Is the Stock Market *actually* risky?

“The stock market is too risky!”

“You're just gonna lose all your money!”

If you’ve ever mentioned investing in the stock market in casual conversation chances are you’ve been met with a lot of fear reactions and negativity; comments on how it’s just like gambling, and horror stories about how someone’s friends’ uncles next door neighbour “lost everything”!  

It’s normal to have emotions around something that is unknown because when it comes to the human brain, it's literally designed and wired to keep us safe.

So when I hear things like this it just tells me one very clear thing…… They don’t know the full story and they don't have the knowledge about the stock market.. YET.  It actually tells me more about where that person is at in terms of their understanding than anything else.

It might be that they have genuinely had a negative experience of trying to invest and have lost money because they've stock picked. Or maybe they sold at the bottom of a correction (this is common).

Maybe they just think they know and have never done anything more with their money except earn it and squirrel away in a bank account.  This in reality is much more of a gamble than investing properly in the stock market, because as soon as you stop exchanging your time for money, (what a job is), then what?

When someone says “it's risky” I always ask them: relative to what? Compared to what? 

Here in Ms. Wealthy HQ, we are all about having you confident and empowered with your money and with your decisions around money and wealth creation. I want you to have the knowledge so that you know the exact decisions to make throughout the rest of your life (not just today), because answers now, based on your current circumstances, current goals, current values are completely different to what it's going to be like in five years, ten years, or even further down the line.

So if you are hearing from other people who are in debt, who don't invest, who have no goals around money and wealth creation, who don't care about wealth, who judge other wealthy people, and that aren’t in alignment with you, then here’s what to do:

Get educated and seek the answers out for yourself.

Because personal finance is… personal.

Head over to www.investingbabe.com and check out my program Investing Bootcamp, where we teach everyone just like you to invest successfully long-term in the stock market and have you confident to grow wealth to $100K and beyond!

----------------------------------

LEGAL STUFF: All content provided by Ms Wealthy Pty Ltd (we, us, our) is for education purposes only. Any use or reliance on this content is entirely at your own risk. The content is factual information and general comment only and does not constitute advice. I am not a licensed financial advisor. The content does not take into account your personal objectives, situation or needs and may not be appropriate for you. The information that is found here are my opinions, and should be taken as such.

Listen in here, and where you get your podcasts:

Prefer to read the transcript?

My name is Simone Mercer-Huggins. I am an investor and trader, and so far I've built over seven figures from the ground up. And now this community is doing the same. The Ms. Wealthy movement is here to share tools, resources, strategies, and support, and full things, financial freedom tune in for everything, money investing, mindset trading and everything in between. If you want to be a powerful player in the wealth creation game, you're in the right place. So welcome to the kiss, my money. Okay.

Oh my God. I can't believe you're investing in the stock market. That's so risky. What are you doing? That's basically like gambling. You're pretty much throwing away all of your money. You might as much as bet at the casino because seriously, I wouldn't touch it. You probably just, you lose all of your money. It's so risky. You have probably had all of those things or a variation or something very similar. If you ever spoken to at least a few people about investing. Now, this isn't true now in my world, like my immediate world with people who get it, but I have these conversations and still hear this on the daily. It's everything from FIA, the belief that other people have lost money. And therefore that's what it truly means. But I hear these phrases all the time. The stock market is really risky, or I don't want to invest in the stock market because it seems really risky or I'm not going to invest in this dogma hit because I'm going to lose my money.

Basically, something like that, pretty much like a hundred different variations of that same thing. And when I hear that or people say that to me, here's the thing. It tells me one very clear thing. It's just information. And it tells me this, that person. And it might be, you just doesn't know the full information and they don't have the knowledge about the stock market. And that's okay. It gives me information about where that person is in terms of understanding and having the knowledge. But if someone ever says that to me, I know exactly where they're at. And it might be that they've genuinely had an experience of trying to invest and then losing money because they've stopped, picked, and just like chosen a random company. And then it didn't work out well. Or maybe they sold at the bottom of a crash. You know, it happens every seven to 10 years because I freaked out and didn't actually have a plan and didn't understand.

