Why Should I Invest in Stocks and Shares?
Investing in the stock market through shares and stocks should be part of everyone's financial portfolio because it allows assets to grow faster than conservative methods.
Other People Are Reading
-
Savings: Poor Performance
-
Certificates of deposit and savings have minimal rates of return, and taxes eat up the remaining profit. Alternatively, stocks can return as much as 12 percent on average if picked well.
U.S. Bonds: Not Much Better
-
U.S. bonds and treasurers offer better rates than savings accounts and CDs but nowhere near what the market can potentially return.
-
Risk
-
Stocks are riskier and have no safeguards. There is no government insurance for loss. However, long-term investors have historically seen repeated better returns than if all the money was kept in savings. The odds favor the long-term stockholder over the savings account.
Diversification
-
The trick to protecting assets in stocks is to diversify. This way, when one industry falters, it can be offset by the successes in an unrelated market area.
Timing
-
Exiting the market should be consistent with how long you have to reach your goal. Short-term investors should have less than one third in the market due to risk. Long-term investors can tolerate risk better with 20 years plus to recover.
-
References
Resources
- Photo Credit money, money, money image by easaab from Fotolia.com
