Stock market investing or a mutual funds investment, basically any long term parking of your money in stock market won’t pay you cash if you expect a living from that, well it can make you rich if you are already wealthy, unfortunately you can’t use that money.
Let’s understand the paradoxical nature of investing income, and how the whole investment talks are merely media gimmicks floated out of con industry propaganda. Let me also put a disclaimer that knowledge gained from doing investment activity is very precious, if you know how to make use of that.
If you take my words, only two kinds of people who should be able to generate any profit doing investment, are 1. rich people who buy stocks and forget, they don’t need to en-cash profit for decades, it’s like putting your money in a piggy bin but you are not going to take it out, means you are virtually rich but your life is not improving, over the years valuation of your stocks will rise and make you feel happy but again you are not supposed to sell the stocks. This is a paradox, fooling those wealthy people that they are making best use of their time.
Second category of people are the fund managers who get commissions from this entire work, so whether your portfolio rise or fall they get a buck, these are the con men’s of industry, their lobbying system is so powerful and spread false ideas about markets, they do this all the time, like – you must never day-trade and always invest for long term, you must understand they are saying for their own sake not for you. Fact is that historically no funds have consistently proven track records, index funds however might perform better if the countries economy is in good track.
Let me be simple and state two reasons why investing in stocks cannot pay for your bills, of course it can increase your wealth if your are already wealthy, sounds weird …huh!.
First difficulty with investing is, it requires huge sum of capital without which you won’t be able to buy and hold significant amount of shares, most medium income people buy 50-100-500 stocks and yearly return maybe ( not at all guaranteed ) 15-20%, this money won’t even pay for your telephone bills. Now compare this to ace investors, who unlike ordinary guy, smartly plays the game of scale, each extra point rise in stock makes millions of change in their portfolio, they also manage others money for a commission so it makes more sense to them.
Large number of folks venturing into investing-mania, are drawn by buzzword repeated over and over again and hypnotized by this media propaganda, they end up doing it more like cultural craze where lot of similar people are doing the same thing, but remember media makes investing look romantic and adventurous only because they are paid by fund managers to do that, so as these fund manages are assured of consistent commission from a large pool of money where the inflow is never dried.
Second issue with investing as I said earlier, you are not supposed to sell your shares and remain invested, until you die. therefore it make sense for rich people’s who need to park their extra money somewhere without bothering what happens to it.its a paradox!!