So there can definitely be things that have happened, where they have genuine, like people have genuinely lost money. Of course I have. But again, that would only have happened if they invested in a way where they didn't understand what they were doing and they didn't have the knowledge and that might be triggering for some people, which I understand. And it's ultimately just the truth. So when someone ever says to me, the stock market, it's risky, or, uh, you're just gonna lose all your money or people have that fear. It's okay to have that emotion around something that is unknown because when it comes to the human brain, it's literally designed in a wired to keep us safe. So anything that is unknown, anything that we can't control, anything that we don't understand seems scary and therefore a threat and therefore, biologically, we are wired to be fearful of it because it's the unknown, right?

There is safety in the things that we know, which is why we have sayings. Like, you know, you don't grow in your comfort zone and all that sort of stuff. And it's true because in the comfort zone, it's things that, you know, and things that are therefore safe. But once you understand this world of investing, then you have the knowledge and then you know how to navigate it. So the answer to the question is, is the stock market actually risky? Well, inherently the stock market as a whole, no 10, you do it in a really risky way. Yes. And so when someone has that question, it's, what's kind of a bit of a loaded question, but it's also a question of, well is crossing the road risky is getting on a plane risky, but we all do those things pretty much every day. So I want to explain to you and break down some of this, and this might be for you, if you are already an investor and you don't know how to navigate this conversation with other people around.

Oh, but you know, my uncle said this and my dad said this, and my friend said this, and now I'm starting to feel really uncertain because they challenged me on things. Maybe I don't fully understand it. And it's also for you, if you have been thinking about investing and you have these notions that it's risky and it's like gambling. So when I'll break down some of these things, cause it's going to really help for you to see it for what it is and to understand this whole thing about risk. And is it actually like gambling? Can you actually lose all of your money? And what do I say to people? Okay. So the first thing I really want to look at from a top-line perspective is relative to what? So when someone says, oh, it's really risky relative to what? And usually the comparison is keeping money in a bank account, earning.

Let's just, I mean, it's, fuck-all interest really is. And most of the time you're losing money in a bank account. At least you're losing the value of it because inflation outpaces the interest that you earn in a bank account. So a bank account is not going to grow wealth. So for the purpose of accumulating wealth bank account does nothing. So if we're comparing it to something that loses money, well, the stock market does have volatility, but again, comparing it to what, and if you, you know, often people don't actually think about how the whole kind of money system works. Meaning the only reason that you have money in a bank account is because you have ant it, right? You've earned an income you've received that, that money from someone usually in the form of employment. Even if you have a business or a job you're still receiving the income from that job, that business.

And so relative to your job, isn't that also risky relying on one single individual company or business to employ you and pay you. Isn't isn't that risky? Like, I mean, some people would say yes, some people would say, well, no, my job is really secure. Maybe it is for now, but things change. And then you can go, well, if I get fired, then I can go get another job. Okay. Well that means there's multiple businesses for you to receive money. So why do you think that it's less risky to have a job and be paid for something, but it's risky, uh, or it's a risky thing to invest in stock market and invest in businesses that do that very same thing. That's what you're doing when you're investing in the stock market. You're investing in businesses, in companies that are publicly listed on the stock exchange that employ hundreds to thousands, to tens of thousands, to hundreds of thousands of people around the world, depending on the size of the company to do the exact same thing.

You do have a job where for that job receive an income, grow the company. And so with the stock market, you're investing in these companies because you believe in them because you believe that the, at least the economy is going to keep turning over to the same degree that you believe, or at least have a degree of trust in the company or business that you work for to receive an income from, but on the stock market, you're doing it with multiple companies. So it's actually, you're diversifying your risk. You're limiting your risk while you're controlling your rest because you have it across multiple companies. So if one fails, well that's okay because you are invested in many others. And obviously there are ways to invest much less risky than picking individual stocks. But if you've been here for a while, you know, that I don't advocate for because very few people can actually do it and outpace the returns of, you know, the market essentially, which is why index funds and ETFs are so attractive because they always hold the top market cap companies. And so you don't ever have to do the legwork because it's done for you. So when it comes to relative to your job, well, isn't it less risky to hold multiple companies that are the best in the field of the top, top, top in the country or in the world versus the company you're working for. And that's just one, and then you might go, well, yes, but I make money for it. So I exchange my time

