4 Steps to Become a Stock Market Millionaire | Smart Switch: Personal Finance

(Katee Brockman)

It’s not always easy to become a stock market millionaire, but it is possible. While you don’t need to be rich to make a lot of money investing, you do need the right strategy.

Strategy is key to building wealth in the stock market, and building wealth is simpler than you might think. Here’s how to get started.

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1. Start investing now

It’s never too early to start investing, and the more time you spend growing your money, the more you’ll earn over time. Every year counts, and starting now can make a significant difference to your overall earnings.

This doesn’t mean you can’t hit $1 million if you get a late start. But for every year you delay investing, you’ll need to invest more each month to reach your goal. So even if you can’t afford to invest much now, it’s best to start anyway to give your savings as much time as possible to grow.

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2. Invest consistently

While you can invest a large lump sum and then watch the money grow, it can sometimes be more effective to invest smaller amounts more consistently. Not only is this strategy easier on your wallet, but it can also save you money over time.

Dollar Cost Average It is a strategy that consists of investing a fixed amount in a certain calendar, and can help reduce the impact of stock market volatility about your investments. Stock prices fluctuate constantly and the market will experience regular ups and downs. If you invest a large amount at one time, there is a chance that you will be investing when prices are at their highest.

However, if you invest smaller amounts more consistently, you will end up investing when prices are both higher and lower. Over time, that can lower your costs and help your money go further. And when your goal is $1 million, every dollar makes a difference.

3. Keep a long-term perspective

It takes time to build a million dollar portfolio. Unless you’re investing thousands of dollars per month, it will likely take you several decades to accumulate $1 million or more. While it can be daunting to wait that long, keep in mind that small contributions add up over time and investing in the stock market is one of the easiest ways to build wealth.

It can also be challenging to invest when the market is volatile. Yes stock prices are falling, it can be tempting to withdraw your money or stop investing. But historically, the market as a whole has delivered positive average returns over time, despite experiencing countless downturns over the years.

By keeping a long-term perspective, it will be easier to avoid getting caught up in the daily movements of the market. And when you continue to invest regardless of what the market is doing, your money will grow more over time.

4. Choose the right investments

One of the most important factors in building a $1 million portfolio is choosing the right investments. Balancing risk and reward is key as it will help your money grow quickly while limiting your risk as much as possible.

While the exact investments you choose will depend on your personal preferences and risk tolerance, the best stocks are those with the greatest long-term potential. These stocks may not experience explosive returns, but if the companies themselves are strong and healthy, they are more likely to experience consistent growth over time.

Becoming a stock market millionaire can be a lofty goal, and it’s something that not everyone will be able to achieve. But it’s not impossible. By consistently investing, choosing the right investments, and keeping your money in the market for as long as possible, you have a better chance of building long-term wealth.

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