CEO Tom Gardner Tells Beginners: "The Stock Market Is a Bank That Pays More Than Yours"

In a recent interview, Motley Fool CEO Tom Gardner said, "The stock market is a bank that pays a higher interest rate than your bank ever will. " However, he prefaced this with the fact that not every investment you make is going to go up, and you're not going to have a positive return each and every year

In fact, Gardner said that if you buy 25 stocks, you need to be comfortable knowing that five of them are ly to be big disappointments

He added that he understands why some people can get intimidated by the stock market, but if you can get past that fear, then you can build a lot of wealth over time

Two of the keys are finding enough good companies to invest in and keeping at it

In individual stocks is also not easy, as Gardner points out, and you are inevitably going to have your fair of losers along the way

Morgan study found that between 1980 and 2020, 40% of the stocks in the Russell 3000 index, which consists of the 3,000 largest companies in the U. , suffered a "catastrophic stock price loss," which it defined as a 70% drop in price from which a stock never fully recovered

That's some pretty scary stuff, but remember the stock market as a whole put up some strong returns during this period

How could that be when most stocks underperformed

The answer is that big winners helped power the market returns

So as Gardner notes, find enough good companies to invest in and you can generate some pretty strong returns over time

There are a lot of well-known names that have been big winners over the years

This includes Amazon, Walmart, Starbucks, Chipotle Mexican Grill, Alphabet (Google), Meta Platforms (Facebook), Netflix, Apple, and Microsoft

These are companies with pretty recognizable es that aren't too difficult to understand, so you don't need to be turning over rocks looking for obscure companies no one has ever heard of to find eventual megawinners

They are often right in front of your face

Image source: Getty Images

The ETF route Of course, if investors don't want to invest in individual stocks, in an index exchange-traded fund (ETF) is another good option

This plays perfectly into benefiting from megawinners, as the index naturally lets these megawinners run and become bigger contributors over time

ETFs are also great investment vehicles to use a dollar-cost averaging strategy with, where you invest money each month at a set amount no matter how the market is performing

Whether you choose individual stocks or ETFs, you want to continue to invest in both bear and bull

In bear can get you some great prices, while the stock market often will set new floors in bull

So while the market will have its ups and downs, over the long term, it is one of the best ways to build long-term wealth, and is a surefire way to get you a better return than you ever will at your local bank

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors

JPMorgan Chase is an advertising partner of Motley Fool Money

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors

Geoffrey Seiler has positions in Alphabet

The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Chipotle Mexican Grill, JPMorgan Chase, Meta Platforms, Microsoft, Netflix, Starbucks, and Walmart

The Motley Fool has a disclosure policy.