Spending big money on stocks?

If I spend $30,000 and got a profit of $2,000 is that worth it are people really spending $30,000 at a time. Or even getting $7,000 back.

1 Answer

  • 2 years ago

    <<<If I spend $30,000 and got a profit of $2,000 is that worth it>>>

    Maybe, maybe not. It depends upon what else you would have done with the money if you had not put it in the stock market and what kind of return you would have gotten.

    <<<are people really spending $30,000 at a time.>>>

    There certainly are people who do. There are also people who invest far more that that at a time. However, most middle class hourly wage workers do not invest that much at any one time.

    <<<Or even getting $7,000 back.>>>

    Short term traders do not usually get that much back from a $30,000 investment, but long term investors have traditionally gotten much more that than back from a $30,000 investment.

    Generally professionals recommend putting money into the stock market that will not be needed for many years. Such investments usually give the highest returns.

    Let me give you an example. I starting investing in the 1970s when the Dow Jones Industrial Average was under 1,000. Today the DJIA is well over 20,000. If I had invested $30,000 in an ETF (exchange traded fund) mirroring the DJIA stocks it would be worth well over $600,000 today without even considering the dividends I would have received over the years.

    Of course, investments in stocks can also lose money. Investing in individual stocks is particularly dangerous. Just ask the people who put a lot on money into Enron stock. Even investments in a well diversified portfolio (investments a large number of different types of stocks) can have significant losses over a relatively short time period. Look at what happened to the DJIA during the 2008-2009 "great recession."

    History shows that investments in stocks are one of the best ways to increase wealth over a long time period. No one can guarantee that will be true in the future, but if it is not then it is likely that the entire country will have a very rough future and most other forms of investments are likely to have more severe problems.

Still have questions? Get your answers by asking now.