Why Should You Invest In Stocks?

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So, there is a reason why you are here. You want to start making money from investing in stocks, but you want to get all the answers before you do that. Am I right? Well, who knows?

Ok, so why should you invest in stocks? Why trade stocks? What are the key benefits of investing in stocks compared to other markets or types of investments like real estate or start-ups, for example?

We can’t give you all the answers, but we can help you get some crucial information before you make your first stock market investment. Now, let’s see why investing in stocks is a wise decision and what are the reasons why you should create a stock investment portfolio.

The Benefits of Investing in Stocks

Historically, the stock markets have provided generous returns for traders and investors worldwide. Theoretically, the stock market’s nature is to constantly grow over the long term despite market crashes once in several years (usually, stock market crashes tend to occur once in seven-eight years). 

However, let’s be honest, of course, it is not all unicorns and rainbows, or in trading terms, it’s not all pips and pennies. Like any investment, the stock market also comes with risks, presenting investors with various challenges and market volatility. So cutting to the chase, is the stock market worth the risk? Yes, of course, it is.

Stock investing is not as complex as you’d think. Owning stocks in different companies can be done in seconds and are beneficial for your finances in numerous ways. So let’s take a look at the five benefits everyone is talking about when it comes to investing in stocks.

  1. It can help you build your savings and earn regular passive income.
  2. It protects your money from inflation and taxes.
  3. It maximizes income from your equity investment. 
  4. It allows you to stay ahead of inflation.
  5. It offers you the possibility to take advantage of a growing economy.  

Now, all of that sounds great, right? So let’s dig deeper and explore some of these benefits in more detail.

1. Stocks Are a Great Way to Create Passive Income

Everybody wants passive income, and stock investments are certainly one of the best ways to get regular passive income. When you invest in stocks, there are two ways for you to make money. The first way is to make money from changing stock prices or, in other words, capital gains.

For example, you buy a stock at a specific price and sell it at a higher price, meaning stock price appreciation. Note that in today’s market conditions, you can do the opposite, which means you can sell (or short-sell) the stock at a high price and buy it at a lower price.

The second way is to make passive income through dividend payments by adopting overly conservative investment strategies. It’s simple – some companies pay dividends and distribute their earnings to investors, so you can purchase stocks that pay dividends and wait for a quarterly or annual dividend income. Of course, there’s a risk that these stocks will lose part of their value, but usually, dividend stocks are considered blue-chip defensive and do not tend to be volatile.

2. Investing in Stocks Is The Best Way To Beat Inflation

Inflation. Yes, this annoying thing that everybody is talking about, scared of, and doesn’t really understand. But inflation is a major concern for people, and it can cause changes in economic policy like the current situation of the reverse currency war.  

Investing in stocks is an excellent way to beat inflation. Historically, stocks have generated an annual return of 10%. Now, that’s way better than the annual inflation rate, at least in developed countries. Further, equity investments provide investors with better tax treatment over a long period, allowing them to stay ahead of inflation and help slow or prevent the negative effects of both taxes and inflation.

3. Investing Is More Affordable Than You Think

Yup. Investing in stocks is a well-worn path to making your money work. You don’t even need a huge capital to get started, and you can literally start by investing a couple of dollars.

Investing in stocks is virtually a painless way to use your earnings in the service of your future. Nowadays, many brokerage firms provide leveraged trading, which means you can invest a small sum of money and trade with a much more considerable amount. Moreover, if you have a low budget and you’d like to actively trade stocks, you can also open a CFD trading account with a reputable brokerage firm and buy fractional shares with a low initial investment. And do not forget that you can invest in penny stocks, which are shares of small companies with a low market capitalization that trade for less than one dollar (or equivalent in another currency). 

4. Stocks Are Easy To Buy and Easy to Sell

As they say, we live in the future now. You don’t need to brush your hair, put a fancy suit on, or even leave your bed if you want to invest in stocks. You can literally buy stocks and sell stocks from the comfort of your own home. Everything you need, you can find online from your desktop computer or even mobile device. And you can also invest in different kinds of securities available on stock exchanges. Exchange Traded Funds (ETFs), index funds, or mutual funds, are a type of fund that collects various securities and tracks a specific index, sector, region, etc.

Simple as that.

5. Investing in Stocks Allows You to Take Advantage of a Growing Economy

Finally, another benefit of investing in stocks is that you can take advantage of economic growth. Do you need proof? Well, stock markets have exploded since the 2008 crisis. Yep, stock markets have exploded. I mean, NASDAQ spiked over 500% since 2008, and S&P 500 gained over 300%. 

The verdict, if the economy grows, so does the stock market. And that’s maybe the easiest and surest way for individuals to take advantage of a growing economy.

5 benefits of investing in stocks

Final Thoughts

The bottom line is you don’t have to be a rocket scientist, math whiz, rich, or George Soros to buy an ownership stake in companies. Sure, a seasoned investor might have an advantage over you, but it’s NOT a competition against the best traders. Instead, it’s you trying to find the strategy that may help you get investment gains from stock investment.  

All you need is to invest some time into learning about stocks (well, you’re in the right place), do some research on the companies you are considering investing in, and set some money aside to invest and build an equity portfolio. To start with, you can read books about trading the stock market, watch stock trading movies and trading documentaries, and join our trading room

There is no need to rush and invest in the stock market immediately. Take your time to educate yourself, do your homework, build a trading setup with one of the best trading computers and laptops and top trading monitors, set realistic goals and expectations, build a trading plan, and get ready to conquer the market!

And even if you won’t end up as the most successful investor in history, it’s still good to have the option to make investments from time to time and get some extra income. Trust us, knowing how to invest in stocks is a smart move, and we are to help you do that.

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