Investing in stocks is one of the easiest ways for most people to become millionaires, reach their personal finance goals, and get their money right. Stocks provide the highest potential returns compared to other investments. However, younger people may not know the importance of investing in stocks. So…

That’s where we come in

Over the next few weeks, Dollabuzz will be running a few posts covering the hows and whys of investing in stocks. Here’s what’s on the upcoming Dollabuzz menu:

Why you need to invest in stocks,

How you can invest, even with little money,

How investing small amounts can make you a millionaire, and

Why you should not be afraid to invest in stocks

Dollabuzz readers! We are back for another session of talking about money. That’s what we love to do here at Dollabuzz – so let’s get it on!

What’s On the Choppin’ Block Today?

Why we all need to invest in stocks,

Why bonds and cash are not as safe as you think they are, and

How investing in stocks can help you reach your personal finance goals

Why Do We Need to Invest in Stocks?

Investing in stocks over the long term (20-30 years) will make you a millionaire and help you reach your personal finance goals. How fast you become a millionaire depends on how much you save and for how long. Like the old adage goes: The longer, the better!

In order to reach your personal finance goals, you probably need to invest in stocks. Safe investments like bonds and cash alone will probably not help you reach your finance goals. These may be “safe,” but safety comes at a cost.

Bonds Are Not As “Safe” As You Think

In a rising interest rate environment (like now), the value of bonds and your investment decreases. What does this mean? This means you don’t make money.

Additionally, bonds offer a fixed rate of return, but there is no upside. And why invest if there is no upside?

While the price of stocks may decrease, the upside of stocks is that they offer a better reward for your risk. Riddle me this: Would you rather have a “safe” bond paying 4-5% or the 20% return of last year’s market? Add that on top of 2016. Yeah – it’s not even up for debate.

Cash Is Not As Safe As You Think, Because…

Inflation makes the price of goods and services more expensive, and cash does not keep up with inflation. Here’s an easy example: Pick any good or service, and it is almost guaranteed to be more expensive now than it was 15-20 years ago. What about that cash sitting safely in the bank? Has its value increased? No, not in comparison with the price of goods and services. Life got expensive, and your cash stayed lame! Lampin’ on your account.

Don’t get me wrong. Dollabuzz believes cash is king, and a nice pile of cash is essential. However, for a long-term investment, cash can’t see the returns of investing in stocks.

How Investing in Stocks Can Help You Reach Your Personal Finance Goals

Depending on your situation, investing in stocks can help you reach your personal finance goals. Looking to become a millionaire? Check. Retire early? Check. Need to save for college? Checkmate!

What do these three personal finance goals have in common?

Time.

Yes – time.

For most people, creating wealth through stock investments takes time. Notice how I didn’t say investing in stocks can make you rich fast. It certainly can… but for most people, slow and steady wins the race.

The number-one reason you should invest in stocks is…

It’s simple to do. Open an account, select your investments, and set it on autopilot. Historically, this has been the easiest and least risky way for people to become millionaires and reach their personal finance goals.

This is how I am reaching my personal finance goals. I invest in stocks through my 401k at work and through a Roth IRA. It’s that simple. Every two weeks, money goes in – and I don’t have to do much else.

Investing in Stocks Is Very Important, So…

Dollabuzz will have a four-part series dedicated to investing in stocks. Every Tuesday, starting with today’s post, we will cover the why and how of investing in stocks.

We will then show you how to start investing with just a little money. Next, we will show you how investing a little money over time can help you become a millionaire. Finally, we will show you why you should not be scared of investing in stocks.

In previous posts we discussed the debate between a 401k or a Roth IRA and why you should open a Betterment or a Robinhood investment account.

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How do you invest in stocks to reach your own personal finance goals?

Drop some knowledge in the comments section!