The stock market offers plenty of opportunities to make money online. The Federal Reserve conducted a Survey of Consumer Finances and discovered that 53% of families in the United States owned stock vs. 52% in 2016 and 32% in 1989. Interestingly, the most significant growth of stock holdings took place in the lower-income group, which indicates that young people especially started investing more often than the peer group of the 10% high-earners.

All this was before the pandemic, with more and more people working from home. In 2020 and the first half of 2021, the search demand for investing-related queries was at all-time highs. We can expect to see a significant growth in households investing in the stock market once the next statistics by the Federal Reserve are published.

3 Different Ways to Invest in Stocks in 2022 and Beyond

The type of stock market investments can be categorized into three different types.

Buy and Hold Investing

Buy and hold investing is what most households do. It refers to an investment approach of buying stocks and having them forever in the investment portfolio. The most significant advantage of this approach is that the set and forget method only requires to get active a couple of times per year to add new positions to a portfolio. Thus, as long the stock market continues to go higher, the portfolio will most likely grow with it as long the companies chosen are financially healthy. In addition, instead of investing in specific stocks, investors tend to invest in broader investments such as mutual funds, exchange-traded funds, and other index certificates.

Swing Trading

Swing Trading refers to an investment approach that requires placing buy and sell orders more frequently compared to buy and hold investors. Swing traders use swing trading strategies to invest in the stock market more frequently. They aim to catch the bottom before buying shares of a stock like Apple, Amazon, or Netflix, sell them at a swing trading high before re-evaluating later if another attempt of buying stock should be taken. While long-term investors don't care about mid-term volatility in the stock market, swing traders do. The benefit of this investment approach is that the portfolio is often within secure and nonvolatile cash positions, always ready to re-invest in specific stocks once another mid-term buying cycle begins. The disadvantage of swing trading is that it is hard to evaluate the market bottoms and market tops.

Day Trading

Day trading is less an investment approach since investing requires a longer holding time. Day trading is more a speculative way of using buying power within a brokerage account to make money in the short term. To be more specific, to make money buying and selling shares of a stock on the same day. But not anyone can make money day trading the stock market by using a brokerage house in the United States. That's because a minimum of $25,000 is needed to day trade with a U.S. broker frequently. That's why most people ignore this type of trading activity. It is also questionable if money can be made by trading that often because, based on statistics, most day traders lose money. There is another trading method called high-frequency trading. HFT traders also buy and sell within the same day. Still, while an average day trader holds the position at least for a couple of minutes, the high-frequency trader typically executes the buy and sell transaction within a second. That's being done by utilizing high-end trading technologies, fast internet connections with low latency, and complex trading algorithms.

Chose Right Way To Invest and Trade

Statistics show that the most money can be made by holding stocks for a longer time. Therefore buy and hold investing beats the other investment methods. That's especially true in the past ten years because there was no longer-term market correction, and most financially healthy companies have seen one way, the way to new all-time highs.

Once the FED decides to increase interest rates to fight inflation, the stock market will most likely begin to consolidate, where swing traders will benefit from shorter stock ownership periods. Day traders make the most money when the market is volatile. Therefore they can make money in all market cycles as long the volatility is high.