The stock market refers to public markets that solely exist for issuing, buying and selling stocks that can be traded on the stock exchange, or over-the-counter.
Shares are bought and sold by investors and issued by public companies. Widely it is a place that stock buyers and sellers meet to buy and sell lucrative stocks that they believe will increase in value overtime.
Many people would like to invest in the stock market, but do not have the resources or knowledge of how to do so. Anyone can do it and anyone can turn around a hefty profit, if they take the time to understand the markets their desired stocks are in.
Below are seven of the top reasons as to why you should invest in the stock market.
1. Inflation Pacer
Inflation describes and economic situation where prices rise but the value of purchasing power, money, is decreasing. To help beat inflation you must invest your money strategically in a high-return situation.
By choosing the stock of good companies will allow you to constantly make good growth returns yearly, meaning your purchasing power increases and your profit grows.
By investing in the stock market you can keep pace with the rising inflation prices and not feel the impact of high rising inflation so quickly.
2. Capital Growth Potential
It has been proved that for the last decade investing in stocks and real estate have given investors the best rates of return. The potential to really turn over a lot of money on the stock exchange is high if you know where to place your initial investments and keep them afloat.
This could be in the form of fixed monthly deposits, insurances, bonds or commodities, the stock market has notoriously been able to out perform all of these investments with great returns.
This alone is a very interesting reason that many people do invest their money on the stock exchange and seek out great growth potentials for their initial investments over time.
3. Better Than A Savings Account
Historically people have scrimped and saved their money into their savings as an obvious way to ensure a positive financial future. Nevertheless, your savings performance is always reliant on how well your account and its interest rates can compare with inflation levels.
By investing your money you do not feel this, your savings could grow massively. You can even take out what you initially invested and continue trading with your profits.
The stock market allows you to take control of your finances rather than relying on the decisions of your bank or other authorities, which in recent times people are becoming more and more sceptical about.
4. Diversify Income
Having multiple streams of income is a smarter way to invest and ensure that your cash flow is less impacted in case of issues outside of your control.
If you earn income from your job, investments and/or another business you may be involved in you might feel more confident money wise.
This is the same for your investments, diversifying them can ensure that you will be less impacted by potentially bad stocks.
If you lose your job, you have your investments, if an investment falls in price, you have others to stabilise you. It is about being sensible and allowing for contingency at any opportunity.
5. Retirement Funds
As we all know, our retirement pensions will not be enough for us, especially if you are hoping to maintain a certain lifestyle.
Investing in the stock market can allow the older population, or the young as they grow older, the reassurance that they will have some funds to their name. The earlier you start, the more lucrative your investment portfolio will be as you grow older.
6. Tax Benefits
Buy investing pre-tax money in an employer retirement fund you can build up your pension pot and reduce your taxable income each month.
This is a great way for people to get on the stock market through a 401 k whilst sensibly saving and avoiding ever growing taxation.
7. Achieve Financial Goals
Investing or increasing your investment portfolio might be a financial goal of yours, doing this via the stock market could bring in some really meaningful profits. This could then allow a person to buy a house, car invest in a business or themselves.
The stock market is a place where money can be made if the right choices prevail.
Conclusion
Above are seven of the untold amount of reasons why you should invest in the stock market. The most important of which would have to be keeping the pace with inflation.
Whilst there are many other reasons to invest in the stock market the above allow for the most lucrative potential returns that could instigate a person actually investing.