What is Investing ?
Indian Stock Market is a lucrative investment avenue that will help you grow your personal wealth many folds. Stock investments are one of the most popular avenues of generating wealth in the modern world. You might have heard several things about stock market investors ranging from some horrific losses to inspiring ‘rags-to-riches’ stories. The beauty of this investment avenue is that it treats every investor differently based on his/her approach to investments.
Investing money in the right avenues is crucial for the growth of personal wealth. Considering that there are several options for investment, it is important to weigh the options that enable high returns in long-term. One such option, that holds the potential of delivering high returns is stock market, where investors can invest their money to earn high returns.
5 Benefits of Stock Investing :
Stock investment offers plenty of benefits:
Takes advantage of a growing economy: As the economy grows, so do corporate earnings. That’s because economic growth creates jobs, which creates income, which creates sales. The fatter the paycheck, the greater the boost to consumer demand, which drives more revenues into companies’ cash registers. It helps to understand the phases of the business cycle—expansion, peak, contraction, and trough.
Best way to stay ahead of inflation: Historically, stocks have averaged an annualized return of 10%.1 That’s better than the average annualized inflation rate. It does mean you must have a longer time horizon, however. That way, you can buy and hold even if the value temporarily drops.
Easy to buy: The stock market makes it easy to buy shares of companies. You can purchase them through a broker or a financial planner, or online. Once you’ve set up an account, you can buy stocks in minutes. Some online brokers, such as Robinhood, let you buy and sell stocks commission-free.
Make money in two ways: Most investors intend to buy low and then sell high. They invest in fast-growing companies that appreciate in value. That’s attractive to both day traders and buy-and-hold investors. The first group hopes to take advantage of short-term trends, while the latter expect to see the company’s earnings and stock price grow over time. They both believe that their stock-picking skills allow them to outperform the market. Other investors prefer a regular stream of cash. They purchase stocks of companies that pay dividends. Those companies grow at a moderate rate.
Easy to sell: The stock market allows you to sell your stock at any time. Economists use the term “liquid” to mean that you can turn your shares into cash quickly and with low transaction costs. That’s important if you suddenly need your money. Since prices are volatile, you run the risk of being forced to take a loss.
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