Investing in stocks is viewed as a risky venture by some people. This is because some investors have ever lost substantial amounts of cash. Nevertheless, that is not the only side of the coin. Other people have accumulated a ton of wealth from investing in it and have joined the billionaires club. Indeed, it is still a viable option for putting your money in.
To Benefit from Investment Gains
Among the motivators for investing in the stock market, is the probability of increasing one’s money. It is known that despite the daily falls and rises in individual stocks, the stock market tends to increase in value. Investors get profits from investing in shares of stable companies that tend to increase in value. Besides, putting your money in several different stocks come in handy in building wealth. This is through leveraging growth in various sectors and industries in the economy. That way, you get some profits despite some of your stocks falling in value.
To Diversify your Investments
The stock market enables investors to put their money in different areas. It allows you to invest in some stocks, as you also invest in bonds, CDs, and money market accounts (savings). The diversification help to safeguard you from the natural instabilities of the financial market. Mostly when the stock market is experiencing a low, the bond market is up. As such, having investment in stocks assists in overcoming losses from other investments. Also, it not only brings in some risk in a portfolio but also the possibility of substantial, rapid gains. This makes investors stop being too risk-averse or adopting only conservative strategies in investment.
To Get Dividends
Although not all stocks earn their owners dividends, some do. They generate income for their holders in the form of dividends, which are annual payments to investors. The best thing is that they can be paid even when the stock price has reduced.
Dividends is an extra income that is over and above the profit made after finally selling the stock. A person who has invested in stocks that earn dividends can use the income as a source of retirement income. Better still, one can reinvest the payments in a bid to expand their portfolio