The fundamental principle in investing is the higher the risk, the higher the reward potential. That's what makes stocks so appealing to many people. Stocks are one of the riskier investments because there are no guaranteed returns, and there's always a chance your investment goes to $0. Yet, there is also unlimited return potential with stocks. Just ask investors in Monster Beverage (NASDAQ: MNST) . A $10,000 investment in the company in August 1995 would be worth over $44 million as of Aug. 23, 2022.
You should never make an investment expecting that type of once-in-a-generation return, but it also doesn't require that. Even $10,000 invested into the S&P 500 20 years ago would be worth over $35,000 today. (The S&P 500 tracks the 500 largest public U.S. companies and is often used to gauge the stock market's health.)
Investing in stocks isn't just something people do when they have extra money lying around to play with. It's something people do out of necessity to prepare for retirement . If you're young (under 40 years old, for the article's sake), stocks are where your focus needs to be.
For further details see:
Why Investing in Bonds Should Be an Afterthought If You're Young