Why should one invest in stocks? What are the advantages of being an active stock trader? These might be the questions on your mind when you see and hear news about stock markets. This article will help you understand why you should invest in the stock market. So, continue reading to know more…
Investing in stock markets have helped many people in the process of wealth creation in the longer term. Stock market investments are safe if you know exactly what you are doing and have a detail study of the economy of the country and the world economies. Over the years, it has been observed that the inclination of people is more towards investing in stocks rather than keeping a lot of their money in bank accounts and other investments schemes. More returns generated by stocks is the primary reason for this change in investment policy. However, there are many more reasons why you should buy stocks.
Advantages of Investing in Stocks
As we all know, the prices of daily essential things have shot up greatly in the last few years. So, with a fixed income, it may be difficult to deal worth your rising expenses. So, you need a rise in your income and this can be possible by buying stocks of good companies. The appreciation in the stock price after a period of time will help you get decent profits and meet thereby increase your income. Stock investing, however should be systematic and specific to get maximum benefits.
Generating Superior Returns
Generating superior returns is the main reason for investing in stocks. In terms of percentage calculation, the returns from stocks can be between fifteen to thirty percent in a year depending on the appreciation of the stock price. This return is higher than the return received on saving account interests. So, you should allot a specific amount in your investment portfolio for stock investments and utilize the other money for some other modes of investment.
Opportunity to be a Part of Company’s Growth
By making investments in the best stocks to buy, you become a shareholder of the company who is a partial owner of the company. Your money is utilized for fast expansion by the company to achieve a good growth in sales turnover and profits. Once a shareholder, you get to be a part of this process and benefit from the progress of your company. Stock market investing makes you more knowledgeable about the world of finance and business happenings around you.
As a shareholder, there is a great chance of getting dividends and bonus shares from your company if it performs better than the expectations. Dividends to shareholders are paid from the profits made by the company and generally these announcement come with the quarterly and yearly financial results of a company. Dividends are given on a per share basis, so more the number of shares you own, more would be the dividend amount.
Participating in Activities of the Company
By becoming a shareholder, you get the right to attend annual general meetings of companies, cast your vote for taking important decisions such as choice of a new director on the board of directors, giving suggestions on mergers, acquisitions and expansion strategies etc. If you are a majority shareholder, then you will be invited for important meetings and your suggestions will be sought every time. Participating in activities of companies increases your knowledge on the capital markets greatly.
The best stocks to invest would be from the consumer goods, infrastructure, construction and information technology sectors. Though you may get information on investing in stocks for beginners from newspapers, television channels and other sources, you will learn how to invest in stocks only after a good stock research and experience. All the best for your future!