Dumb Money? Not So ‘Dumb’ After All: How Average Investors Are Making Smart Moves.
Josh Newman’s career in the nonprofit sector didn’t promise vast riches. So, he took matters into his own hands by venturing into the stock market. With consistent contributions to an employer-backed retirement plan majorly focusing on stock funds and strategic investments in companies like Apple, Berkshire Hathaway, and Meta Platforms, Newman’s diligence has paid off. At 63, he boasts a portfolio estimated at around $1 million. And he’s not stopping anytime soon.
“Being overly conservative with investments might mean one could outlive their savings,” says Newman, a nonprofit stalwart from Omaha, Neb.
Historically, Wall Street has sometimes dismissed individual investors as lacking sophistication. However, the past decade has seen these “amateurs” prove their mettle, particularly in tech-driven markets.
According to Vanda Research, since 2014, the average stock portfolio of individual investors has surged by approximately 150%, edging past the S&P 500’s 140% increase. Notably, leading tech giants like Apple, Tesla, and Nvidia constitute a significant portion of these portfolios, contributing majorly to their growth.
Arash Abbasi, an AI scientist, mirrors this sentiment. Even with his tech background, he identifies as an amateur investor with significant stakes in leading tech companies. “The focus should be on the long-term game,” asserts Abbasi, emphasizing a willingness to embrace risks for potentially higher returns.
Robinhood Markets’ user data reflects a similar trend. The majority of its users invest in well-recognized tech stocks, alongside companies they’re familiar with, aligning with the age-old advice of investing in what you know – a strategy even Warren Buffett stands by.
However, it’s important to note that while many individuals successfully navigated the turbulent waters of stock markets during events like the pandemic, not everyone emerged unscathed. As with any investment, there are always inherent risks. Some learned this the hard way with stocks like GameStop and AMC Entertainment.
Yet, the broader picture remains positive. The general decline in trading activity since the pandemic doesn’t translate to a decreased interest. On the contrary, net purchases of U.S.-listed stocks have surpassed pre-pandemic levels.
Jully-Alma Taveras, founder of the online platform, Investing Latina, credits the rise of online resources and social media for the empowerment of the everyday individual in the stock market. She believes, “We’re evolving, becoming more financially astute with each passing day.”
Legal Disclaimer: This Blog post is intended for informational purposes only and should not be construed as investment advice. Every investment carries inherent risks. Before making any investment decisions, please consult with a financial advisor or professional to assess your individual goals and risk tolerance.
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