I don’t know about you, but when I think of investing, I think of two things: The stock market and your mom.
The stock market and your mom are frequently compared against one another by investors and aficionados of your mom alike, because let’s face it: both the stock market and your mom are pretty cool. But when it comes right down to it, the stock market is clearly better than your mom. Let’s dive deep and find out why.
1. The stock market pays dividends.
If you are a savvy investor like yours truly, you know that some stocks pay out what are called “dividends.” Dividends are essentially free money you get for being smart with your money and putting it in the stock market instead of giving it to homeless people. All rich people invest in the stock market and earn dividends because they are smart. Donald Trump, for example, is very smart. He earns a lot of money from dividends so he can make America great again by being rich.
If you invest in the S&P 500, which is a collection of America’s best companies, you will generally earn between 2 and 2.2% in dividends each year. That’s pretty awesome, considering that some of the top banks currently pay out around 1.5% per year if you open a money market account with them.
So how does your mom compare? She doesn’t, because your mom can’t pay you a fucking dime in dividends.
Winner: The stock market
2. Your mom is a depreciating asset.
I’d like you to try something for me here. Take $500 and create a portfolio of various securities for yourself. You can do this by going to M1 Finance, my favorite brokerage, and buying various ETFs and bonds, or just investing in a professionally made pie. Wait 20 years. Notice anything different?
If you did a good job of diversifying your portfolio, odds are good it has increased in value, and you now have more money. Well done!
Now, take another $500 and physically throw it all at your mom. Wait 20 years. You will probably notice that your mom has no idea where your money went, and she has gotten a lot older. That same money has decreased in value substantially because you lost all of it. That was clearly not a great investment.
Winner: The stock market
3. The stock market is made up of big players like Amazon, Microsoft, Apple, and Facebook.
Your mom is made up of… well, your mom. ‘Nuff said.
Winner: The stock market
4. It is expensive to trade your mom.
After commissions, fees, and taxes, you’ll see that trading your mom just doesn’t make any financial sense. I once tried to trade your mom and discovered that there were too many financial and legal barriers. It’s pretty clear that you are essentially stuck with your mom for your entire life.
But what about the stock market? With recent advances in fintech, you can now trade stocks for free. That’s right, free. Not a penny out of your pocket to buy or sell. You can do this on the aforementioned M1 Finance platform, or you can use Robinhood. Pretty cool, eh?
Winner: The stock market
Conclusion
There you have it: Stock market 4, your mom 0. But despite all of this, remember one thing: When you were fired from your job, your friends didn’t have time to spend with you, your girlfriend left you, your car was stolen, you were diagnosed with stupid… who was there to protect you, made sure you were taken care of, and helped get you back on your feet? Who has always been there for you in your time of need? Who will be there for you when life is out to get you?
Yeah, still the stock market.
