Stock market is one of the sectors that many investors have risked investing and have enjoyed its fruits. This is because, despite the fact that it is very risky it has high returns. The high risk factor has not made many to shy off from investing in it. This brings up the question, why invest in stock market? Well, the advantages are numerous as illustrated below:
- It is a Good Long Term Investment.
In many cases, we use adaptive reasoning as a guide to forecast things to come. Stocks have been consistent over significant periods of time. However, one needs to be conversant with the history of the company or organizations from which he wishes to invest in. Once that is done, one can choose a suitable amount of stocks to hold over a long period of time. It is also advisable for an investor to diversify his holdings through exchange traded funds (ETFs), mutual funds etc. In this case, you can hold stocks for as long as you want which implies that this can act as a retirement plan. Furthermore, the accumulated wealth could be transferred to the next generation.
2) Stocks Have a High Potential Return.
This is realized through dividends and capital appreciation overtime. This is more pronounced in areas which register a positive growth in the economy. Another advantage worth noting here is that an investor is also able to keep pace with the rising inflation. Stock market has a tendency to rise in value though the price of stocks rise and fall on a daily basis. Experts advise that one should invest in different stocks which would help build wealth by leveraging growth in various sectors.
3) You Can Invest With Little Fund.
This demystifies the misconception that one, especially beginners need a lot of funds to invest in stocks. As I mentioned earlier, one needs to do a research on the organizations, more so those offer stocks at lower prices. Once this is done, you can start by investing small amounts and start getting good returns.
4) You Can Invest Online.
Many businessmen have had to cope with meager profits due to the middleman factor. When it comes to online transactions, the nightmare of the middleman is eliminated. Investors can buy and sell stocks without having to meet brokers, which implies that the costs will not be incurred. Investors can trade when they want hence no delays unlike in cases where you need to contact or wait for a middleman or broker.
5) It Makes you a Shareholder.
When you buy shares of stock it means that you have an ownership stake in the company or organization from which you purchase the stock. In other words you become one of the business owners. This also grants you an auspicious opportunity to participate in making business decisions and in selection of board members.