New apps let you ‘practice’ trading with US$100K in demo money, helping newbies learn the ropes
Many of us have a colleague who is a strong proponent of cryptocurrency as the wisest investment choice. Their logic usually tends to be something related to ‘the future’ and ‘getting in on the ground level.’ Or one might have a more conservative acquaintance who advises buying gold; noting that during times of global uncertainty, gold is a bedrock. Both of these arguments have merit, but both are also flawed. In the case of cryptocurrency, the jury is still out… to put it mildly. We yet have no idea if it will become the de facto currency of the future, or if it will end up being a bubble akin to the famous tulip mania of the 1630s. On the precious metal side, gold does indeed have a storied track record, however, the volatility of gold prices is such that it’s likely a better investment for those who have enough capital to ride out huge rollercoaster-like price fluctuations. Bear in mind that while the price of gold does occasionally soar, it does so when there is fear in the market, and when investors expect stock prices to go down – meaning gold is not an asset designed to generate income… but rather one to store funds in as a safe haven. It’s a great idea, of course, to diversify your investments, but overall, there’s a strong case to be made that the stock market provides the greatest opportunity for profitability converse to its risks.
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The ‘everyday’ investor is generally looking for a way to increase their savings rather than hold them in check. Naturally, safety is a factor to consider, but the larger desire for an investor is to make a stable profit. And for attaining this goal, the stock market outperforms in virtually every way. The problem is the aforementioned ‘everyday’ investor is often spooked by the stock market – for a variety of reasons. Perhaps they see it as overcomplicated and are dismayed by the high prices charged by brokers and managers. Or perhaps they’ve seen too many movies featuring gloom and doom connected to stock market scenarios. There is now, however, an interesting solution that may help literally millions of people ease their way into the stock market. We’re talking about an investing app that allows you to become a shareholder with 0% commissions and that executes your trades with a 0% delay. Even more interesting than the simplicity of having a 24/7 smartphone app, is a training option on the app whereby users get a set amount of practice money – as high as US$100,000 – with which to practice investing. It’s a risk-free way of learning the basics and acclimatizing even ‘newbies’ to the general ABCs of simple stock portfolios.
After getting used to ‘playing the market’ one can use the app to execute real trades, or buy currencies or commodities. You’d be surprised at how fast a person can go from not understanding the basics to buying coffee futures. There is, of course, a learning curve – but with an app in your pocket and the ability to first do practice runs, much of the tension and stress is alleviated and people find quickly that it’s not as complicated as perhaps a commission-seeking broker would have you believe. Honing your skills with a demo account that immediately puts US$100,000 at your disposal is an excellent way to sharpen your skills and practice trading strategies. Yes, in some ways it is ‘gamifying’ the stock market… but aren’t games often – if not always – one of the better ways of learning new things?
But back to the opening arguments as to what’s the best solution for investing. There’s no question that a small number of people have become exceptionally wealthy due to investments in cryptocurrency, but you’ll notice these numbers pale in comparison to the throngs of people who make slow and steady profits via stocks. Remember that buying a stock is buying a piece of a physical company. You actually own something tangible. Yes, you will need to learn to weather the storms of volatility and not freak out the moment your stock dips due to some global disruption, but for those seeking long-term, steady profit gains there’s simply nothing better than stocks, which have – over the long run – outperformed virtually every other type of investment. Let’s repeat that: over the long term.
For example, from 1990 to 2020 there was an astounding 360% increase in the price of gold. However, if you look at the Dow Jones Industrial Average during that same period of time you will see an increase of 991%. But if you look only at the short term, such as between the year 2021 and this year, gold has outperformed stocks due to a variety of geopolitical issues. So, ask yourself: what are you looking for? Simply a safe haven to park your money in? Or are you seeking a long-term way of increasing your money while accepting some short-term risk? If you’re looking for an overall winner, the stock market has proven – despite its occasional dramatic highs and lows – to be the wisest choice for the majority of people. And now with apps that allow practice runs, anyone can learn to become an investor.
