There are three ways to invest in the stock market.
1. Pick individual stocks
2. Let a professional stock picker pick them for you
3. Invest in an index fund that invests in all the publicly traded companies.
Statistically, it is difficult to outperform the stock market over time. The reason why is that when you purchase a common stock, you aren’t really investing in the growth of the company. You are betting that you are smarter than the millions of other investors who are betting on the same growth as well.
That’s only part of the story. The issue is that many investors are not able to stay committed to their investments, and dramatically underperform benchmark indices over time. (See www.dalbar.com)
To explore what strategy is best for you, play a simple game of logic that I created called “Outfox the Box.”