Why stocks can make you rich

Now, many people think that stocks and shares are not for them.

But the truth is that stocks are for you - if you want to get rich, just so long as you never commit more than you can afford to lose. And therein lies the key.

The fact is that stocks and shares can go up as well as down and sometimes they even go bust and you lose everything.

This means you must never put in more than you can afford to lose, as with your cash savings in the bank it's pretty much as safe as houses but not so as we know with stocks and shares.

But with that caveat out the way, that which you can afford to lose is fairly safe in the stock market if invested around sectors to maximise the diversity in your portfolio and track the markets - IF you can leave it there for years.

Now that's the big caveat, because short term losses are virtually always ridden out over the long term.

Indeed historic studies of the British stock market going back in ten year periods shows that the markets out perform cash saved in the bank over those time periods... indeed over fifty years or so the amount of money a few thousand invested in stocks and shares turns into is just huge when that same sum is compared to what you would have got out of bonds, savings or of course just cash in the standard bank account.

So the bottom line? Don't just discount stocks and shares as too risky, or too hard to understand, or just not for you - because if you do that you might just be turning your back on what could make you really rich over the next five to ten years or so!

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