Giving Up On The Stock Market

What's up, guys? It's Graham here.

So, for the past century, the stock market has been a tried and true method for building your wealth, making passive income, and growing your money to the point of never needing to work another day in your entire life ever again. But for an upcoming generation of new investors, that is not so much happening. Even though the stock market has experienced one of the strongest recoveries in history, free trading is practically everywhere, and Reddit users like Roaring Kitty have glamorized stock trading to the tune of tens of millions of dollars.

A new study just revealed that half of young investors feel like the stock market is rigged against them, with 37% saying that they would not want to invest in the stock market even if they had the money. Not to mention, a significant portion of Millennials are making one single mistake that could wind up costing them over three million dollars throughout their lifetime, and that needs to stop, at least on my watch.

So, let's cover exactly why so many investors are giving up on the stock market, whether or not there is actually any truth to the stock market being rigged, and then how you could rig the stock market in your favor to make enough money to buy a house, since nearly half of all renters believe that will never be possible.

Although, before we start, if there's one thing you should not give up on, it's the like button. Now, I cannot promise you that smashing the like button is going to instantly make you more money, but I can't promise you that it helps me out a ton. And if you do me that quick favor, I'll end the video by talking about this lawsuit that resulted in a tree being cut exactly in half. So thank you guys so much, and also a big thank you to AppSumo for sponsoring this video, but more on that later.

Alright, so before we go into these findings, let's take a brief moment to talk about the stock market. For anybody curious why we have a stock market in the first place, because most people have no idea the really cool backstory behind all of these numbers that we see here. Actually, let's make this a bit more fun. There we go, that's better!

So gather around the campfire, and I will explain exactly how all of this was made possible for everyday investors with as little as an iPhone and a Reddit account to Wall Street Bets. It all began in the early 1500s when European countries would complete trading expeditions around the world. But there was a problem: even though these trips were extremely profitable, they often took months or years to complete, and they were insanely expensive to fund.

As a result, it became difficult for investors to stay afloat, pun intended, while they waited for the ship to return that easily could have been robbed by pirates, experienced difficulties, or simply just could have not come back. So these expeditions began selling shares of their profit for anyone who wanted to buy in as a way to get more people involved and spread the risk throughout a greater number of investors. Then, when the ship returned, the profit was equally divided in proportion to the number of shares owned.

Over time, that strategy began evolving throughout other businesses as well. Pretty soon, selling stock became a way for companies to raise capital, allow people to return on their investment, and spread their risk throughout more investors. And now it looks something like this, where you could get a free stock down below in the description that's now worth all the way up to a thousand dollars.

But despite that, there's a reason why more people are refusing to invest in the stock market right now. Oddly enough, some of this begins with the topic that I did not expect to mention again so soon, and that would be GameStop. Now, I'm sure this needs absolutely no introduction, but for anybody who happened to turn off their phone earlier this year, the GameStop short squeeze was an event where retail investors piled into the stock and caused it to skyrocket in price. Hedge funds subsequently lost billions of dollars, and as a grand finale right as things were going to the moon, trading was temporarily halted, which resulted with intense regulatory scrutinization over how stock prices could be manipulated.

Even though the damage was far-reaching throughout retail investors, one of the less talked about aspects of this was the impact this made on newer investors, and as a result, some of them flat out do not trust the stock market and refuse to invest. In fact, of those who followed the story, 39% believe the stock market is a great way to make money quickly, while 20% believe the stock market is too risky.

Additionally, only half of young adults believe the stock market is a good thing for ordinary people, and even more surprising is that 37% would not invest at all even if they were given money specifically for that purpose. Honestly, young adults aren't even alone in this because, as we go further down the rabbit hole, you'll begin to see this is just the beginning.

Bankrate conducted a separate study across adults in the United States, and their findings suggest that nearly 50% of Americans feel like the stock market is rigged against them. They also found that more than 39% of American adults had no money invested in the stock market either before the pandemic or currently, and even Yahoo Finance found that 43% of Millennials are not investing either. And that's a huge problem.

