One of the biggest myths about investing in the stock market has always been that making the plunge, making your first investment, is just like gambling. It is the same reason many people absolutely refuse to enter the stock market today. Number one, gambling is addictive; the loss of an investor’s money induces the person to try to make more, and this can lead into a vicious cycle. Many investors often think that trading shares is much like trading a vehicle, and instead fail to realize that they are trading stock, which represents the ownership of a company.
The defense for that way of thinking, is that indeed, gambling, is a “zero sum game”, which means, it’s a win lose situation, the money goes to the winner, and is taken from the loser. There is no value ever created, or built up. But by investing, those who are participating, are building up the wealth of the economy in the country the investments are made in. When companies compete amongst each other, they are increasing productivity within their organizations and stimulate the development of new products that can better the lives of the general population. Investing experts encourage the general public not to confuse stock market investing, with pointless game that is gambling.
The stock market is not merely an exclusive club where rich executives, and cigar-smoking wealthy inheritors go to make money. The average American would be somewhat surprised to find that many people have invested, are investing, and have made money off trading stocks, and investing in shares. Real estate agents, homemakers, the average middle-class layman can increase their wealth, with a little quality instruction, and the funds set aside to do so. It is merely a matter of what a person is willing to learn, and do. Everyone has at some point, had an interest in making an either short term, or long term investment in the stock market. There are always teaching materials available for those willing to try.
Many people have asked whether or not investing money in the stock market is particularly safe, for a number of reasons, such as the baby boom generation’s effect on the stock market, as it ages. Many people are under the influence, that as the baby boom generation ages, they will tend to shift their money from stocks, into much safer bonds. However, some expert investors are betting differently. Actually, the experts are advising that the baby boomers are going to keep their investments going strong, at least for the next few decades.
Some stock market experts are advising that, to bet against the trillions of retirement funds, and the forty, to almost one hundred and thirty trillion that they will start to inherit over the next three to four decades, is not the smartest thing to do. The opinion, and advice of experts go on to say that the majority of all this money will go into stocks because it has no other place to go. They have stated that this cash will be the primary fuel for the extended bull market that they project.
Of course, yes, the market is not a risk-free place for investments. Year to year, yes the stock market is very risky. But, what the people with a negative outlook, on the entire stock market, and its investors, fail to grasp, is that for the seventy million baby boomers is the US, saving and hoarding their funds, is more risky, than opting to invest in the stock market. There are even larger numbers than that in Europe, and with the population in Asia, the number is probably twice as much as it is in the U.S.
Experts advise the average investor not to be misled; it is the baby boomer from Asia, America, and Europe, that is really driving the massive demand side of the stock market. To realize their sometimes very frivolous goals, whether it be keeping their overpriced automobiles detailed, and shiny, or making sure their frequent flier miles are kept up to speed, baby boomers are doing what any other savvy investors would do, within the same circumstances. The generation is investing their finances in the stock market, experts say, the only thing the baby boomers believe will give them a strong chance, in battling for the future lifestyles they have been fantasizing about, and believe that they are entitled to.
A noted demographics researcher and expert, Tom Monroy has dubbed this key, defining group of boomers, born between 1946 and 1955, the Early Boomers Redefining the Economy; which in some opinions is a little overblown a nickname, but most investors have adapted to the EBRE’s. A good number of the “e-breeze” investors, now liberated from all the baggage, and mental entrapment left over from the Great Depression, have developed and grown used to a more opulent taste in life, than most middle class people are used to. This leaves them no choice, but attack the stock market with zeal, and invest purposefully. After taking their ages into consideration, these EBRE’s do not have the means, otherwise, to meet their financial goals.
The average adult, will need at least sixty percent of their salary from before retirement, to live comfortably after they have left their careers. Many baby boomers realize that because of their lifestyles lived thus far, they are behind on the amount they should have been saving for their post-career lifestyles. As unfortunate as it is, realistically speaking, the four, or five percent of returns that they will receive from investments made in the form of bonds, and of various other solid income instruments, just will not be enough.
The baby boomer generation realizes this, of course, and experts conclude that this is the reason there will not be a lack of funds in the stock market, for a long, long time. Also the entire reason the stock market is the place to invest now, as well as over the next fifty or sixty years, perhaps longer.