As I write this, the market has been whipsawing between up days and down days for the last few weeks. This volatility–driven by inflation concerns and the potential economic impact of the omicron virus–can make stock market investing a nauseating experience.

Yet to build wealth, invest we must, and we must be consistent with it too. That means consistently adding money to our 401ks or IRAs regardless of what the market happens to be doing on a particular day.

But isn’t there a better way? Do Americans hoping to retire someday need to subject themselves to the whims of the stock market? My response is yes. In fact, I believe investing in the stock market is really the best path to wealth building for most of us. I’d like to explain why.

Ease of Entry - You can put $100 in an investment account every month and invest those funds into the stock market. This low barrier of entry means just about everyone in the world has an opportunity to participate. The same is not true for many other wealth-building assets, like real estate or investments in private companies for example.

Tax Advantaged - The government favors stock market investors. When stocks are sold for an increase in value, they generate capital gains taxes. These tax rates are far more favorable than income taxes rates, ranging from 0% to 20% (if the stocks are held for more than one year).

Furthermore, stocks can be held in tax-advantaged investment accounts like 401ks or Roth IRAs. Some of these are tax-deferred, some tax-free, and others are taxable at capital gains rates. Other wealth-building assets, like real estate, also have tax advantages, but the variety of investment accounts stocks can be held in makes them ideal.

Liquidity - While stock investments should always be held for the long-term, if you need to get out of them it’s incredibly easy to do. Most stocks can be sold from investment accounts and your cash is available within a couple of days (be mindful of withdrawing funds from your tax-advantaged accounts however. This can have tax consequences!) The same liquidity is not available in most real estate holdings, pension plans, or small business ventures.

Diversification - Not all investments behave the same way. Some go up when others are down. Some stocks go to zero, others shoot to the moon.

During the financial crisis in 2008-2009, the stock market dropped around 30-40% in 2008 alone. From January to March 2009, it lost another 20% or so. That’s roughly 50-60% of its value! However, the bond market actually gained a few percentage points over this same period.

On the other hand, the last 13 years since the financial crisis have been a “bull market” (a market of continually increasing asset values) for stocks. Bonds have also done well, but not as well as stocks.

Stocks and bonds don’t have a perfectly negative correlation--stocks aren’t the “yin” to bonds’ “yang”--but they don’t move perfectly in step with each other either. Bonds are relatively safer than stocks so investors tend to flee to bonds for safety in hard times, but stocks contain greater potential for long-term growth. This example of assets behaving differently is one of the characteristics we look for with diversification.

Diversification requires humility. We admit that we don’t know which stocks to “pick” so we buy a lot of them (usually through exchange traded funds or mutual funds). This decreases the damage done if one or two stocks suffer or fail completely.

Portability - This is an often overlooked highlight to investing. When you receive social security or a pension benefit, your spouse is typically entitled to a survivor benefit as well. But after your spouse passes away, the benefit stops, and if you pass away the day after your pension starts, too bad, so sad.

Since stock investing is direct ownership in businesses, there is no benefit that stops. The stocks pass to your spouse (through state laws) and once he or she passes, they pass to your heirs (through a trust, gifting, or probate), and on and on. There is no contact as with an annuity or insurance product which terminates after you and/or your spouse pass away.

Inflation - Stocks have proven themselves over their long history to be a good hedge against inflation. Real estate has too. Safer investments tend to offer poor protection from inflation. The annual inflation rate averages around 2.5% but recently it has climbed to 7% compared to last year. That’s a reason for concern for a lot of reasons, and when it comes to building wealth, it’s a reason to invest in stocks.

Investing is scary. I wish there wasn’t so much need to take on risk to earn a reasonable return, but in my experience it is, ironically, one of the most reasonable approaches.