Wednesday, July 21, 2010

Buy Stock To Beat Inflation

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One of the best reasons to buy stock is to beat inflation. I went to the bank the other day and I just can't believe that interest rates are so low. Something that doesn't bode well for the stock market in my opinion. Once interest rates rise, the market will probably go down as it historically has. I could be wrong. But even though the statistics show us that inflation is really low, everything seems to cost me more so the inflation rate in my opinion is a lie. That being said, in order to grow your savings, you've got to look for a higher return. That return has usually been derived from stock market investing. You've got to buy stocks if you want to outpace inflation.

That being said, the hard part is posting stock market gains. Just because you can do better in the stock market doesn't mean you will. The way I see it, you have three choices.


  1. Invest in mutual funds

  2. Invest in stocks

  3. Invest in a combination of the two

Buying a stock mutual fund and holding it forever is one way to see gains in your portfolio over the long term. These can be index funds or any variety of mixtures of investments. Because these funds are fully invested almost all the time, they tend to go up and down with it. Expect fluctuations.

Learning how to buy stocks is a challenge and not for everyone. I'm convinced that most people can do as well or better than their broker. I have said this before, anybody can leave the money in the market and watch it decline almost 50%. The key thing with your broker is this. If you have individual stocks, you have to sell them at some point. Gone are the days that you can hold it forever. If you do, you are almost guaranteeing yourself a disappointment down the road. I have seen it happen with many retirees. The stocks value tanks right when they need it. The industry preaches buy and hold but doesn't practice it. There's a reason for that so you should take notice.

Learn to look for stocks to buy with institutional support and sell when it does. You can tap into this by learning how to read stock charts and by following the advice of William O'Neil.

Start studying the market! I feel like a cheerleader..lol. You might also check out my Ultimate Buying Stocks Guide to get you started.

Good luck!

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