wave. I’ve seen plenty of great products never make it because of the management’s ability to help the public understand.
You are correct, Joe! I am in search of finding how to spot these marvelous investments in their early years of growth. I’d love to get your thoughts on my next article.
I couldn’t agree more Shilpan, but isn’t that a little easier said than done? 🙂
Once you know of that new revolutionary company that will make me 1000% over the next decade, please make sure you email your good ‘ole friend! 🙂
Absolutely! I am going to write another article to detail some factors to consider to help you identify next Apple 🙂
We are big fans of index funds. They are almost fool proof. They are a great way to invest when you first start out because they allow you to diversify even when you can only invest a little. We plan on using this type of investment for a long time.
I can’t agree with you more, Miss T!
Shilpan, If I were a time traveler, I’d certainly go forward and find the next Apple. Unfortunately, I have no idea what the next big thing will be. Anxiously awaiting your next post on the topic.
We can always learn from what worked in the past using these investments to analyze factors that are common among them. That will be my effort to articulate in the next article.
Great idea, hard to predict. I will admit, I haven’t done any single stock investing, but if you were able to pick these companies out before they became big, then everyone would be a millionaire. I think there’s a little bit of luck in play here.
Agreed. We can always learn from the history. My intent with this article is to show that history repeats itself at a regular interval. If you know how to identify a home run stock, and stick with it for a decade or longer while it is in its prime growth phase, you can profit handsomely from that investment.
[…] Three Easy Ways to Make Money in Any Market by Street Smart Finance. […]
[…] Three Easy Ways to Make Money in Any Market on Street Smart Finance […]
[…] Kind of like investing for dummies, but at least I’m making an attempt at diversity. As I get older, I’ll shift more out of stocks. I have also started putting some money into non-IRA holdings in the event that I decide to retire before I am old enough to withdraw from the IRA. I have a long way to g0 and am still waiting for Shilpan from Street Smart Finance to pick the next Apple. […]
[…] Three Easy Ways to Make Money in Any Market Time is your friend; impulse is your enemy. — John Bogle Have you dealt with the conundrum of finding easy ways to make money in the ever-changing stock market? You are not alone! You can easily get swayed by the so-called slick stock market advisers who… Read more […]
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Hi Shilpan,
The math has to be off in your sentence here “If you had invested just $4,000 in Apple’s stock after buying your first iPhone back 2007, you would have made $128,000 from that investment alone.”
I wish it were right, because (with extreme luck and a little bit of good judgement) I brought about $6k worth of Apple stocks in 2006, and they’re now worth around $50k (@$500/share recently). Pretty darn good return, but nothing as extraordinary as $128k.
Thanks!
BTW, also wanted to make a comment about picking individual stocks, esp. high-flyers like Apple.
Even with my very lucky Apple purchase, I remain suspicious about my or anyone’s ability to consistently “pick” winning stocks over the long turn. I’ve bought a few winning stocks since I started dabbling in stock market in late 90s, but I’ve also picked some spectacularly bad ones (meaning bought high or sold too soon in a fit of panic).
But my worst mistake is sitting on the sidelines during 2008-2010, when I KNEW the market was undervalued yet was paralyzed because I couldn’t decide which stocks to buy. Then life happened and I got distracted and stupidly let over $100k cash sit idle in the bank.
So now I’m firmly in the low-cost index funds camp as championed by people like your friend, Mr. Collins. I think it’s ok for people to believe they can pick individual stocks, after all, most people think they’re better than the average driver. But I think personal finance bloggers should include a warning label in each and every one of their blog piece advocating picking individual stocks, to stress how hard and how STATISTICALLY unlikely for anyone to identify a winning stock at the right time.
Take Apple for example, at about $500/share, should your readers buy or sell Apple stocks? I don’t think anyone knows the right answer, and we may not know in 10 years or 20 years.
Perhaps it’s better to advise readers to put any spare savings into a low-cost index fund FIRST. Then, if they think they’ve identified some promising stocks, they can always sell portion of the fund to buy those stocks. I wish I had done that in 2009, and doubled that $100k by now! I corrected that mistake last week and put them in VTSAX.
Knowing how tempting and fun picking stocks can be, I’ve decided to limit it to under 5% of my total assets. Having that upper limit will ensure my overall ‘stash won’t be devastated, even if I proceed to pick the worst stocks.
Sorry to seem to single you out to criticize, but I felt compelled to say something precisely because you’ve written some wise articles here and I find them very helpful. Please take my 2 cents as constructive criticism. Thanks!
[…] Kind of like investing for dummies, but at least I’m making an attempt at diversity. As I get older, I’ll shift more out of stocks. I have also started putting some money into non-IRA holdings in the event that I decide to retire before I am old enough to withdraw from the IRA. I have a long way to g0 and am still waiting for Shilpan from Street Smart Finance to pick the next Apple. […]
[…] Kind of like investing for dummies, but at least I’m making an attempt at diversity. As I get older, I’ll shift more out of stocks. I have also started putting some money into non-IRA holdings in the event that I decide to retire before I am old enough to withdraw from the IRA. I have a long way to g0 and am still waiting for Shilpan from Street Smart Finance to pick the next Apple. […]