For income,

But that's the exact thing that we want to get you out of a pattern of. Because as soon as you stop exchanging your time for money, which is what job is then, then what happens then? Where are you? Which is why we invest, because we then have a portfolio investing in companies that are growing and we receive payment in the form of dividends or capital growth. And therefore it's paying us and making money for us, right? That's essentially like when we break down how investing works, you're investing into a company so that that company can use that capital, that money that you've put into that investment and the ownership of that investment so that they can put it into R and D into growth, into expand, you know, expansion, or it might just be to consistently keep running that company and bring on new customers because the global population continues to grow.

So we have more people. So we need to expand for that, which is why we continue to see growth when people say, oh, the, the growth of, um, you know, companies that the stock market or the economy will stop at one point, well, that would only ever happen. If our population growth can completely stopped, which it's not going to, because the more people we have, the more people have babies. And, well, I don't know how to explain the rest of you. That's how it works. Right? So if we look at well, what happens if the entire global yeah. Um, population stopped growing and then our economy stopped what we have a much bigger problem on our hands than just our investment account. Am I right? We're just the job that you, but I digress. So when we look at like a big, a perspective of having this one job and this one income, and only trading your time for money versus putting it into multiple, like the multiple top companies in the country, in the world, so that they can keep growing.

And then when they are no longer the top companies in the country or the world, then you just hold the next top companies or countries in the world, then isn't that potentially a strategy, right? That you could employ to. Are you starting to see how actually that's not that risky compared to me working for this company or this job that I have. And if you own a business and you run a business, then you are someone that should definitely already understand the concept of investing in a business because you do it for yourself. So I know a lot of people that, you know, start their own company, become an entrepreneur yeah. Uh, and stop working for themselves. So therefore you would understand that these people out there, these CEOs and these boards of companies that are running these multi-billion multi-million dollar companies probably know something about how to run a company and how to turn a profit and how to generate revenue and how to be the best in the world and therefore how to take more capital and grow it and expand.

Right? Like, I mean, I know certainly from my point of view, when I started this company, I knew very little, I know a lot more now, like two and a half years in, into running this company, but there's still a lot I don't know about. And so I look at these huge companies and go, wow, they have these incredible minds, these incredible people behind them and these teams running them like, well, I want to be invested in that. And I want to be invested in that growth. So if you have your own business or, um, oh, you run your own company or an entrepreneur, then you get it because surely you get it. I've never, however, I'm going to be honest with you. I've never fully understood the disconnect between someone saying the stock market is risky if they run their own business, because why do you run your own business, then you believe in business.

So relative to what, and then the other one I want to talk about is relative to most of the time people compare it to housing, like owning property. And it's often because people think this is physical, tangible element to this bricks and actual something in either in the sky, because it's an apartment or in the ground, it's a house. And they think because it's physical, it's more real, but well, isn't investing in companies that are real and physical, like apple who have multiple stores around the world and physical like products that, you know, you use like your iPhone or car companies, that physical things that have, you know, like all these companies that they're still physical, they still have people, they still have bricks and actual, tangible things. It's a real thing.

And when it comes to like the non-physical part of investing your money, that you have sit in a bank account doesn't actually exist. Have you ever thought about that? There's actually only 6% of the global, um, currency in circulation and it's becoming less and less because we are becoming much more of a digital economy. And we, most of us carry less and less cash now. So the actual money in your bank account, isn't real, it's not sitting in a safe somewhere. Like there are some cash reserves around the world, but if every single person in the world wanted to take cash out there, it's not available, it doesn't exist. And so the physical component, you still trust your banks to have these non-physical money of new ones. So, but what about trusting a company that has actual physical staff and like buildings and products,

Right?

