5 Reasons Why You Should Invest in Stocks

by Andrew McGuinness     jul. 16, 2019

The subject of stocks and investments may seem foreign to many of us who have little interest or experience in the field of business. The thing is, investing in stocks is something genuinely anyone can do. If gaining profit from an investment in the stock market is something that might interest you, here are five reasons why you should make the commitment.

1. More diversity, less risk

There is no way to completely get rid of risk when dealing with investments and the stock market. The stock market and risks go hand in hand. Despite this fact, it is possible to lower your risk of losing money by diversifying your investments. How is this possible, you ask? Well, diversification involves adding variety or range to your portfolio of investments. In other words, if you were to invest in more asset classes, for example, your chance of risk will, in all likelihood, become lower.

2. One step ahead of inflation

It is proven that the purchasing power of most, if not all, currencies decreases as time progresses. What bought you a nice meal 50 years ago can’t buy you a pack of gum today. By investing in the stock market long-term, you would be able to take advantage of this fact and stay one step ahead of inflation.

3. High potential for growth

Because of retirement programs as well as 401k programs, each month graces the stock market with large direct investments. This causes prices to inevitably raise. In other words, the stock market is meant to grow monetarily over time, it’s just second nature. Also, in the case that a company in the market was to fare negatively, the exchange actually cuts this company out and alternates it for a better faring one in order to improve prices.

4. You don’t have to risk it all

There is no rule in the stock market that says investors must risk anything and everything within their possession. Just because some people do happen to risk it all for the thrill of the ride, the unwavering belief that a particular stock will make it big, or some other reason, it does not mean that you have to. Every investor needs to do what is right for them, depending on their situation and their unique circumstances.

Those unable to handle risk well should obviously be investing less. Other essential factors when it comes to deciding what to invest in and how much are age and financial situation. The older you get, the less practical a long-term investment becomes. The more money available to you, the less sense it makes to put your efforts into smaller, more frugal investments.

5. Different options for different investors

When investing in stocks, there aren’t any rules that you need to follow, or expectations that need to be upheld. The nice thing about the stock market is that you are able to do what’s right for you. If you are unsure about investing and would like to give it a try on a more micro-level, there are plenty of individual stocks that will allow you to do that. On the other hand, if you’re all in and would like to invest on a macroeconomic scale, it is possible to buy a blanket of indexes.

Mutual funds may seem interesting to you, but be aware of those higher fees. Investing in Options may also be a wise choice, as it allows lower capital investing and the possibility to engage in more customized strategies. If one stock option isn’t right for you, there is bound to be something else. That is the beauty of the stock market.

Get unlimited access to our Learning Center,
Broker Insights and Exclusive Promotions for Free!