Everyone's goal is to make money when they invest into the stock market. That's why you'll want to have at least one general idea before you invest in something. It is good that the market is growing, but a strong stock market can put pressure on investors. Not surprisingly, people are worried that what goes up goes down, and the market must turn south to reach new heights. You may have heard that you have to buy low, and you have trained yourself to see it as an opportunity to buy a weak market. What should you do when the market continues to rise? 

The average return on the stock market has been around 10% per year for almost the last century. The S&P 500 is often considered the benchmark for annual stock returns. While 10% is the average return of the stock market, the returns in any given year are far from average.

What is a good return for my money?

There is no single answer to this question. A "good" ROI depends on several factors. The most important factor in determining a good ROI is your financial needs. For example, suppose a young couple invests in school fees for their new born baby. A good return on investment for them will be one that allows their initial and continuing investment to grow to a level sufficient to cover college tuition fees 18 years from now. Defining a good return on investment in this young family will be different from defining a retiree looking to supplement their income. A retiree will view a good return on investment as a rate of return that generates sufficient regular income to enable him or her to live comfortably. Of course, one retiree's definition of a comfortable life may differ from another, so their definitions of a good return on investment may also differ. 

How the prices are set in the stock market?

Stock prices on the stock market can be set in many ways, but the most common way is through the auction process, where buyers and sellers bid and offer to buy or sell. An offer is the price at which you want to buy and an offer (or ask) is the price at which you want to sell. When talking and asking converge, there is an exchange. The market in general is made up of millions of investors and traders, who may have different ideas about the value of a particular stock and therefore the price they make a transaction at can be different. These investors and traders perform thousands of transactions that turn their intentions into stocks and / or sell the stocks causing minute-by-minute dynamics during a trading day. The stock exchange provides a platform where such trading can be done easily by matching the buyers and sellers of the stocks. The average person will need a broker to access these exchanges. This broker acts as an intermediary between the buyer and the seller. The most common is to get a broker by creating an account with a well-established retail broker.

The stock market cap and sector

Stocks can be categorized in different ways, but the two most common are by market capitalization and sector. Market capitalization is the sum of the market values of the issued shares of a company and is calculated by multiplying these shares by the market value of the current shares. The exact definition depends on the market, but large-capitalization companies are generally considered to have a market capitalization of $10 billion or more, while medium-capitalization companies have a market capitalization of $2 billion or more and, small companies have between $300 million and $2 billion cap. 

How to be safer with your money

Especially if you plan to profit from your money as it enters the market slowly, you must decide how to invest "safe" money. If you decide to take on more risk, you can do you research on high-quality short-term bonds that don't pay much interest. However, bonds can also lose money, and you may incur business expenses and capital gains when you sell bonds periodically. If you choose to invest differently when markets are rising, various investment options are generally considered safe. But remember, you may be taking different risks, such as the risk of losing profit and the risk of losing inflation. You can eliminate market risk on FDIC-insured accounts, but you may need to trade that risk for something else.

Investing For Life is here to provide information to help with your research and hopefully this has been of use to you. Just because it's a disciplined (and often sensible) thing doesn't mean it will always turn out well. If you are reading this and investing in the markets, you may lose money. Don't invest if you can't afford the risk. Stay Safe!