The Stock Market: Should You Invest in It?

I’m not going to claim that I’m an expert on the stock market despite the fact that I spent years advising people and helping them invest their money while I worked for several large banks. In fact, I don’t think there is anyone that can really claim to be one. Yes, I know that there are some people who claim to be experts. They advertise that and even have some monetary results offered as proof that they are. But in my humble, non-expert opinion, advising and successfully picking stocks in the market is very difficult. It’s a high risk maneuver at best, and I’ve actually compared it to gambling in my past writings.

If you're wondering, "should I invest in the stock market?", then read on for some considerations before you decide to invest.

Having said that, I will have to admit that some people who gamble actually can win big. While the stock market isn’t exactly spinning a wheel and hoping it lands on “jackpot”, it is a guessing game where you can educate yourself and then make a “smarter guess” than the wheel spin might offer. So you may be asking yourself, “should I invest in the stock market?”. Here are some facts to consider.

Stock Market History

The market has had growth over time, so much so that believe it or not, over the past 90+ years, it has averaged a gain of about 10% per year. That has occurred despite periods of ups and downs, like the recent drop in market values just a few years ago to the record setting gains of this year.  Unfortunately that doesn’t mean that you have seen that happen in your investments. In fact, the kicker is that it probably hasn’t performed the same way for you as an individual. That’s because timing, category, and many other factors make such a difference in your investment performance that in the end, your smart guessing may or may not work for you.

Risk Tolerance

Millions of people either invest or want to invest but there are questions as to who should and when. Risk tolerance is a term you will often hear when it comes to investing. I know all about that because mine is pretty much nil these days. At 67, retired and not as healthy as I should be, I’m more or less in the mode of protecting my money. I’m doing mostly conservative things and saving as much as possible on my expenses (hence, Super Saving Tips) to maintain my net worth. Your case is probably different. While in most cases, I’m not entirely comfortable with retirees investing in the stock market, some do. To me, the market is part of the building wealth scenario. Because of its long term implications, it’s geared more towards the upwardly mobile young person who has a much higher risk tolerance and time horizon to weather the ups and downs of the market.

My Own Experience

Back in the 1970’s, I started investing in the market myself. At the time, the thought of managing your own retirement portfolio was ridiculous and so it was important to have a broker. I kept an account at what was then Paine Webber (now merged with UBS AG, a Swiss company). It was a traditional brokerage firm where I had a broker advising me as to what he thought was the right way to go and yet still keeping in mind my limitations and fears. I maintained that account while I was moving up and increasing my salary and net worth.  Eventually, but the late 80’s and early 90’s, I was having a great success capitalizing on and making huge gains in the “tech” explosion of that period. Thank you AOL, Microsoft, and others for that. It became the money that I used to fund my IRA’s and an annuity that supplements my retirement to this day. I haven’t invested in the market since my divorce in 1998 (as I approached age 50). Was that a mistake? I don’t know, but certainly I had peace of mind as the market has roller coasted throughout the 21st century like it hasn’t ever done before.

So Who Should Invest, and How?

The answer isn’t simple. My thought are that young people with time on their side have the best chances. Especially because investing has changed with the technological boom. In the past, the traditional “let me call my broker” type of activity was the only way to do it. And with that way came the advice, recommendations, buying, selling, and of course the expenses of all of that contact and work. The costs of investing are one of the real factors that need to be considered because I know, from having been on both sides of this equation, one solid fact: your broker makes money whether or not you do.

Good news, however. If you are interested in investing (think long-term here), today there are online brokers that can handle your investment needs faster and for much less than the traditional brokers. If you’re the kind of investor that doesn’t need or want the heavy contact and prefers minimal advice that will save you money off fees and commissions, then online investing is probably for you. There are advantages with the traditional brokers, but you pay for that every step of the way and frankly, I can’t declare that those who do are going to be more successful. Better informed, maybe, but not necessarily better off.

Where to Invest

Every year, Kiplinger ranks the best online firms that offer their services and are recommended by their clients. Here are the current top rated online firms you may want to check out to see if they’re right for you. Each of them will offer you an incentive (like most of the credit card companies do) to get you to sign up, and in many cases, it’s quite a great deal.

