Over the very long term, the S&P 500 index has generated an average annualized total return of about 10%. More recently, the performance has been even better. The closely watched benchmark has produced a 283% total return in the last 10 years (as of March 24).
This is clear evidence that the stock market can be a wonderful way to build wealth. But it can certainly be intimidating for beginners. Here’s how I’d start investing in the stock market today with $10,000.
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Start by choosing passive investment vehicles
There might be no better option for newbie investors than to buy low-cost exchange-traded funds (ETFs) to gain access to the stock market. This strategy is called passive investing. I’d allocate $5,000 to this.
There are lots of investment vehicles out there. They often provide different types of exposure. Of that $5,000, I’d invest half in the…
