Purpose of Stock Investing
To some people, the purpose of stock investing is simple: to make money -- the more the better. But making money in stocks is a means, not a goal. Stock investing involves risk of financial loss. The reason investors take risks is that they have no other way to achieve their financial goals.
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Financial Goals
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Everyone's financial goals are different, and while some people simply want to get rich fast, most investors have more specific (and realistic) goals in mind: buying a house, putting the kids through college or saving for retirement. If we could achieve those goals by saving money dollar for dollar, we would not need to take the risks associated with stock investing, but most of us can't, so in order to achieve those goals, we have to take risks.
Risk-Reward Ratio
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Stocks offer the best risk-reward ratio: if you manage your risks well, the financial rewards of investing in stocks can far outweigh the risks. The risk-reward ratio is not automatic: it varies with each stock and depends on investor skill, experience and circumstances.
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Capital Appreciation
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Stocks offer the best capital appreciation potential: over the years, many stocks produced returns of several thousand percent. Few other investments can consistently match that.
Storage of Value
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At the very least, stocks allow you to store the purchasing power of the money you have today for future use. For example, you have $20,000 today that you do not need. You could buy a car with that money, but you don't need a car. You put that money in the bank and earn interest on it. Your bank deposit is federally insured, so you are guaranteed not to lose money. Five years later, your bank deposit may be worth $21,000 with interest. However, the price of the car, which you now need, has gone up to $30,000. You haven't lost any money, but your money has lost purchasing power: you can no longer afford to buy the car that you could five years ago. If instead you'd put your money into stocks, there would have been a risk of loss, but your money could have grown to $40,000 over the same period, enabling you to afford a new car and more.
Other Reasons
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Some people, especially, short-term traders, view stock investing as an intellectual game, a thrill, an opportunity to win. But all those considerations are secondary to the profit motive, because if it weren't for profits, people would hardly be involved in the stock market to the extent that they are, and stock trading would be considered a hobby, similar to stamp collecting or gardening.
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