If the market increases by 6-8% annually, how can someone in the future afford to buy even one stock if their income does not increase proportionally?

Question

If the market increases by 6-8% annually, how can someone in the future afford to buy even one stock if their income does not increase proportionally? Won’t stock prices increase 6-8% indefinitely prohibiting anyone from buying them? Also if the market crashes to correct the increases, how can anyone make a profit off long term investments without timing the market? I would like to invest in broad index funds but don’t quite understand how my money will increase if there is always the risk of a correction crash before I retire and take my money out of index funds. Thank you.

In: Economics

Answer 1

The sticker price of a stock is almost completely irrelevant to retail investors(aka normal people). Most investment is through mutual funds where the price per share of the underlying assets doesn’t affect the cost to invest. Add to that the ease and cost of investing for retail investors has dropped considerably in the last 100 years and the problem you are thinking exists has never manifested itself.

You can make money without timing the market exactly because the value increases with time. Over long periods of time this has never not been true and wont be in the future.