Ben Gran, The Motley Fool
4 min read
When the stock market is going through boom times, it’s understandable that some people might feel tempted to day trade — buying and selling stocks based on short-term market moves or overpriced hype. If it seems like lots of other people are getting rich quick in the stock market, some people might feel a sense of “fear of missing out (FOMO).”
Young men can be particularly vulnerable to the allure of risky investment behavior. But a recent survey found that day trading can be bad for your mental health.
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Let’s look at why day trading can be bad for people, and what young investors should do instead.
Survey: 64% of young men who day trade stocks feel like “failures”
A new survey from the Institute for Family Studies published in Bloomberg found that 25% of young men (ages 18-29) trade stocks daily, and 64% of these men say they feel like “failures.” The survey didn’t say how much money these “failures” were gaining or losing. But based on other research, an estimated 95% of day traders lose money.
Day trading is risky and often stressful and frustrating. Too often, young men are drawn into day trading because they feel underpaid at work or underemployed in their careers. But it’s hard to make money as a professional stock picker. Stocks don’t always go up, and many stocks fail to outperform the broader S&P 500 index.
Many young men like those mentioned in this survey might be risking money on day trading that they can’t afford to lose. That money could’ve helped them build a brighter future.
What to do instead of day trading: Buy and hold the Vanguard Morningstar Total Stock Market ETF (VTI)
Instead of betting on short-term market moves or getting caught up in stock hype, most people will be better off taking a long-term investing approach. Buy a broadly diversified index fund like the Vanguard Morningstar Total Stock Market ETF (NYSEMKT: VTI) and hold it for years.
This low-cost index fund lets you own the entire U.S. stock market, with publicly traded companies of all sizes. It holds a total of 3,531 stocks. Instead of picking stocks, this fund owns roughly “all the stocks” in America.
In the long run, this total stock market ETF has delivered powerful wealth-building returns. Its average annual return has been 11.75% over the past five years and 14.53% over the past 10 years.
