Did you know more than 50 percent of all American families own a stock?
If you’re thinking of investing in the stock market, it’s clear you’re not alone. However, stocks aren’t the only place where you can put your money. There’s real estate, corporate bonds, certificate of deposits, money market funds, and even savings accounts.
But just what makes the stock market stand out? Why is it the go-to investment destination for millions of Americans?
We have the answer for you.
Keep reading to learn the benefits of investing in stocks.
Low Capital Requirements
You don’t need thousands of dollars to get started as an investor in the stocks market. In fact, you can purchase a share price for less than $100.
Warren Buffett, one of the richest men in the world, made his first stock investment for $114.75. Look at his billions today.
On the other hand, alternative investment areas, such as real estate, typically require you to have a lot of money.
Gives You Ownership in a Company
When you’re buying stocks, you’re also getting a piece of ownership in the company.
Take a moment to think about this:
Wouldn’t you want to own Apple or Alphabet or The Walt Disney Company or any other great American company? You don’t have to raise hundreds of billions to own any of these companies. As long as they’re publically traded, even a few hundred bucks is enough to get you a piece of the company of your choice.
Depending on the type and number of shares you own, you could vote on vital issues regarding the company.
Two Potential Income Streams
There are two ways to earn money from stocks.
First, if you make a smart stock investment, the share price of the company will gradually increase over time, and so will your money. As an example, people who invested $1,000 in Amazon in 2009 are now worth more than $23,600 – a 2,000 percent increase.
Second, you’ll earn a dividend income. Although public companies aren’t obligated to pay dividend income, many profitable ones do. As such, buying shares in a well-performing company is a sure way to earn yourself an annual dividend income.
Easy to Get Started
The ease of investing in the stock market is no doubt one of the primary reasons it’s a favorite for millions of Americans. There are several apps and online platforms that enable investors to individually purchase stocks of their preference.
And if you’ve no knowledge of the process, you can invest with the help of a stockbroker. These professionals will make purchase decisions on your behalf, and for this, you will pay a fee or commission. Use this share brokerage calculator to determine the amount of money you will pay your broker.
Do Your Homework
Stocks are risky – companies can and do go out of business. A couple of great examples of this are Enron and American International Group (AIG). So, to avoid buying a lemon, you’ll want to be sure you’re doing your homework. There many, many good ways to accomplish this – checking company financials, being sure you know about the product or use it yourself, etc. A couple of overloooked methods of doing your homework are to check insider sales. If company insiders are selling large blocks of shares, and in particular selling large blocks before earnings, its a red flag for poor performance. Insidertrades.com has a searchable listing if you want to explore this option.
Reap the Benefits of Investing in Stocks
Although it has its downsides, the stock market is a prime investment destination, and for good reason. From the low capital requirements to the ease of getting started as an investor, don’t pass the opportunity to reap the benefits of investing in stocks.
Keep tabs on our blog for more investment insights.
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