The Importance of Growing With the Market Instead of Trying to Beat it.

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Hello All!

The stock market can be a rollercoaster of a ride as you watch some of your favorite companies increase and decrease in enormous amounts of value over the course of a couple of days. It’s one of life’s greatest rushes to watch a stock climb and one of life’s greatest soul crushers when they fall.

It can be hard to pull yourself away from taking large risks when trying to hopefully have the chance of making it big. Just like casinos, the reporters of the stock market know exactly how to spike your emotions in order to get you to rely more on your emotions instead of knowledge!

Because of that, it is especially important to distinguish exactly how you invest in the market. Attempting to beat the market USUALLY results in emotional investing and great losses. By growing WITH the market, you are sure to avoid emotions and lower your risk as every investor strives to achieve.

The Trap of Trying to Beat the Market

Investing can be like gambling in a lot of ways. In fact, the entire system is meant to adhere to our human nature of wanting to “win it big”!

Think about it.

As investors we are overwhelmed with speculative news from the markets and so called “experts” who believe that they are able to accurately beat the market. In reality, there is no one on this earth who is able to accurately predict what our market is going to do. Now of course, there are those who are able to better withstand downturns than others, but it is impossible to be able to accurately predict what will happen on a consistent basis.

Not to mention, the entire system provokes emotion through the colors that we see! Every time that a stock goes up we are overwhelmed with green colors symbolizing gains that we either have participated in or that we have lost out on. Then to make matters worse, every time a stock goes down, our stocks turn red as if its a bad thing!

I’m here to tell you that these colors are completely wrong and deceiving in nature as in reality they mean absolutely nothing! Actually, I view these colors as the complete opposite! When stocks that I know will perform well with time begin to decline, I get excited. These investments are just going on discount so you can buy more! Over the long run, if your stock is performing well, then great, you have successfully turned a profit.

HOWEVER,

If you are constantly watching these green and red colors flash on your screen every time the stock market moves up and down, you are that much more likely to subject yourself to emotional investing.

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Recently a friend of mine and I watched as a stock known as SLS grew 2,800%, 1,800% of that in the 10 minutes him and I were on the phone. Every part of me wanted to put money in because I had missed out on my opportunity to participate in gains.

So why exactly is it bad the stock market provokes emotional investing?

Because every time you see something go right or wrong, you might decide that you want to put money in or take money out at the WORST POSSIBLE TIMES.

In reality, there is a much safer way to invest that will inevitably save you piece of mind as well as a lot of money for your future, and its called growing WITH the market.

Why You Should Grow With the Market

Some of the best investors of our time know that they are unable to beat the market on a consistent basis. It’s not a viable investment technique that allows their firms to build a foundation off of.

So how exactly do these successful funds make such a great return on investment while being consistent all the while?

Through the use of the championed technique of growing with the market.

It is a known fact that our market in the United States has grown at a consistent basis of about 8-10% over 10 year periods for the last 100 or so years. Our market has ALWAYS made a climb, no matter what we have gone through.

The fact of the matter is that, unless our market somehow decides to not follow this trend, which has consistently occurred ever since its creation, growing with the market allows us as investors to minimize the risk and more so guarantee the returns that we want!

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So what are the results of growing with the market at 8-10%?

With an initial starting amount of $100 and an additional contribution of just $200 per month, you will end up enjoying an ending balance of $40,232.15 in just 10 years. Astronomical returns that just continue to compound in value as time goes on.

Returns like this are truly the reason why its so much more effective to be investing in something that has consistency rather than volatility.

Not to mention, growing with the market allows us to participate in compound interest! By allowing your gains to stay in the market and grow over time, you are effectively allowing compound interest to stack on top of itself and ultimately help you with your overall gains!

So how exactly can you begin to shift your mindset from trying to beat the market to growing with the market?

How to Grow With the Market

We are very lucky in today’s day and age to be able to have the investing resources modern tech has allowed us to have. Thanks to the great invention of index funds, we are able to easily track how our market is doing by accessing a broad array of diverse stocks!

If you’d like to learn more about index funds and why they should be a cornerstone of your investing portfolio, I have a blog that talks more about it here.

Basically what the blog discusses is how diverse and effective index funds are. Index funds allow you to invest in not just one type of stock but a broad array of them. Imagine a basket full of top performing stocks simulating all of their returns. That simplifies what an Index fund is.

One of my favorite index funds to invest in is called Invesco QQQ. It tracks the top 10 NAZDAQ tech stocks and allows you as an investor to participate in their gains. I bought recently in march at 188 and today, almost 9 months later, the stock is at 305, providing a 62% return on my investment!

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Yes this took time, but it was the most consistent and profitable way that I could have invested my own money. Had I been putting my money into stocks that were purely speculative, I cannot say that I would have enjoyed the same type of returns.

With that, I recommend looking into Vanguard index funds. Vanguard has created a broad array of index funds which virtually track every corner of the market depending on what gains you would like to participate in. Some index funds you could look into to get started include VOO, VUG, and VBR.

Once you’ve picked a couple of stocks that simulate the growth of the market, just sit back and relax knowing that you will enjoy returns over the long run. Just make sure to continue to feed your investments with dedicated percentages in order to fully utilize the power of compound interest.

Only sell whenever you are ready to move your money to a different stock! I personally don’t touch any of my investments until a year after investment to truly get a good reading of what the company is doing. Anything shorter of that is usually too premature in making any wise investment decisions.

I hope you have a new found enlightenment in your investing strategy after reading this. When carried out, growing with the market can take away one of your biggest opponents when investing. YOU.

If you have any questions about this or any feedback don’t hesitate to reach out to me at my email or on the contact form as I greatly appreciate any feedback from you the reader!

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Andrew Martinez, owner and writer of Minerva Money

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Published by Andrew Martinez

Owner and writer of Minerva Money, a blog on personal finance for the average person who is interested in taking control of their future and alleviating themselves from the burden of uncertainty. I have a deep passion for helping those around me with not only finance but mental well-being so if you have any questions or just want to talk don't hesitate to reach out!

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