9 Impressive Benefits of Investing in the Stock Market
Investing in the stock markets makes sense there's no doubt about this. So, your investment strategy should include buying and holding stocks. Are you interested in learning more about the benefits of investing? Read on to find out more.
Did you know that the average stock market return over the last 100 years is 10 percent annually before inflation?
Depending on your investment strategy and the degree of risk you're comfortable with, you could potentially make a lot more than 10% annually. It's also possible, of course, that you could make less than the average.
Here's a look at the nine impressive benefits of investing in the stock market.
1. Dividend Earnings Mean Passive Income
One of the benefits of investing is the potential to make passive income. If you buy shares in companies that pay dividends, you'll earn money for each stock you have in your portfolio.
Many people adopt a strategy of investing in dividend-paying companies to the point where they can make a lot of money every month or quarter. Do you want to grow your dividends so that you can eventually live off of them?
It's possible. And this is one good reason to invest in stocks that pay out dividends.
2. REITs Will Allow You To Make Even More Passive Income
When you get a taste of the passive income from dividend-paying stocks, you won't want to stop. One way to make even more passive income is by buying shares in real estate investment trusts or REITs.
These entities buy properties and pay unitholders monthly or quarterly dividends. REITs are required to pay out the majority of their net earnings to stockholders. So, when you invest in REITs, you can get regular dividends.
If you've always fancied investing in real estate but don't fancy the headaches of dealing with tenants and repairs, consider investing in REITs.
You can make passive income without having to shoulder any of the stress of owning investment properties. It's the best of both worlds.
3. Enticing Returns Over Long Term
You stand to achieve a tangible rate of return when investing in stocks over the long term. While it's possible to make money quickly if you buy a hot stock just before it skyrockets in value, buying and holding for the long term works best.
So, the longer your investment horizon, the more you can potentially make.
4. Invest As Little Or As Much As You Want
One reason you should get started on your investing journey sooner rather than later is that you don't have to have a whole lot to get started. You can start with a little or with a lot. The important thing is that you get started.
You might want to set aside a certain amount every month to invest in stocks. Over time, even small monthly contributions can lead to a sizeable portfolio.
5. Achieve Financial Security Over Time
Do you dream of achieving financial security? Living paycheck to paycheck is no fun. But if you make stock market investments consistently and stick with your strategy, you're bound to increase your wealth over time.
6. Diversify Your Portfolio
It's important to diversify your investment portfolio. You should, for instance, consider investing in things like real estate properties, cryptocurrency options, and bonds. Another important option is to invest in stocks.
Before you do any investing, consider what you want and assess your tolerance for risks. But stock investing is something that makes sense for diversification. You don't want to put all your eggs in one proverbial basket.
So, investing in different areas will give you some protection. It'll help to provide some stability since your eggs won't all be in one basket.
7. Stave Off Inflation
Inflation is one reason why you should never leave all your money in a savings account that earns almost zero interest. Stock market returns tend to outpace the inflation rate by a considerable amount.
So, if you'd rather not see your wealth erode due to inflation, consider investing in stocks.
It's said that the long-term rate of inflation has added up to around 3.1% each year since 1913. Stock market returns, meanwhile, tend to be in the double digits. So, you can protect your money from being eaten away by inflation.
8. Liquidity Matters
One of the reasons to invest in stocks is because of liquidity. When you buy stocks, it's best to hold onto them for the long term. But if you need to sell some or all of your holdings, you can do so rather easily.
So, liquidating your stock holdings is much easier than, say, selling real estate. Your money will be accessible if something comes up that necessitates selling some shares.
9. Pride Of Ownership
Pride of ownership is yet another reason for buying stocks. Do you have a favorite company that has its shares listed on a stock exchange? One way you can show your support for the company is by buying some of its shares.
By so doing, you'll own a small portion of the company. This can provide you with a sense of pride since you'll own a piece -- albeit a tiny piece -- of the company.
Of course, you should perform due diligence before buying shares of any company. Stock trading is serious business. You shouldn't buy stocks unless you've done your proper research.
And never invest more than you can afford to lose. Any investing for beginners guide will tell you that since stocks go up and down in value. It's just that you're likely to come out on top if you invest over a long enough period.
Experience The Benefits of Investing By Investing In Stocks?
You can learn more about investing in the stock market courtesy of our courses, coaching, and more. If you're a more experienced investor, you can check out our stock trading AI data platform for legal insider trading.
Whatever your goals are for stock investing, we can help you. Get in touch to learn more. You'll better appreciate the benefits of investing.
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