How Much Money Can You Make in the Stock Market (15 Tips to Help)

This article answers the important question of how much money you can make in the Stock Market as well as powerful tips to help you.

 

Importance of Knowing How Much to Make in the Stock Market

Recent surveys suggest that 56% of Americans are directly involved with the stock market.

In other words, 56% of Americans own or are invested in stocks that are traded on stock exchange floors.

This can be through the actual ownership of shares of companies, investments in mutual funds, or retirement accounts.

The stock market is the tried and proven way of obtaining a good return on one’s money.

There are trends, movements, ups and downs in the market which affect investment returns.

However, for the most part, it is the “gold” standard of investment vehicles.

Although a great percentage of American families are invested in the stock market it may be defined as passive.

This means that they don’t take an active part in buying stock.

Forbes magazine indicates that only 14% of American families are directly involved in the stock market (click here for more on this).

So, perhaps you wish to “step up” your financial game and learn a bit more about the stock market and how much money one may make in the stock market?

 

Personal Story

I was about to do some yard work at home but needed some new gardening tools.

I splurged and bought a more streamlined garden rake in hopes of saving some wear and tear on my back.

I started to rake up the leaves and lawn trimmings, but the height of the rake put an added strain on my lower lumbar area.

I took several breaks to stretch out my back area.

During one of my breaks, I was holding the rake in my hand and wondered what I was thinking as the rake was not making the job any easier.

To my chagrin, I was inspecting the rake, I twisted part of the handle, and lo and behold there was a built-in extension that allowed the rake to better accommodate my height.

With the proper height extension, it allowed for the raking job to be done with a less negative impact on my back.

Let us pick up the rake of the stock market and explore tips or features that may be more conducive to our investing and less wear and tear on our financial back.

 

How Much Money Can You Make in the Stock Market?

So, the paramount question is, “How much money can be made on the stock market?”

The amount of money to be paid is dependent upon many variables.

Those variable include how much the individual investor invests, what does their portfolio look like, how aggressive are they as it relates to their level of risk, do they leave the invested money alone, etc.

With all of that being said, the average return for an investor in the stock market is a 10% return on their money.

 

15 Tips and Strategies to Help You Make a Lot of Money in the Stock Market

 

1. Learn 

As with anything, knowledge is power.

It is no different about entering the stock market and endeavoring to invest wisely and make money.

There are a variety of books that an individual can purchase or browse through in their local bookstore.

Also, the Internet has some well-written articles that an individual can read that have been authored by people who have been successful at investing in the stock market as well as those who are professional advisors for their clients.

Websites such as Vanguard.com or Fidelity.com will also provide online lessons to learn about the basics of the stock market and how to invest.

 

2. Nest Egg

Before thinking about investing in the stock market, certain critical steps must be taken in regards to stabilizing your finances.

One of those important steps is to establish a nest egg.

A nest egg is an amount of money that is equal to 3 to 6 months of your monthly income.

This nest egg will provide financial support if something unplanned or catastrophic may happen in your life that affects your finances.

Examples of those types of events could include a medical emergency, loss of a job, replacement of the car, major appliance repair, etc.

 

3. Use the Right Advisor 

Another important step in your desire to make money in the stock market is to utilize a personal financial advisor.

Many investment sites will provide this option as a service if you open up an account.

It is part of their, hopefully, low fees that are assessed on managing your investment monies.

 

4. Timing 

In the back of your financial mind, it is paramount to remember that like everything else, the stock market has its ups and downs.

Despite these fluctuations in the stock market, it has been the tried and proven method for an individual to realize decent investment growth.

The investment should be left alone over the long haul and remain in the market despite upturns or losses.

Also, as it relates to timing a critical factor for investing in the stock market is not to rely on your emotions.

Novice investors sometimes allow their subjectivity to drive their investment strategy and they try to “time the market.”

The best strategy is to do one’s homework in regards to identifying a business, based on their financials, purchase the stock and then stay the course.

 

5. Longevity 

Investing in the stock market can be compared to being part of a track and field event.

What the stock market is not is a 50 or 100-yard dash.

The stock market is a cross-country endurance race, and it is important to maintain your pace and finish the race or in this case, stay the course with your stock investing.

 

6. Bold 

Before investing in the stock market, you must assess your risk level.

This is one of the questions that a financial advisor will ask you with that question being what is your tolerance for risk?

It can fall anywhere between low to high.

A good rule of thumb is that if you are just starting in the market and will be in the stock market for decades, investing in a moderate to a high-risk category is a good plan of action because, over the long haul, you will realize greater dividends.

