Stock markets provide better returns than all other investment options over the long term. However, very few individuals are prepared to wait for the long term. People want to invest $100,000 and earn $500,000 in a span of 12 months. Things just don’t work that way.
For starters, 12 months is too small a period to assess positive returns from the stock market investments. If the market is down for the next six months, it is obviously going to affect the returns that your investment will generate. Over a span of 10 years, the markets will bounce back and you will have a cyclical graph where the profits go up and come down repeatedly. A smart investor is one who knows when to pull out of a loss making stock and enter a profit making stock at the right time. Getting this right will require a lot of practice.
To get all these variables in your favor in a span of 12 months without any superior technical knowledge on your side is hoping for miracle. Banks provide returns at a rate of 6% to 8% of the amount invested. If you have a good year, this figure may rise to 10% or even 12% of your investment in the stock market. However, to expect 500% returns in a span of 12 months is asking for disaster.
Make sure you do not have excessively high expectations from the stock market. It is not a magic solution where you can wave a wand and get fantastic results on your money invested.