When it comes to the stock market, you may know of investors who hop from one new investment idea to another, and tend to get all excited about how much money they could potentially make from their stock picks all the time. This behaviour is not uncommon and is mainly caused by one fundamental feature about stock markets everywhere.
But before we reveal that, I’d like to back up a bit and ask you a simple question:
‘How do the rich get richer?’
If you look at the data, the answer is pretty obvious:
Source: Visual Capitalist
From the chart above, it tells you that if you have a net worth of $100,000, your wealth mostly comprises your home, car, cash, and retirement account. But if you have a net worth of $10 million or more, your wealth is mostly held in stocks, real estate, mutual funds (typically invested in stock), and business interests (which is also stock)....