The first thing that most people think about when it comes to investing money is buying and selling stocks on the stock market. This is one of the most popular methods of investing money because it has the biggest potential for growth compared to other forms of investments such as high-yield bank accounts and certificates of deposits.
When you consider the fact that a high-yield savings account or a CD account can have a return rate of about 1% annually, it’s easy to see why the stock market can be a better option for growing your money over time. On average, investing in the stock market can have an annual growth of about 7% to 10%.
If your priority is investing money to potentially make the most profit possible, then you may want to consider making stock market investments with your extra money. Buying and selling stocks for a profit can be a good way to start making money.
Another benefit of the stock market is that you do not even have to sell stocks to make a profit. In fact, you can purchase dividend stocks, which will pay out a certain amount of money on a yearly basis to investors based on the number of shares they purchased.
However, it is important to note that investing your money in the stock market can often come with bigger risks and rewards than other investment methods.
Stocks are also not guaranteed to grow, which makes them riskier than high-yield accounts or certificates of deposit.
In some circumstances, you may even lose money by investing if the stock market crashes or you make an investment that doesn’t work out. Many experts recommend beginners start investing with index funds for a safer investment opportunity.
Index funds are unique from mutual funds because they try to match market growth instead of trying to beat the market. Generally, buying an index fund will have less risk than an actively managed mutual fund, but more return than a CD.