Last Updated on January 29, 2021 by Yetty Akindele
We’ve often heard people talk about the ups and downs of the stock market and investing in it has become a global trend. Though the fate of investments in stocks is uncertain, the potential for return is significantly high. That’s why people find that investing in the stock market is a perfect way to multiply their money.
It is essential to educate yourself about the right strategies and stocks to invest in if you are new to the stock market or a potential investor. With sufficient information and analysis of the corporation statistics, you’ll be able to earn long-term rewards.
What Are Stocks, And What Is The Stock Market?
If you’re not aware of stocks, they are a cluster of a company’s shares. If you own a stock, it means you hold a fractional share in a corporation. The investors and sellers of stocks collectively form the stock market.
Today’s Top Stocks – Just Released!In a stock market, the shares of companies are auctioned. People buy shares at the lowest price possible to sell them later when their value increases, consequently earning profit.
Why Should You Invest In Stocks – Top 10 Reasons
If you haven’t thought about investing your money in the stock market, here are some reasons why investing in stocks is advantageous:
1. Earning grows with the economy
Economic growth creates more job opportunities boosting both corporate income and sales. With an increase in paychecks, companies’ revenue generation booms due to an increase in consumer demand.
In short, the value of stocks increases with economic growth; therefore, they are a good option for investment.
2. Protection from inflation
Inflation is the process of an increase in the overall prices of services and products over time. Many people suffer due to hyperinflation. Investments are of no value if the profit earned is equal to or less than the inflation percentages.
However, the annual return of stocks is usually much higher than inflation rates, making them ideal for investment. Invest your savings now to stay ahead of inflation!
3. Multiply your investments
One of the best reasons to invest in stocks is that they help to multiply the amount you spend. Stock investments are the best way to earn a high profit if done correctly.
Over the years, the stock values have gone up with improving global economies. There have been a few ups and downs, yet the stock market continues to grow. Investing in the right stock shares ensures tremendous profit in the long run.
4. Investment diversity
There is much diversity in the stock market related to investment plans and types of shares. You can opt for long-term or short-term profit earning strategies. Short-term strategies usually depend on changing trends; whereas, profit from long-term investments increases with the company’s growth over time.
Premium services featuring top stock picks from The Motley FoolThe stock market also allows for global investment opportunities. You can easily invest in shares of overseas corporations and earn profit from their plans.
5. Transparency of the stock market
The stock market is best known for its transparency and has no hidden agendas towards its investors. The way it works is simple and meets the investors’ needs for disclosure of actual values and prices of shares.
Besides, there are no secret strategies to gain high profit besides basic research and understanding. So, there aren’t any hurdles in your way of succeeding in stock investments.
6. Cash loses its value over time
Investing in stocks is better than keeping your savings in the form of cash because it loses its value with time. You must have heard from your elders how things were cheap, and money had more value in the past! Right? Well, that’s true because inflation makes money lose its value.
When you invest in stocks, you can outrun inflation and earn a considerable profit. Stock investments when done right, ensure your savings stay valuable for a long time.
7. Easy to invest
Investment in stocks is relatively easy and more lucrative. All you have to do is purchase a share from a broker.
The age of the internet has made things much more accessible – You can buy your shares online without any hassle. Some online brokerages to use are Questrade, Wealthsimple. Just set your account up, and you’ll have your share within minutes. Easy! Isn’t it?
8. Steady income
If you invest in dividend shares, you’ll earn good money on a steady basis. The annual return of these shares depends on the stocks you buy.
Dividends are usually paid in quarters making your investment a constant source of income throughout the year.
9. Learning opportunity
Today’s Top Stocks – Just Released!Investing in stocks is a great way to learn about the stock market and enhance your business skills. It is simple, fun, and valuable. You’ll learn about the economic impact on companies, products and will able to improve your analytical abilities.
The skills you acquire through stock investments will be beneficial in other areas of your life as well. Invest your money now and learn!
10. Have a happy retirement
Stock investments are the perfect retirement plan. Invest early to lead a carefree life after you retire. People often forget the importance of retirement plans and suffer once their job duration ends. Investing money is a great way to ensure financial security in the future.
Long term stock investments multiply your invested amount manifold and even allow you to retire early. That way, you can spend your time with your family without worrying about money.
How To Invest In Stocks – A Step By Step Guide
Stock investments are simple and easy. If you have made up your mind and want to invest in stocks, here are some simple steps you can follow:
1. Set your goals
The first and the most crucial step towards investing in stock is setting goals. Make sure your financial state allows you to experiment in the stock market. Analyzing your income, debts, household budget and emergency fund availability will help you determine if you’re ready for investment.
Decide the reason you want to invest. Do you want to enjoy an early retirement or receive profit on a short-term basis? Ask yourself these questions and build your strategy accordingly. Determining these goals will help you to find the right kind of shares for investment.
2. Decide a budget for investment
Setting a budget for your investment is highly important. Having the shares of your choice depends on the budget you have.
If you’re new and have a low budget, mutual fund stocks suit you best. Having a mutual fund means you buy a small portion of the stock. You can buy individual stocks as well.
3. Open an account for investment
The next step is to open an account for investment. The internet has made it all manageable, and you can easily create an account online and buy your shares.
Many companies provide an online platform for stock investments, including Wealthsimple, Morningstar, The Motley fool, and Questrade. These companies are brokers that help you in the investment process. Choose the one that suits you best.
4. Educate yourself
Educating yourself before investing your savings is always advisable. You need to be aware of the stock market’s ups and downs, the types of accounts you can open, the benefits of long-term investing, and the drawbacks of buying individual shares. Only when you have complete knowledge, you can rest assured to gain profit from your investment.
If you’re wondering how, you can read books, watch videos, attend courses, or search the internet. Companies like Morningstar provide guides to help you understand investments.
5. Start investing
Once you know about your investment plans and all the possible outcomes, it is time for you to start investing. Though there are many strategies you can follow, the basics will help you out the most in the stock market.
Use your funds wisely to build your portfolio and ensure you are investing in companies that can grow with time. Keep yourself updated and always research before investing in a stock.
6. Keep individual stock investment gradual
Make sure you invest in individual stocks gradually while building your portfolio as they don’t offer the dollar-cost average feature.
Avoid multiple positions in a single stock and keep moving. Different stocks will make your portfolio more attractive.
7. Diversify your investments
You can diversify your investments by having retirement plans and investment accounts. Asides investing in stock markets, invest in bonds. When the stock market is down, bond values will rise, and you’ll be safe.
Premium services featuring top stock picks from The Motley FoolDiversifying your investments also means investing in multiple stock types, including individual and dividend stocks. Don’t forget to maintain a balance between your assets to have a steady income and growth through investment.
Conclusion
Investing in company shares is a great way to earn a profit. The stock market is one of the best options if you’re looking for an ideal platform to invest your savings and save yourself from inflation.
With the knowledge and right strategies, the shares you buy will increase in value over time and offer long term financial security. Besides earning money, stock investments are a great way to learn about the global economy. Make an account and invest in stocks now to learn and enjoy its benefits!