Don't Invest in Stocks Unless You Can Answer This Question
The stock market is probably the best tool that investors have at their disposal for generating lasting wealth. We can look at the S&P 500 to illustrate this point. This index of the 500 largest businesses in America has produced an average annual return of roughly 10% over the past 50 years. An investment of $10,000 in 1972 would be worth about $1.49 million today if all dividends were reinvested. That's a remarkable outcome for not having to do anything besides wait.
But if you're considering investing in stocks with the hope of achieving these kinds of returns, then you must be sure to ask yourself this one question: "Do I truly have a long-term mentality?" Here's why this perspective is so important to becoming a successful investor.
Even a newbie investor can quickly notice just how volatile stocks are, moving up and down like a roller coaster each and every trading day. This is because shares in businesses are driven entirely by investor sentiment in the near term, something that really can't be predicted. Factors not even related to the companies themselves can affect prices on a daily basis, like central bank policies, geopolitical turmoil, and even weather.
Source Fool.com