  1. Fidelity – Always highly rated, has great no load fee and no load cost mutual funds.
  2. Merrill Edge – For those who are very active in number of transactions, cost is low at $6.95 each and if you like the rare combination of a bank connection with real people and offices, they are available through Bank of America. They also offer 90 day free transactions and up to $600 cash upon signup.
  3. Charles Schwab – Advantage here for any EFT transactions you desire at a very low transaction fee, earn 500 free transactions when you start your account.
  4. E-Trade – Has the best mobile access, perfect for those who are never without their smartphone in hand. Earn up to $600 cash and 60 day free trades upon signup.
  5. TD Ameritrade – Track performance all the time, has great info about the stocks and funds with easy access. Earn 90 day free trades and up to $600 cash when signing up.
  6. Scottrade – If you like brick and mortar availability, they have over 500 offices in addition to online. Up to $2,000 cash bonus upon signup plus 50 free trades.
  7. Vanguard – Recommended and known for its performance on its own mutual funds particularly. It’s a low cost and affordable way for even a retiree to invest.

Maybe you’re just getting started or just want to dip your toes in. Then you might want to try one of these alternatives:

  • Motif Investing – Lets you purchase a bundle of up to 30 stocks (a Motif) for less than $10.
  • Acorns app – A free passive investing tool which automatically invests your “spare change”.
  • Robin Hood app – Free app that lets you purchase any stock without fees.

Whether you decide to invest in the market or not, think about your risk tolerance and consider the “what if” factor. If you don’t make any money, or if you actually lose money, will it make any major difference in your life in the short term, and in the long term?

Are you a risk taker? Do you currently invest in the market? What part, if any, does stock market investments play in your future and retirement planning?


  1. We do invest in the market. I have a rolled over 401K that’s active and my wife contributes to hers at work. I do agree that the early you can start the better. It’s something I keep telling my teenagers about. When I start an investing conversation with “How would you like to be a millionaire?” It usually gets their attention.

  2. I think investing is the only game in town to stay ahead of inflation. Ten years ago, Mr Groovy and I had a 1 year CD with no penalty for early withdrawal – at the rate of 4%! You can’t get a decent interest rate anywhere these days. I believe that’s why the “younger generation” is finding real estate so appealing. But the tried and true method of using index funds for the long term seems to be about the safest way of taking advantage of compound interest.

    1. At my age, I’ve really steered clear of investing in the market or mutual funds. My wife has had a substantial amount of her retirement money building in mutual funds, and since she’s younger than I am, I feel that’s a good move. Your view is obviously what’s working best for you and you’ve given good thought to it.

    1. For my wife I definitely think that the Vanguard funds are a good idea. Being 67 I just don’t have the “guts” to take any risks because I really feel I’m in defense mode on protecting my assets. I agree that taxes and inflation can eat away at it, but I just don’t want to take the roller coaster ride in asset value of any investments.

  3. I’m banking on the fact that the market usually returns 7% on average over the long-term. I have my retirement account fully invested in the s&p 500 and my trading account to have fun and make a little extra money. If I lost all my money in my trading account, which is pretty sizable, I will never have financial trouble because of my retirement account!

    1. Fidelity is highly rated, so I think that’s a very good choice, and if you’re happy, no reason to change. Consolidating from a number of other brokers may be costly just from fees, however if the performance is really bad, it may be a good investment to consolidate. That’s something you’d have to investigate.

  4. Hey, Gary. Love your tutorial. It’s all about one’s risk tolerance. If a 50 percent stock market plunge will seriously harm your retirement plans, then you should have as little exposure to stocks as possible. Mrs. G and I are being very cautious as we enter retirement. We’re looking at a 40/60 split between stocks/bonds. Is that too cautious? Or does that entail too much exposure to stocks? We’ll see. The next few years should be interesting. Thanks for sharing your insights. It’s always great learning from someone who has a healthy fear of the stock market.

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