If you aim to get rich off stocks, then you’ll need to either start with a lot of money or do a lot better than most other investors. In fact, most don’t even earn an average return in the stock markets — let alone get rich off them.
As GOBankingRates recently reported, research from J.P. Morgan Asset Management found that during a 20-year period from 1998 to 2017, the S&P 500 returned an average of 7.1% per year. But the typical investor averaged only a 2.6% annual gain — barely above inflation.
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Unless you have $1 million or more to invest in stocks, then a 2.6% return isn’t going to vault you into the wealthy classes. So how can you get rich off stocks? GOBankingRates asked ChatGPT that question. Here’s what it said.
Be Patient and Consistent
Getting rich off stocks “is possible,” according to ChatGPT, but it will require a combination of discipline, time and strategy.
The key is to think long term because “most people who got rich from stocks did it over years or decades,” ChatGPT explained. If you adopt a get-rich-quick mindset, you’re more likely to lose money.
You also need to invest consistently, which helps you take advantage of compounding. ChatGPT recommended that you start investing early and keep at it regularly. Aim to contribute to your investment accounts at least once a month. When possible, use tax-advantaged accounts such as IRAs and 401(k)s.
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Seek Quality
There’s a reason stocks like Apple, Amazon and Microsoft have made so many investors rich — because they’re quality companies with strong management, steady financial growth, a competitive edge, and products that people need and use.
As an investor, you should put your money into the best companies, regardless of whether they happen to be the best stocks at the moment. This will require researching a company’s financial returns, with a special focus on its revenue growth, profit margins and debt level.
Another good idea is to find stocks that pay regular dividends. Dividends ensure a steady income, and reinvesting those dividends accelerates compounding.
What Not To Do
Taking the right steps and following the right strategy can help you get rich off stocks. But it’s equally important to avoid making mistakes. Here are three things ChatGPT said you shouldn’t do:
- Day trade or chase hype stocks. Day trading is best left to the pros, while chasing hyped-up stocks is very risky unless you really understand what those stocks do.
- Time the market. As ChatGPT noted, missing the best days “kills returns.”
- Panic-selling during downturns. If you want to build wealth with stocks, be prepared to hold them even during crashes and bear markets.
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This article originally appeared on GOBankingRates.com: I Asked ChatGPT How To Get Rich Off Stocks — Here’s What It Said
