STOCK INVESTING IS NOT PASSIVE INCOME!
I hear people say from time to time that they want to learn how to buy stocks online because they want some “passive” income. They are under the impression that you can buy stocks, sit back, and watch them appreciate.
Now there was a time many years ago when that seemed to be the case. Buy and hold was a popular phrase back then and it means you buy a stock and just hold it many years for a nice gain. Nothing much extra is needed with that strategy as the stock market has proven it goes up over the long term and so do most stocks with it. But is that really the case anymore?
The stock market seems to be more volatile in the 21st century than ever before. Part of that is due I believe to the ease and speed at which you can make trades along with the cheap price. This has led to more people actively trading stocks rather than investing in them. The availability of information is also partly due to this as the Internet has done much to even the playing field between average everyday investors and the professionals.
Everything moves at a faster pace than it did years ago. New industries are born every week it seems and established industries have trouble keeping up and adapting. Sony used to be the dominant company in music with their Walkmans and now they are no where to be found and most kids have never even heard of one. First it was cassette tapes, then CD’s, and now mP3′s with Apple being the dominant player. Who konws what is right around the corner and when it will come?
You used to be able to buy a blue chip stock like GM and sit on it for 20 years for a better profit than you could get at a bank with certificates of deposits or with Treasury bills from the U.S. government. Now if you buy a stock and check back in 20 years, that company may not even be in business anymore or they might have been sold several times! In other words, the best stocks to buy right now may not be the best stocks to own next month or next year.
Investing done right is NOT passive. The more money you have and the more stocks you own, the more you really need to keep on top of things. You need actively manage your portfolio by keeping current with all the financial news and company happenings. It is your money after all and right now it takes more work to manage it than you might expect.
