What is the best way to earn money in the stock market?
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There are many stock market strategies that can be employed to make money in the stock market. Many of these strategies involve simple diversification, long-term investing and low fees. A few examples include:
Diversification – stock market investing is risky. Diversifying your stock portfolio reduces risk by having more than one stock type. A few examples of diversified portfolios are:
Long-term investing – by not trying to time short term stock market moves you will be better off in the long run. If your goal is for your stock portfolio to last decades then it doesn’t make sense to sell stock when the market is down. This stock market strategy requires you to have a long time horizon and be able to weather short term stock market bear markets, i.e., when stock prices are dropping over months or years.
Low fees – Investing in low fee funds can greatly improve one’s portfolio performance over time because your returns will not be eaten up by stock market fees. Popular low fee stock funds are index funds, i.e., mutual fund that follows an stock market index like the S&P 500 (SPX).