Now, I know I'm preaching to the choir here, and chances are if you're watching this channel, you already know you should be investing. But once you take a step back, you begin to realize that you're not the average, and most people have no idea just how big of a mistake they're about to make. Unfortunately, though, it really appears like the main issue behind all of this is simply just a lack of education and a lack of understanding in terms of how to invest.

That was pretty obvious by reading through some of these reasons, so let's go ahead and debunk each of these one by one. In the next five minutes, you can understand 95% of investing. Really quick, I want to give a huge shout out to a fellow YouTuber, Noah Kagan, who is kind enough to sponsor this video with his business, AppSumo, the leading digital marketplace for entrepreneurs.

Real talk here, but being self-employed is kind of like giving yourself a dozen jobs in one while you split your time between customer service, sales, answering comments, and trying to come up with coffee designs. It's never ending. But AppSumo helps you automate all the busy work, focus on boosting productivity, and focus on what matters the most, like smashing the like button for the YouTube algorithm, for example.

They've got software like Mail Backup X that helps backup and restore lost emails, contacts, and calendar notifications for a fraction of the cost, meaning I never have to worry about accidentally deleting something and then forgetting what it was. Over a million entrepreneurs and creators trust AppSumo to help them discover, buy, and sell the products they need to grow their business. So let AppSumo be the engine for your growth, so that you could focus on doing more of what you love.

Plus, as a special bonus to the channel, AppSumo is giving twenty dollars in free credits to the first 500 people who use the link down below in the description, so that's basically just like getting free money. Definitely go and check them out, use them to your advantage, save some time, and thanks again to AppSumo for making it all possible.

Now, with that said, let's get back to the video. Alright, so in terms of the five biggest reasons why so many Americans have given up on the stock market: first, 56% said they simply didn't have the money to invest. Now, this is a little bit surprising, given the average American spends eighteen thousand dollars a year on non-essential items.

But the truth is, money is not necessarily the most important component of investing, and instead, it's time. The longer you invest your money for, the more time it has to grow. For example, invest a hundred dollars at the age of 40, and at an eight percent return, it'll be worth 466 dollars by the time you're 60. That's not bad.

But had you invested that same hundred dollars at the age of 30 instead, well then it would be worth about a thousand dollars by the time you're 60. And had you invested that same hundred dollars at the age of 20, well then it would be worth over two thousand dollars by the age of 60.

That means the future value of your money doubles for every decade you decide to invest earlier. By that logic, it's a lot better to invest a little bit of money now than to wait and invest more money later. The second, 32% say that they don't understand stocks, and at least this one is a little bit more understandable on the surface.

Stock trading can look confusing. There are so many graphs, charts, and reports specific to each, argued by a different analysis with opposing interpretations and expectations. But just because you don't understand something doesn't mean you should give up altogether, because there is an easy solution to this. For the vast majority of investors out there, it could really be as simple as signing up for a free stock trading brokerage in less than five minutes and then consistently investing your money in a broad market index fund that tracks a little bit of everything, like FIZZ, ROCKS, SWISS, or VTSAX.

And then that's it! For almost everybody, this is by far one of the best approaches to take without having to learn all the nuances of buying and selling call options on Robinhood. The third, 13% say they're more comfortable with safer investments like savings. Now, this is probably one of the most dangerous assumptions because it plays into the mindset that if you invest, you could lose a lot of money, where in reality, this couldn't be further from the truth.

As long as you follow a few simple steps: one, in the short term, throughout the next few years, who knows what's going to happen? There are certainly times where the market suddenly falls, investments are wiped out, and yeah, you could lose money, but throughout the entire market, one thing has always remained the same: the longer you keep your money invested for, the higher the chances are you will make money.

And as you can see, after about ten years, your chances of losing money is pretty much non-existent. After a 15 to 20 year holding period, the S&P 500 has never once delivered a negative result. Now, two, you should never just invest in one or two individual stocks and that's it. Anytime you invest, you need to diversify.

