The stock market is a big auction house for pieces of company ownership, called stocks. Despite the risks and volatility of the stock market, there are considerable advantages in investing money in stocks.
Outperforms Other Investments
Historically, the returns on investments in the stock market are higher than those on invesments held in other markets and assets. This means that, over time, money will grow more if it is invested in the stock market. The historical average for stock market investments is approximately eight percent per year.
Another advantage of stock market investments is the ease of access (and exit) in the stock market. Thanks to new Internet technology, an investor can easily take a position in a company and leave that position in a matter of seconds.
The diversity of options is one more advantage of investing in the stock market. Companies that have their stocks listed in the market cover a range of industries and services. This offers the investor a chance to diversify his portfolio and make money in a variety of economic conditions.
Investing in stocks that earn dividends is a unique advantage of the stock market. Stocks release a portion of the profits in the form of dividends to their stock holders. Meanwhile, the stock still has the ability to increase in price, creating two ways for the stock to earn money for the investor.
While critics often point out the examples of companies that release fraudulent earnings statements as a way to taint the entire market, the vast majority of the companies release accurate information about the money they spend and earn. This adds a layer of transparency in the investment.
Easy Review and Research
It's not difficult to research a company's financial statement. It's also easy to monitor the stock's share price. This information is available in newspapers and magazines, as well as online.