Capitalism is the best economic system known to humans. Capital markets are used to provide one of the factors of production to businesses – Capital. As owners of Capital, by not investing in stocks you are passing on the best tool available to you under the economic system you live in to build wealth.
Capital markets provide individuals like you and me with an opportunity to benefit from the best of the best businesses in the world. When I look at my portfolio I am amazed to see the kind of businesses I own a piece of, for example – I own Boeing, an airplane manufacturer, Apple – over 1 billion devices sold worldwide. I don’t have the ability to contribute to what these companies do yet I am able to own a piece of their business and benefit from it. All I have to supply is capital (whatever I can afford) and emotional disciple to hold on to the stock over a long period of time through the up & down market cycles. Its amazing, they make money for me while I sleep.
A recent article published on CNBC shows a decade of investment returns in 15 American companies. You can access the complete article Here. Below is the chart of the 15 companies.
There are multiple ways to invest in stocks:
1. Stocks of Individual companies
2. Funds
3. 401K & IRA plans
If you don’t have the time or the inclination to study about individual companies than follow Warren Buffett’s advise and invest in a low-cost Vanguard S&P500 fund. Invest regularly and if you can heavily when the markets are down and you will make a very nice return on capital over a long period of time.
Happy Investing!
Disclaimer: These are my personal views and are for educational purposes only. I am not a financial advisor.