Because just like the Europeans risked having their ships robbed by pirates, you could unknowingly invest in the next Enron or JCPenney and lose your entire investment when they go bankrupt. So, as a general rule of thumb, the more stocks you buy, the higher the chances are you make money. And three, investing in a savings account is about as pointless as a red light in Grand Theft Auto.

Now sure, it could be a really great insurance policy to keep cash on the sidelines in the event of an emergency, but beyond that, you're pretty much guaranteed to lose money by saving it thanks to inflation, and that'll continue being the case as long as we keep printing money. Now, for 13% of Americans say they won't invest in the stock market because it's rigged against them.

I'm not going to argue that there's absolutely stock market manipulation that takes place on a daily basis, but usually, these items are short-lived, and across the wide spectrum of the entire market, those factors can only influence the stock's price for so long before eventually things return to normal and stabilize. Finally, the fifth reason why 11% of Americans are not investing is because of volatility. Like I mentioned, short term, anything could happen, and it's certainly not a good experience to buy into a stock and then have it instantly drop because you bought it.

But even though the day-to-day could appear to be crazier than Too Hot to Handle on Netflix, when you zoom out to a larger picture, year by year, you'll see that those graphs quickly level out, and overall, the trend continues higher, even though day to day it appears to be volatile. Unfortunately, this trend of not investing means that Millennials could be missing out on 3.3 million dollars if they avoid the stock market throughout their lifetime.

Like NerdWallet analyzed the last 40 years of stock market returns, and they found that if you invest just 15% of the median income in the US, beginning at the age of 25, you would have a four and a half million dollar balance by the time you're 65. However, if you just threw that money in a savings account earning an average interest rate, you would only be left with one million two hundred and seventy-one thousand dollars by the age of 65.

And had you been Pablo Escobar and just held all that money in cash underneath a mattress because you don't trust the banks, your total savings would have accumulated to 563,436 dollars by the time you're 65, which is pretty much four million dollars less than had you just invested that money in the stock market consistently. To make matters even more convincing, not one of the ten thousand probability simulators lost their initial investment in the market over a 40-year time span, meaning the biggest risk of investing is just not investing.

Plus, if it makes you feel any better, since we have been trading your all-time highs consistently throughout the last year, just consider this: since 1950, the market has hit an all-time high seven and a half percent of all trading days. If we include the time the market spent within one percent of an all-time high during that exact same period, the market was at or near all-time highs one out of every five trading days.

In addition to that, from 1988 to 2020, investing at cash at all-time highs paid higher returns for all three time periods when compared to investing on a random day. And over a five-year time span, the S&P 500 has never finished a period down more than 10 percent. So historically, your chances are pretty good investing at or near an all-time high and not really losing that much money, even in the worst-case scenario.

So overall, even though most Americans believe the stock market is rigged against them, the best way to rig it in your favor is to simply keep investing consistently, and that's it. No, it's not a quick way to make money like 39% of young adults believe, but it can be a great way to preserve your wealth and grow it long term, as long as you don't do anything stupid.

And lastly, speaking of stupid, for everybody who helped me smash the like button for the YouTube algorithm, here's a story you all came for and why this tree is cut in half.

Twenty-five years ago, the tree was planted outside the house, but over time, it attracted birds, and with that brought a lot of noisy chirping and poop. The neighbor on the right requested that the tree be removed, but when that request was denied, they took matters into their own hands by cutting the tree exactly in half of the property line illegally. Here in the U.S., you're allowed to do whatever you want with strawberries that grow across your property line, so no laws were broken, but I would hope that they at least ask for a discount on tree trimming because by the looks of it, they got half off! Get it?

Alright, I'll stop. So with that said, you guys, thank you so much for watching. I really appreciate it. As always, make sure to subscribe and hit the notification bell. Feel free to add me on Instagram; I post pretty much daily. So if you want to be a part of it, feel free to add me there, as on my second channel, The Graham Stephan Show, I post there every single day I'm not posting here. So if you want to see a brand new video from me every single day, make sure to add yourself to that. Let me know what you think. Thank you so much for watching, and until next time!