Why Graham Stephan Says You Should Never Bet Against Stocks Long-Term

You need to read this when deciding where to invest.

The stock market as a whole has not been making investors very happy recently, with many stocks seeing sharp declines in share prices. The market downturn may be making you wary about putting your money into it, and that's understandable because no one wants to buy shares of a stock only to lose some of their money right away.

But, if you're frightened to put your money into a brokerage account and invest in stocks, you may want to heed the wise words of personal finance expert and YouTube personality Graham Stephan. Here's what Stephan has to say.

Stephan's advice could help you make smart investing choices

On Twitter, Stephan urged his followers to keep the big picture in mind when deciding whether to invest in stocks or not. Specifically, he said "Never bet against stocks long-term!"

Stephan backed his advice up with a chart that was included in his Tweet. The chart showed the return on investment (ROI) stocks have provided compared with other investments. Stephan's charts dated all the way back to the 1800s, so it contains a lot of data showing the relative performance of these different investments. Specifically, it showed:

• Stocks have provided a 6.7% real return
• Bonds have provided a 3.55% real return
• Bills have provided a 2.7% real return
• Gold has provided a 0.6% real return
• The U.S. dollar has provided a -1.4% real return

A real return is the ROI you get after accounting for inflation. The key point of the chart, though, is to show that stocks as an investment have outperformed every other asset. Not only that, but they have outperformed by a big margin.

Although the chart indicates that past performance doesn't guarantee future performance, the fact that investors have consistently earned a better return on stocks for over a century is solid evidence that you likely won't go wrong if you buy shares of high-quality companies and hold them over decades.

How to follow Stephan's advice

Following Stephan's advice and not betting against stocks is simple. You need to open an investment account if you don't have one already; build a diverse portfolio of stocks; and leave your money alone for a long time.

If you do not know how to buy individual stocks, you can still follow his advice. You can buy exchange-traded funds (ETFs) that offer instant diversification and that are easy to purchase. For example, an S&P 500 fund allows you to invest in a financial index that tracks the performance of 500 of the largest companies in the country. You get a small stake in each of the companies on the S&P 500, and these businesses are spread across all industries so you naturally limit risk.

You'll also want to make sure you leave your money alone once it has been invested. If you have chosen your investments wisely, you don't need to worry about a market downturn since recoveries always follow.

So, don't let the market's recent performance deter you from making the smartest financial move you can. Listen to Stephan and get your money into the market so you can maximize your chances of earning the best possible ROI over time.