Making Money in the Stock Market Can Be Easy, Even if You’re Not Great at Picking Stocks

Investing in the stock market is a tried-and-true way to build wealth over time. Many times, however, investors are left disillusioned because their returns are underwhelming or they’ve lost money on stocks and investments that they thought should have been good buys.

Even when investors go with seemingly safe investments, they can get burned. 3M is a stock which comes to mind. It has been a solid brand and business for decades, but now, due to legal problems, it has split its operations and slashed its dividend, which for years looked to be incredibly safe. Walgreens Boots Alliance is another once-safe stock that had to cut its dividend earlier this year.

Investors who recently bought shares of those stocks are probably disappointed now, after their short stint in the market. Particularly if they made the mistake of loading up on only a few stocks rather than diversifying their investments.

Stock picking can be risky and time-consuming

Investors burned by a stock pick or two might have learned that picking individual stocks can be risky. However, it’s the allure of chasing big gains and trying to beat the market that attracts many investors.

It’s this gamification in stocks that led to Warren Buffett’s right-hand man, the late Charlie Munger, in 2021 to derisively compare erratic behaviors in the stock market to what someone might observe in a casino. And betting on high-risk stocks can be a dangerous strategy. Risk is real in the stock market. (Check out this page for help understanding your own risk tolerance.)

Even blue chip stocks can sometimes provide investors with underwhelming returns. And while many investors can outperform the markets while diversifying and holding many stocks, it’s not an easy strategy to do on your own, especially if you don’t have the time to keep track of all those investments or aren’t really interested in doing so.