One of America’s leading business anchors has shared her insider secrets to help ordinary workers penetrate the stock market and achieve financial freedom.
Liz Claman, host of Fox Business’s The Claman Countdown, told DailyMail.com that the stock market isn’t as exclusive as it seems, but that hedge fund managers “want you to be intimidated” by the industry.
The finance guru revealed that the key to unlocking the stock market is timing stock purchases efficiently, increasing your earnings over time – and simply leaving your stocks untouched until they yield huge rewards.
And after more than 20 years of guiding her viewers through the financial jungle, Liz insists there’s no better time to start investing than now.
Claman has been at the forefront of business reporting for more than two decades, acquiring insider knowledge not normally shared with the working public.
Many people seem to think the industry is out of their reach, as the bottom 50 percent of American adults own just 0.6 percent of the stock in the market.
But Claman said an intimidation factor is one of the first hurdles for potential investors, as many talk themselves out of stock purchases after being confronted with Wall Street jargon.
Rule #1: Start now
Plenty of would-be investors tell themselves they’ll get into stocks ‘one day’, but in reality they may be avoiding doing so out of a sense of prudence.
The financial expert said there’s never a perfect time to lay the groundwork, noting that “the power of compounding” is the key to building a fortune.
For a 25-year-old hoping to retire at 60, opening with $100 and adding $50 per week would save $299,000 in retirement — assuming an average account return of six percent.
But if that same investor waited until they were 35, this fund would be less than half of what it could have been, earning about $147,000.
“Over a long period of time, the stock market returns more than any other investment because the bumps smooth out over time,” Claman added.
Liz Claman, host of Fox Business’s The Claman Countdown, has given her top tips for breaking into the stock market
Rule #2: Don’t pay anyone to invest your money
While big money executives often portray themselves as gifted traders with deep knowledge of the field, Claman revealed a secret about stock buying that they don’t want the public to know.
“Money managers will be furious with me for saying this, but if you put your money in an S&P 500 index fund, your returns over time will be better than paying someone to actively pick stocks for you,” she said.
Claman noted that “the industry is very good at convincing people that they need them,” and emphasized that ordinary people are missing out on money almost effortlessly.
By using an S&P 500 index fund, traders can invest broadly in the strongest companies on offer rather than making risky, specific one-off bets.
The benefits of this were highlighted by Wall Street legend Warren Buffett, who in 2008 challenged the hedge fund industry to surpass the overarching investment strategy.
One firm rose to the challenge, contrasting their “active investing” tactics with Buffett’s belief that “passive” funding outperforms the best hedge funds.
And while the million-dollar bet raised $220,000 after being placed in five hand-picked, personally managed funds over a decade, Buffet pocketed $854,000 despite never touching his money.
“People who leave their money alone see the best returns,” Claman added.
Rule #3: Wait for the sale
Investing broadly and using techniques such as the S&P 500 index fund are the best choice for most investors.
But when a certain stock really catches your eye, the financial guru said timing is everything.
The big question is: how do you recognize a golden opportunity?
Claman said the best investment times come in times of uncertainty, such as the Covid-19 lockdowns, where there is “always a silver lining – and sometimes a golden lining.”
One prime example of this is Starbucks, which saw its stock value plummet during the 2008 financial crisis when workers stopped splurging on expensive lattes.
But while many people wouldn’t risk their money on a falling stock, Claman said following a few key monitors would show that now was, in fact, the perfect time to buy — with Starbucks shares now more than five times higher. were like before the market crash.
When evaluating a specific opportunity, investors should ask themselves: Does the company have a history of efficient business? Is it a market leader? Is it valuable enough to withstand the wave?
As markets are routinely rocked by tumultuous events every now and then, being able to see a window is essential.
“No one even knew the lockdowns were a possibility, so no one had anticipated it,” Claman added.
“What separates the wheat from the chaff is recognizing an opportunity.”
Rule #4: Understand the 110 rule
The Rule of 110 is a little-known hedging strategy that Claman says is one of the best bets for building a thriving stock portfolio.
As a rule of thumb, the percentage of your money you put into stocks should equal 110 minus your age.
So for a young 25-year-old investor, they could funnel 85 percent of their money into the stock market if they’re interested in making some serious money.
But while such an investment makes sense for someone with a lot of time on their hands, the Rule of 110 dictates that older investors don’t have to take the risks of holding on during major market dips.
However, the market specialist added a caveat to the rule: “Never buy just one share.”
Instead, look to exchange-traded funds (ETFs), which allow you to buy into an industry that appeals to you without taking unnecessary risks.
Whether it’s semiconductor chips, tech startups or healthcare, hedging your investments with an ETF allows you to funnel cash into a basket of stocks in a specific area.
“Once you have it, leave it for the long haul,” the business anchor added.
“Don’t go for specific, single stocks you like so you don’t get exposed if it’s going through a bad time.”
Rule #5: Don’t run from the bear – hug it
The last line is meant to offer a glimmer of hope in troubled times, as a bear market – a situation where stock prices plummet and investors sell – can be a great way to hit the jackpot.
“A climate of fear often engulfs even the best stocks,” Claman said. “Instead of running from the bear, give him a snack.”
“Look at a historical long-term stock market chart and you’ll see that at the worst point of just about any bear market, that sell-off is actually the best time to buy.”
When the markets recover, it is the investors who got into lucrative companies that have been stuck in a rut come out on top.
Fidelity, the financial planning giant, even proved that holding stocks is the most solid investment strategy after it launched an internal review of its accounts.
The report found that the customers who made the best returns between 2003 and 2013 were either “inactive” — those who hadn’t touched their money at all — or were dead.
“We want you to be alive and well and ready for a well-funded retirement,” the financial expert continued.
Periods of market uncertainty provide wealth-building opportunities for the patient, diligent long-term investors. So be that patient and diligent investor.”