So it's, I'm not trying to convince you of anything. I'm just asking you to think about this idea that it's not physical and therefore not real. And therefore it's, it's more risky because that, um, the jump from it's not physical or real to it's risky, doesn't make it doesn't actually make any sense. It's, it's, it's a leap. It's a jump that has no correlation whatsoever. And the whole concept that companies are not physical or real is obviously complete BS too. Like that's not a true statement. So when someone says it's risky, I always, I don't, I don't often don't say it because people are often very grounded in their beliefs around it. But if someone is open to discussion and wants to, wants to change their mind, which I'm guessing you are because you are here and listening to this, then I would ask them relative to what risk compared to what, and then the other things, when it comes to is the stock market actually risky.

So here's the thing. And this is often why I, uh, I can pretty much determine that anyone's saying that is either not an investor. And by the way, I have not. I mean, I don't want to say it's a hundred percent. Cause I haven't asked every single person that's ever said it to me because I take it that would have taken a lot of time, but a very close percentage to a hundred percent of people that say the stock market is risky. It's like gambling, or you'll lose all your money, uh, people who are not investors. So let me say that again. Cause I want this to be like super, super clear. Everyone that has ever said or says the stock market is risky. You'll lose all your money or along those lines are not investors. So why on earth, if you hear this in the street, if you hear this from your friends, if you hear this from your family, why would you take opinions, beliefs, thoughts from other people who aren't actually doing the thing that you want.

And I'm guessing you kind of want it. If you're listening and tuning in now, or at least maybe you're curious about it, or maybe even you currently do it and you want to do it better. And so in like taking that from someone else who isn't actually an investor, I mean, I see it all the time. People, I have a lot of conversations in dams of like someone going, oh, someone so-and-so, this person told me to do this with my money. And most of the time that person that is telling them has a net worth of less than a hundred thousand dollars, probably often, sometimes less than that. A lot of the time the person telling them doesn't invest in. And so I don't want, let me rephrase. I want you to be thinking about who you're listening to and if you don't like what I'm saying, then turn it off and don't listen to this ever again and find someone who you do align with.

But here in Ms. Wealthy HQ, we are all about having you confident and empowered with your money and with your decisions. I want around wealth creation. I want you to have the knowledge so that you know, the exact decisions to make throughout the rest of your life and not just now, by the way, because giving you an answer now, based on current circumstances, current goals, current values is completely different to what it's going to be like in five years or 10 years or even down the line. So it's a huge and considerably different ball game from you, learning and understanding how to manage your money, how to be comfortable with your money, how to spend well and invest and save and know how to create wealth safely in alignment with you and how it works. Long-term one is a long-term skill that you have for the rest of your life.

That will make you millions of dollars. One is something that takes your power away and what something, when you don't have the power, you don't hold the power of someone else's making the decision for you. You don't have the knowledge and you don't have the power. So here we are all about giving it to you. Cause I just want to see more of you become wealthy. That's it? That's the end game, right? So I want you to challenge and really think about who you're hearing and who you're listening to and who is saying this to you and what their situation is. And if it's something that you want. So if you are hearing this from other people who are in debt, who don't invest, who have no goals around money and wealth creation, who don't care about wealthy, who judge other wealthy people and that isn't in alignment with you, which if you're here, it probably isn't, then don't listen to it or get educated so you can respond or choose to just say, well, I didn't agree.

And I've got the knowledge around this, so Hey, that's cool. So I digressed a little bit, but I wanted to, I wanted to make sure you're really clear about this so that you don't get thrown off the horse when someone says it to you and you know exactly how to stand your ground because you're confident in yourself, which is basically what happens when you have the knowledge and you learn yourself and you get the confidence. It's like, when I hear that, I'd literally, it has no impact on me whatsoever. It has nothing to do with me and everything about that. Person's mindset. That's it? That is it. But it's great information because it tells me a lot about the person where they're at. So something to also consider and think about is this whole thing of like, when someone says the stock market is risky, risky, well, the stock market it's a market and it has multiple different ways to invest.

