Why Do I Need a
If you want to buy stocks, you're
going to need a broker. Also, who wouldn't want to own stocks? There is
no place over the past 100 years where your long-term savings would have
fared better than the stock market -- not in bonds, not in real estate,
and not in gold.
However, before you start tracking the Dow's every move; before you run
the numbers on a company's cash flow, you should set some expectations.
One good rule of thumb is that if you've got money you won't need for
at the very least, five years, and hopefully longer, then you should invest
it in the stock market. Money earmarked for earlier use (such as a down
payment on a house, or a graduating senior's college tuition) should be
put in a short-term savings vehicle like a money market account, savings
account, or certificate of deposit (CD). Also, if you have high-interest
credit card debt, send all your extra money directly to your lender and
pay off that bill.
For the long-term money, there is no place where you historically could
have gotten a higher rate of return than in the stock market, especially
recently. As measured by the S&P 500, the market has returned a whopping
19% with dividends reinvested over the past 10 years. In fact, it crushes
the historical (since 1926) average annual S&P return of 11% (which still
isn't too shabby). But this trend won't continue forever, and before you
start investing, you should consider that.
Nevertheless, over the long term -- during bull markets, bear markets,
Depressions, recessions and elections -- the stock market has been the
place to be, and a discount brokerage account will get you there