The stock market should no longer belong to the fat cats of Wall Street. It should have never belonged to them. It belongs to us, the people.
Spending away precious years of our lives in return for material possessions is a zero sum game. Instead we should focus on wealth accumulation. In order for us to claim a piece of that pie, we have to learn how to invest frequently and efficiently.
To maximize the return we get on our investment, we should all invest in a low-cost index fund such as the Vanguard Total Stock Market Index Fund (VTSAX). This fund consists of a portfolio of 3592 stocks in the United States of America. It’s about as diverse as you can possibly get and covers all public corporations big and small.
Historically speaking, VTSMX has returned 12.66% last year, 8.38% over 3 years, 14.62% over 5 years, and 7.23% over a 10 year period.
The invested sum that we place in the market can therefore grow over time. In the meantime, VTSMX will also pay a dividend rate of approximately 2% annually (or 0.5% every quarter).
Meanwhile, average annual inflation has a rate of about 3.22%, which means that prices for average goods will double every 20 years. Simply put, the price of items goes up and the buying power of your dollar goes down.
By investing, you protect yourself from inflation and the eroding value of your money.
Don’t trust the U.S. to get it right all the time? Then further diversify and put a portion of your holdings in the Vanguard Total International Stock Index Fund (VGTSX). This fund is made up of 6120 stocks from the rest of the world: Japan, United Kingdom, Canada, France… all the way to Pakistan and Peru.
From the janitor to the CEO, they’re working to make sure their company stays afloat and keeps raking in money for their investors. By owning an index and therefore a piece of every company in the world, you essentially have everyone else working for you.
Companies work to make money and please shareholders and investors. I want to emphasize this: Companies work to make shareholders happy. Not consumers. Not workers.
Most companies could care less about how happy their actual workers are so long as production and profit increases quarter after quarter. To many companies, we are nothing but a number.
Production too low? Fired.
Late for work a few times because you had to take your kid to the hospital? Fired.
Boss hates your guts? Fired (soon).
Of course, there are companies out there that do a good job and take really good care of their employees. I’ve also had the pleasure of working under some folks that sincerely cared for my well-being and happiness. However, in the end that is all a by-product of a healthy and profitable corporation with happy shareholders.
The wealthy stock-owning elites get wealthier every year. Average Worker Joe will continually be screwed over. Don’t let them have that control over you. Be a shareholder.
It’s about time we get our fair share of the pie. Start investing now and make the market work for you.