So on the stock market, you can invest in things that have pretty much guaranteed backing from the government and most of the time of guaranteed return, but it's very, very low. So things like bonds, for example, guaranteed backing from the government. And most people trust the government enough to trust them with things like a pension when they get to, you know, older age or, you know, to look after them or whatever, which, I mean, I don't, I don't ever intend on relying that or even considering that because it's very small and not alive to live at all, but most people consider the government to be safe. Yes. And so you can invest in government based investments on the stock market, you can invest in other things like major companies, like banks and most people trust tens of thousands of dollars and more to sit in their bank account.

So why wouldn't you then invest in that bank to make you more money than the money that you're earning in your bank account in savings, interests? So this is what I always, if I want, if I'm in a mood and I want to play a game and I'm in a bit of a playful mood, I'll often joke around with that of like, oh, so, you know, if someone says, oh, like, you know, I just have a lot of money sitting in my bank. It's safer there. Quote unquote, it's safer than, yeah. Isn't, that's always my question. Is it? Oh, okay. How come you trust your bank to have your money, but you don't want to invest in the bank to make you more

Money. Here's

What your bank is doing with the money that you have sitting in savings account. They're investing it in the stock market. That's nothing like a lot of them money and yes, they make a lot of their money from credit card interest and learn interest. Yes, of course. Um, but they also invest, they're not silly. They're financial institutions. They believe in the economy. They literally are in the finance portion of the economy being in a bank. So how much do you trust banks? And also as a, as a side note banks, as a S as a stock, as a company, like, as a stock to invest in, um, are completely different company to growth stocks, for example. So most banks are actually dividend paying stocks because they're stable. Long-term, they're essentially boom, uh, companies that if they invest considerable amounts of capital in, you know, back into their company, then most of the time they don't expect exponential or like high growth returns, which is why they consider dividend paying stocks.

So it's why that you don't necessarily hold that company to see massive growth. You hold that company to receive dividend payments, and I'm not going to get into like the pros and cons, because that's a whole other discussion about your investment strategy, um, and what you actually want to invest in. But it's, you know, we can see them as a table, basically a safer version of investment with Hilary return. Of course, then a high growth company, because there are very many company you can't put the same amount of money. Like if you put the same amount of money into a bank, a stable bank that has like brick and mortar things all around the, you know, the world or the country versus putting it into a new tech company, like, you know, Facebook 10 years ago or Google 10 years ago, or whoever the new up and coming tech, uh, tech companies out, or, um, medical research companies, for example, they're completely different fields because a bank can't really exponentially grow to the same degree that a new tech company like Facebook, Google, apple, can I, new medical company that has, you know, heaps of research behind it, like Pfizer in the wake of COVID or, you know, medical companies that are finding new cures for all types of diseases and cancers, like that's a whole different ball game, which is why we have different categories of risk of assets, like different categories of stocks.

And then we have bones that are government backed, which are really low risk. And then we have other things as well. And there's a degree of like risk. Like, yes, you can invest in higher risk emerging markets and countries on you, or you can invest in really established, you know, big countries like the U S and the UK and Europe and Australia that I like first world countries. And I've been around for a while and have stable first world economies, right? So there's a degree, but there are things to consider and understand when it comes to your money in a bank and what they're doing with it. And in terms of understanding the government and also find it, the final point I want to make is this ridiculous notion of investing is like gambling. If anyone ever says that and people don't don't understand the concept of just the top line, really broad, super, super, super macro understanding of what investing does or is and how it's different to gambling in gambling, the casino bets against you, or, you know, you can gamble against other people.

Sure. But it's a zero sum game by that. I mean, one person wins and one person loses money. So if you put money into a poker game who wins one person, right? There's one winner and everyone else on the table loses. If you're paying, putting money in a poker machine or a pokies machine, or a slot machine at a casino, you either lose money or you win money, or you win a portion, but there's zero sum, meaning hun, or if you put a hundred dollars in a hundred dollars is allocated to a loss or a win on either side, either the casino or you, or in a poker game, a hundred dollars is either to that winner or everyone else loses it's zero sum when it comes to investing, it's not even remotely the same thing. Like not even in the realm of the same thing, investing literally stimulates the economy.

