How do some of the myths about the stock market even start?
One would guess it comes from simple perception. But the myth we need to debunk today is downright infuriating.
It's the belief that you need a lot of starting money to be a successful investor.
That couldn't be further from the truth. You don't need $1 million to start investing the right way. You don't even need $1,000.
All you need is a small stake and the right level of confidence...
The stock market is not just for rich people. It's not just for brokers and people with big boats sitting off the docks of Manhattan or Miami.
It's a genuine wealth-building tool for America's middle class. But many people don't take advantage of it...
It hasn't helped that three major financial crises occurred in the last 20 years... The dot-com bubble, the Great Financial Crisis of 2008, and the Covid Crash of 2020 have turned many 401(k)s into "201(k)s."
These sharp downturns have shaken confidence in U.S. and global markets. As a result, middle-class investors – who are typically loss-averse and prone to selling stocks in times of crisis – have walked away from stock market investing.
When it comes to who owns stocks and who doesn't, the numbers are staggering...
The top 1% of households by wealth have controlled 70% to 80% of the market since 1989. But the Federal Reserve reports that as of early last year, these households were near their highest levels of stock ownership ever... controlling 87.2% of U.S. equities.
In 2007, roughly 66% of Americans owned stock. Today, according to a recent Gallup survey, that figure is roughly 55%.
Wall Street, meanwhile, isn't doing anything to bring more Americans into the market. Hedge funds, private equity firms, family offices, and certain institutions are typically designed for accredited investors.
Who is an "accredited investor?"
These are individuals who only qualify for certain asset classes that are heavily focused on the markets. Accredited investors must earn at least $200,000 per year or have a net worth (minus their primary residence) of $1 million or more.
Big banks and big money managers love these investors because they generate massive fees for their bottom line.
But they've also contributed to the ongoing consolidation of assets among the wealthiest people in America. According to a recent Federal Reserve report, the top 1% of households in the U.S. own 52% of the stocks.
No wonder there is this ongoing misconception that the stock market is a machine built for rich people.
However, don't buy into that myth. The stock market is your tool to find success and build wealth.
I've had many conversations with people about where and how to start investing. And I always try to get people to think in terms of "rules." So here goes...
Rule one: Don't think that you don't have enough money to get started.
For example, I listen to people say that they need to hit a particular savings milestone before they start investing. Some people say they need $10,000 or $15,000 in their savings account before they start investing.
No. Start now.
Instead of putting $100 or $200 away each week or month into a savings account, put it in the market. The savings account will pay you a paltry 0.08% interest, which is lower than the inflation rate. You're actually losing purchasing power by parking your money in that savings account.
Think of it this way... you'd need 866 years to double your money at 0.08%. If you were earning 10% a year, you'd need just over seven years to double your money.
There are undervalued stocks that you can buy for $50 or $100. They might be trading even lower than the amount of money you have to start building a portfolio, which allows you to buy multiple shares. If you have $50 and the stock is at $5, buy 10 shares. If you have $50 and it trades at $10, buy five shares.
All you need to do is start small.
If you're out of the market – or just starting to dip your toe into it for the first or second time – you're in the right place. Or maybe this applies to someone you know... Maybe you have a college graduate in your family who's just getting their financial start in life.
Regardless, you should start small if you're learning how to trade and invest. And even if you do have a lot of capital, you shouldn't dive into the markets with both feet.
You don't need to worry about buying every single stock that interests you at once. Start with a few ideas and pick your best ones.
But for now... have confidence in the fact that the markets are not just for the wealthy.
Editor's note: If you're scared of getting into stocks only to lose it all in the next crash, you need to hear Keith's message today. Thanks to a unique set of tools, he was able to sell most of his stocks by February 28, 2020... before the worst of the COVID-19 bear market. Now, as stocks soar and we get closer to the peak of the Melt Up, this system could be the key to hanging on to your gains... Get the details before this presentation goes offline.
After the fastest bear market and the subsequent rally last year, it can be intimidating to consider investing right now. But if you're wary of the next market downturn, sticking to a few simple rules can still help make you money today... Read more here: Defeat the Next Bear Market With These Five Steps.
With stocks making new record highs, you want to be in the market today. And right now, investors are ignoring the main way to make money in stocks over the long term... Get the full story here: Where All the Money You'll Ever Make in Stocks Will Come From.
Simply starting your investing journey is incredibly important. And once you get started, you need to know which types of companies are worth your money...
EVERYONE STILL LOVES THIS 'ELITE' CHOCOLATIER
Today, we're checking in on one of the world's most popular chocolate makers...
Regular readers know we love investing in companies that are at the top of their industries. Our founder Porter Stansberry calls these "Global Elite" businesses. They have strong balance sheets, and their brands are known worldwide. Today's company is a classic example...
Hershey (HSY) is a $35 billion candy giant. It boasts popular brands like Reese's Peanut Butter Cups, Kit Kats, and more. Folks have loved these candies for years... and that's not about to change. In its most recent quarter, Hershey reported net sales of $2.3 billion – up 12.7% year over year. And the company raised its full-year outlook as well.
As you can see, HSY shares have been climbing. They're up almost 60% over the past five years and just hit an all-time high. And as long as folks keep buying its chocolate goodies, Hershey's success should continue...