If you are starting in the stock market and are at an older age, then the years that may be remaining for your investment in the stock market may be fewer.

Therefore, you would need to consider purchasing stocks at a lower risk level.

Related: Best Stock Market Movies to Help You Make Money Trading.

 

7. Invest Regularly

The secret to investing is to begin and continue.

This means that you should be investing in the stock market according to what you have budgeted towards this expense line item.

The value of investing regularly will help you to realize the power and beauty of compound interest and you will see your portfolio grow as the stock market grows.

 

8. Leave it Alone

The temptation is to look at the market daily or even frequently during the day to see how your investment is performing.

This can be exciting, but it also can be disheartening if there is a day or period in which your investments seem to be performing poorly.

The important thing is to leave your investments alone and do not tamper with them.

 

9. Diversity

A good way to mitigate any downturns in the stock market is through diversification.

This simply means that spreading your investments over several stocks rather than just placing your investment dollars in one particular company is an excellent way of mitigating your risk and potential loss.

 

10. Partner 

In addition to the other resources available to help with your education process in making money in the stock market, it is important also to network with other individuals.

Part of that networking process is to find knowledgeable individuals in this field and ask them about educational resources that you can take advantage of to learn more about the stock market and investing.

 

 

11. Don’t Use Rent Money 

In your excitement to earn money by investing in the stock market, a critical aspect of using your financial resources is to not overextend yourself.

A budget should be created that reflects your financial investment strategy and to abide by that budget.

Is also important to remember not to utilize monies that have been designated for other expenses in the household i.e. rent money.

 

12. Avoid Volatility 

As much as possible, it is important to avoid volatility.

Even though some may define investment in the stock market as a form of gambling, it is important to minimize any unwise decisions and actual processes that can be more like gambling than investing.

One of the volatile ways of being involved in the stock market is through the purchasing or investing of penny stocks.

This is certainly not an area that an individual starting in investing in the stock market should be involved with.

It is important to gain some confidence, realize some success, and continue on that path of confidence to get acquainted with the stock market.

Also See: How Much Money Do You Need to Be Set for Life and Financially Stable.

 

13. Funds vs. Stocks

Another great option for investing in stocks is to purchase index funds.

An index fund is a type of mutual fund or what is known as Exchange Traded Fund (ETF).

The portfolio of these ETFs is constructed to mirror the components of a financial market index.

One such example would be the Standard & Poor’s 500 Index.

An index mutual fund is said to give the investor a broader market exposure, at a minimum cost and provide low portfolio turnover.

These funds are a reflection of the benchmark index and are not dependent upon how the market is performing.

Generally, ETFs are optimum investment vehicles for 401(k) s and IRAs.

 

14. Dividends

In addition to managing your risk and honoring your risk tolerance, it is important to invest in companies that provide dividends.

When you do your homework and look for companies and how they are performing by reviewing their financials, it is important to determine whether the stocks pay out dividends regularly.

This is not only an indicator of their profitability but also as a shareholder you will be part of the profit-sharing process of the company.

 

15. Take the Plunge

Once you have done your homework and feel comfortable with your level of education, understanding of the stock market, and have some money budgeted to begin your investment journey, it is important to take the plunge.

Actually, rather than taking the plunge, start at the shallow end of the pool and begin slowly and get comfortable with the process and how you handle and react to your investment.

 

How Much to Make from Stock Market Investing FAQs

 

How Much Money Can You Make From the Stock Market in a Year?

The average return on investment (ROI) for an investor in the stock market is roughly 10%.

Of course, there is no guarantee as sometimes the return may be more or sometimes less.

Also, it is important to add inflation into the mix.

That percentage range can be from 2% to 3%.

Historically, the money earned from the stock market can range from 7% to 8% annually.

 

How Do You Get Paid From Stocks?

Many stocks pay dividends which is a distribution from the company’s profits paid to shareholders.

Dividends can be paid in cash or sometimes in receiving additional shares of stock.

It is always a good idea to reinvest dividends.

 

You Can Do It

You realize that even thinking about making money on the stock market is a good indicator of your desire to make your money work for you.

The stock market can be skittish and can be labeled as a bear market or sometimes it can take on the role of being bullish.

In either case, it is part of the investment process and is the optimum investment vehicle for an individual to realize the best return on their hard-earned money.

 

Conclusion

The stock market is the most proven way for an individual to realize the best return on their money.

This investing process can be done in a couple of ways.

The individual can learn how to make money off the stock market by teaching themselves and then pursuing a stock market investment plan.

The other option is to utilize an investment firm in which you will have accessibility to a member of that firm to help you and, based on your authorization, be your investor.