How to Make Easy Money in the Stock Market

Every trader who ventures into the stock market typically wants to earn a large amount of money, with minimal effort, in the shortest amount of time possible. While it is not always possible to earn a large amount of money in a short period of time, you can use several easy strategies to make money in this market. If you want to participate in the stock market and make money, you must be willing to avoid hype and do your own research.

Instructions

1. Choose an individual company stock and make a purchase. Once you buy the stock, hold onto it for an extended period of time. Instead of buying and selling rapidly throughout the course of a day like many traders do, hold onto the stock for the long-term. For example, you might need to hold the stock for five to 10 years, depending on the industry.

2. Invest in index funds. Index funds typically track a financial index, such as the S&P 500. To do this, the fund purchases every single stock in the index, weighted toward the bigger companies. By doing this, the fund can earn returns that are very close to what the index earns. According to a study by Dalbar, from 1986 to 2005, the S&P 500 averaged a return of 11.9 percent. This is better than most mutual fund investors and individual stock investors earn. You do not have to worry about choosing individual stocks, and you can leave the administration of the investment up to your fund manager.

3. Use a managed account to earn money in the stock market. A managed account is a type of vehicle in which you turn the controls for your stock market account over to a professional. The professional's own trading account is linked to yours. Then when the professional makes a trade, the same trade is made in your account. By doing this, you will not have to worry about choosing your own stocks or knowing when to get out.

Tips & Warnings

• Research your stock picks carefully when you are investing on your own. Do not simply take the word of an analyst you see on TV or on a website. Look at the company's financial statements and use financial ratios like the price-earnings ratio to gauge whether to buy a stock.

• Avoid working with programs or analysts who make recommendations and promise exceptional returns quickly. Many of these programs are scams, and you could lose all of your investment capital.

References

• Get Rich Slowly; Make Money Quick! In the Stock Market!; J.D. Roth; August 2006
• The Digerati Life; Why Most Investors Don't Make Money in the Stock Market; 2011
• Bloomberg Business Week; Buy and Hold Strategy Not Dead Yet for 94-Year-Old Investor; Margaret Collins; September 2010
• Charles Schwab; Managed Accounts vs. Mutual Funds; March 2008