Of different places where you can invest your money, the stock market is one of the best. Returns in the stock market for investors in large numbers of stocks through low-cost index mutual funds have been between 10% and 15% annually during long periods of time in the past. There is no reason to believe this will not continue in the future provided the drivers that have caused the growth of the economy, including increases in population and increases in productivity, continue. After inflation, those returns are between 6% and 10% – much better than the 2%-4% after-inflation return you can get from bonds. Those returns aren’t like those from a bank account, however, and new investors must understand this to analyze the risks they are taking on and how to control that risk.
The first thing to understand is that no one knows where the market will be next week, next month, or even…
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