So what companies do with your money is they reinvest it into that company because they see high growth potential. They need capital to hire more people, to expand, to grow into other countries, to hire the greatest minds, to do research, to invest in productivity. And that therefore, sorry, the wheels of the global economy by hiring people, by using other companies to supply the things that they need, uh, to, you know, literally it's just, and then it goes on and on and on and on. And the people that are employed then spend money in other companies. And it's literally stimulates. And it just like expands and expands and expense. There's no zero sum. You're not putting money in and then they take it and then you've lost it. That's socially opposite of gambling. You put money in with the expectation of receiving more money than what you put in and the high probability of it, if you, if you invest well, which if you've stuck around here, or if you're in bed in investing bootcamp, then you know how to do that. And then you keep doing it and repeatedly, or you invest in even lower risk or return assets like the government, the expectation of being paid more, you don't lose that money that you put in it's.

So I want us to cover that off, to understand all facets. So we spoke about is, is the stock market actually let gambling and why it's completely not. We spoke about relative to what housing, having a job, relying on your job or owning a business. And we spoke about the different types of companies as well. There's so much more that I could talk about. I mean, I could just talk about the different facets of risk, but I wanted to talk about this so that I can send more people to this. Since that you can send your friends to it as well. If they ever say to you, the stock market is risky and it's like gambling, and you'll lose whole of your money. Now I do want to say, if you invest in like one company and you stock pick, and that company goes to zero, can you lose that money?

Yes, of course, but no one should be investing that way. And anyone that is investing that way, like I said, at the beginning, doesn't understand investing or how to invest properly. And so that's just information for you to go, oh, I need to understand how to invest. Um, that's an aligned with my risk tolerance and invest in assets that matches that and my goals, and I need to invest in a longer term horizon so that I'm not depending on that money. Uh, if there's a short crash and I, you know, want to take that money out, but in the history of the stock market and I'll end on this and the history of the stock market, since it began, it has only ever gone up. Has there been volatility? Yes, but we are up from when it began. We've really far up from when it began.

Has it been crashes? Yes. Has there been dipped? Yes, there is. There is ups and downs along the way, but it's up, it always recovers the market as a whole, always recovers. And you can invest in that whole market rather than individual companies. And when it comes to return on average, it's between about nine to 11%, depending on where you are in the world and what you invest in, but stocks is between nine and 11% year on year return. Some years at 20%, some years are minus five, some years in minus 20, some years, a 40% return. But on average, it equals and evens out to about nine to 11%, which is why I tend to say it's about 10%

Return.

So that's just so that you can understand what the expectation is in investing in stocks. Okay. Okay. Wow. Thank you for sticking here. Thank you for listening and being here. And I hope that this is supplied you some ammo discussions either with yourself or even other people when it comes to those funny sayings, um, that, or the funny beliefs that people have when they just don't have the knowledge yet about how to invest successfully. Okay. If you want to learn more, then you can head over to investing babe.com and check out my program, investing bootcamp, where we teach everyone just like you to invest successfully long-term in the stock market and have you confident to grow wealth to a hundred K and beyond. Obviously the goal is to, to grow to way more than that. But once you get in your first 5, 10, 20 K, then you know, you're well on your way.

And you know exactly how to do it now for the rest of your life. You can also head to Ms. wellthy.com and click on the first link that you'll see on there. And you can do a free training. So I have free stock market training. Uh, just, if you just put in your name and email and register, you can check out that training. It's a bout 45, 50 minutes, um, of me teaching you the stock market and investing. Okay. And at the end of that, I also talk about an investing bootcamp more as well. If you want to know more about it there, otherwise head to investing babe.com. All right, beautiful. I will see you next next week.

If you're not part of the Ms. Wealthy movement yet, make sure you head over to Instagram and hang out with me. There I am at Ms. Wealthy official. And if you need anything else, head to Ms. wealthy.com, you can get all the info that you need. Find us on Facebook as well. And I'd also love if you can drop a review on iTunes, it supports us massively, and it means the freaking world.