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How To Make Millions On The Stock Market

April 18, 2012 | Comments: 0 | Views: 149

What would it take to make millions of dollars by utilizing the stock market? The answer is not really all that simple. There are all kinds of scenarios that could play out and a lot of different methods and tactics used for achieving such a goal. For example, if you pick your stocks well and achieve a respectable annual growth rate, you could become a millionaire by trading stocks faster than someone who chooses a different stock that doesn't do quite as well.

Making Millions Trading Stocks

One scenario which is attainable by some traders would be to buy a stock that gets 17% annual growth, which would turn a $10,000 dollar investment into a cool million bucks in just 30 years. As long as you pick your stock right, have $10,000 laying around and about 30 years to burn, you could become a millionaire in this example. If you were able to pick a really good stock that received a better growth rate, then obviously you could achieve the millionaire status quicker. On the other hand, if you chose a stock that didn't do as well, it would take you longer in this scenario. For example, a stock that grew by a rate of 10% average every year would take you roughly 50 years with the ten thousand dollar investment.

A Risky Approach With A Conservative Backbone

Now, if you are not fond of the idea of waiting around 50 years for your investment to make you a millionaire then you have an option. Take some risks with some of your money. You definitely do not want to risk all your money and should put the majority of it into something that is a less risk and stable. There are some good options available to you for a conservative approach with the majority of your nest egg. One example might be to put most of your money into something like the S&P 500 Depositary Receipts known as SPDRs. This will invest your cash in 500 major U.S. based companies.

Once you have socked away most of your monies into a conservative fund or stock you can begin looking at some risks to take with whatever you kept out of your nest egg. If you want your portfolio to grow faster you may consider putting some money into individual growth stocks. This strategy should help you to moderate volatility and allow you to do well with your investing methods.

Picking individual stocks can be tricky yet exciting. One story which may offer some motivation is about a guy I read about online. This gentleman got in early on AOL stock and turned $1800 into $190,000! Now that is a healthy return on your money. Who is this man who took the price of a new HDTV and turned it into $190,000? David Gardner, the co-founder of The Motley Fool. So, you can see it is possible to get great results if you take some risks with some of your money.

Finding a Stock With Great Potential

If you want to acquire stock that could potentially change your life forever, you may want to follow David Gardner's six point checklist:

  • Is it the top player and first mover in an important and emerging industry?
  • Does the stock have a sustainable advantage?
  • Does the stock have a strong past price appreciation?
  • Is there good management in place and smart backing?
  • Does the stock have strong consumer appeal?
  • Has it been called overvalued by the media outlets?

Finding just one growth stock has the potential to turbo charge your portfolio. This is what makes it worth the risk because it only takes one winner to get you in the green.

Larry Haywood is a stock market enthusiast and web publisher covering a wide range of investing topics such as: Invest in Gold in 2012?

Source: EzineArticles
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