10 Reasons Every American Adult Should Invest in the Stock Market
Investing can be scary, and there are many horror stories out there.
But investing can also be simple and boring.
If done right, history shows that losing money in the stock market is unlikely on a long-term basis.
These 10 stocks could mint the next wave of millionaires ›
Investing can be daunting for many reasons. Stocks, index funds, and exchange-traded funds (ETFs) go down all the time, and the market has been extremely volatile, especially since the beginning of the pandemic in 2020. Furthermore, most people are investing money they will need in the future, and nobody can predict the future. That said, 62% of Americans reported owning a stock in 2025, according to a Gallup poll. Here are 10 reasons every American adult should invest in the stock market.
The main reason most retail investors buy stocks, index funds, or ETFs is because they want to start saving for retirement. I don't need to tell anyone that life is expensive when you consider the cost of paying a mortgage or rent, food, transportation, and clothing, among many other expenses. These expenses can eat up a large portion of your paycheck, which is why people need to think about ways to grow their wealth over time. Investing allows people to do this while they work and sleep.
Most investors have likely read stories about people investing in meme stocks like GameStop back in 2020 or some small cryptocurrency that no one has ever heard of. Rarely, someone does strike it big, but often, people end up losing their money on these high-risk trades. That roller coaster ride certainly isn't for everyone, and rightfully so, because many people need every last dollar they can save and can't afford to make overly risky bets. Luckily, investing can be quite boring if you invest in an index fund or ETF that buys a basket of diverse stocks set up to generate steady returns for patient investors that stay invested for years if not decades.
Many investors with a long-term horizon invest in the broader benchmark S&P 500 index. According to data from Berkshire Hathaway, the S&P 500 has generated compound annual gains of 10.4%, including dividends, between 1965 and 2024, for an overall gain of 39,054%. That means $1 invested in 1965 would be worth $390.54 now. While the S&P 500 can be volatile on a short-term basis, the longer one stays invested, the more likely they are to make money. This is generally because long-term investors aren't trying to time the market, so they ride out generally short-term downturns and profit from recoveries.
Now, investors may be concerned that the S&P 500 is too heavily concentrated by a group of stocks called the "Magnificent Seven,"+ meaning diversification in the broader benchmark index is less than it used to be. This is true. A group of large companies specializing in tech and artificial intelligence have taken the market by storm. Stocks like Nvidia and Apple now have market caps well over $1 trillion, a feat that used to be unthinkable. For investors who want to avoid this concentration, there are ways to buy an equal-weighted S&P 500 fund that removes the weighting of each stock.
Investing requires patience, but if you trust the process, you'll realize that you can accumulate more wealth than you may have ever thought possible. This is due to the power of compounding. For instance, let's say you're just starting your career and don't have a lot of spare cash to invest but manage to scrape together $500. If you invested that money in the S&P 500, assume long-term historical returns of 10.4%, and add just $100 to your portfolio a year for 30 years, that initial $500 will grow into over $27,000. All you have to do is wait patiently. Also, as your career advances, you will likely have more disposable cash to invest, which will significantly enhance your returns.
Now, a lot of risk-averse people may simply care too much about their money to trust the market, and I can certainly understand this sentiment. Unfortunately, keeping money in a checking account that doesn't earn anything will actually lose you money. This is because of inflation, in which consumer prices generally rise over time. Just think about how much prices have risen from before the pandemic in 2020 to now. If you kept your money in a checking account, its value stayed the same, but the price of pretty much everything else rose, leading to a loss of purchasing power.
Many people are investing through an individual retirement account (IRA) or a 401(k) through an employer. In these cases, the U.S. tax code actually allows people to deduct a certain amount of contributions from the income they earn that will be taxed, leading to a lower tax bill. The limits in 2025 for an IRA are $7,000 per year for those under 50 and up to $23,500 for a 401(k). It can definitely make a difference.
There's more than one way to invest. Some people buy large, very safe blue chip stocks; some buy stocks for their dividends; and some are more aggressive and make risky bets, hoping that one big win will make up for all the other losses, similar to a venture capitalist. The point is that you can invest in different strategies, sectors, regions, etc. Speaking to a financial advisor can be helpful because they can assess your current financial situation and your risk tolerance to develop a good investment strategy for you.
When most people have money, they want to spend it. This tempts all of us to make purchases that we may want but don't necessarily need. By putting a certain amount of money each year into a retirement account or portfolio, people are removing some of these temptations and reinforcing smart spending habits. As I mentioned earlier, each dollar invested can go a long way due to the power of compounding, so each dollar we don't invest subtracts from your future wealth.
It would be wonderful if everyone had financial freedom all the time, but that just isn't realistic. However, most people need more money as they get older because they have more responsibilities, whether it's starting a family, buying a house, or dealing with higher medical bills. If you invest younger when you typically have less responsibility, you'll be happy you have an investment portfolio that you can use later on if needed or that you aren't stressing about retirement. More than a few disciplined and patient investors have achieved financial freedom much earlier than they likely ever thought possible by starting early.
Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this.
On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves:
Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $373,066!*
Apple: if you invested $1,000 when we doubled down in 2008, you'd have $38,158!*
Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $664,089!*
Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of June 9, 2025
Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Nvidia. The Motley Fool has a disclosure policy.
10 Reasons Every American Adult Should Invest in the Stock Market was originally published by The Motley Fool
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