Updated: Apr 21
Before going to reveal the secrets of how to become a millionaire with the stock market, I would like to define the stock market in a distinct way that you've never heard of. The stock market is the aggregation of buyers and sellers of stocks. It is not just some random price movements that make up a crazy chart. Like every other market, to buy or sell a stock both parties should come to a deal to exchange the stocks. The price of the stock is determined by which party is dominating the market at that moment. If the buyers dominate the market, the prices go higher. But if the sellers come to rule, the price crashes. Let's proceed to our first part on how to become a millionaire.
I assume there is no wonder in the explanation of what the stock market is. But it is vital for you to understand what the stock market is in this way so you can jump into it with facts and science and not as gambling.
There are two ways that you can reap the fruits of the seeds you have sown in the market:
Both of these terms closely resemble each other and they are almost the same. The similarity of these two terms can be torn apart by a single independent variable.
Can you guess what it is...? It is time. Time is the only thing that distinguishes investment from trading. Of course, there are several other minor factors that make the difference but it is the major one.
Why so?.. The answer is simple. If you buy a stock and hold it long-term it is called investment. If you buy and sell it in the short or medium-term it is trading. Both of them have their unique perks and ugly disadvantages. There are multiple types of traders as well as investors. We will talk in general about both of them and how it helps us in the journey to becoming a millionaire.
Investing is an extremely long process in which you have to buy the shares of the company and hold them for a longer period. Investors invest in a stock-based mostly on the fundamentals of the company. They try to understand the value and anticipate its future growth.
People like Warren Buffet are one of the legendary examples of investors. One of the biggest disadvantages of investing is the overnight news. Famous companies had gone bankrupt in a single night. Imagine you have invested millions of dollars in a company and the next day morning you have nothing you have invested in the specific stock. But it's a highly unlikely scenario.
On the other hand, trading refers to buying and selling shares in the very short term. Traders buy or sell the stocks on the basis of technical analysis which is based on past price actions.
Some traders don't care about the company's worth or don't even know what the company's doing. Damn cool, right! But it's not as easy as it seems. Most traders also invest in companies that they think will help with the inflation rate and help them in long run. The major disadvantages of trading are controlling your emotions, volatility, and limited timeframe. But unlike investing you can close your position and exit on that day itself.
Knowing both of them, it's you who should decide to invest or trade. I would suggest full-time workers with a tight schedule to invest. And those who with a liberal amount of time and good control over their emotions try trading.
Here is the real deal, trading is like a job. You can be anyone a software engineer, a doctor or an engineer. You have a source of income. Consider trading as a source of income like any other job. But investing is the real deal. Whether you're a trade or a person from any other profession. Earning and investing is the key to becoming a millionaire. I have seen stocks grow 1500% in three years. If you have invested just 10,000$ it would be 15million in just three years. But how to pick such a stock that has such potential? (It is a vast area of subject that can't be explained in this blog) No matter what job you do, invest at least a small amount of your income less risk index S&P 500. Patience accompanied by a smart mind is the key to success. Even a very little amount you manage to slip to potential stocks will make you a millionaire.
This is the basic outlook and the first step you should know to become a millionaire.
More detailed insights into obtaining financial freedom will be posted on the upcoming blogs.
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