In the aftermath of the recent worldwide recession, many people have turned away from shares and for good reasons. But before you blindly follow the masses, find out yourself first before making a decision as there are many advantages to investing in the stock markets. Buying company shares in the stock market can be one of the best and most profitable investment you could ever have.
For long term investments, stocks and shares have continually outperform all other types of investments including property, bonds, commodities and money saved in a bank account. Many consulting and finance companies have done researches which basically arrived at the same conclusion.
Stocks are shares in a company. When you invest in a company's stock or buy its shares, you own part of that company. How much you own depends on the number of shares you hold. If the company is profitable your shares will increase in value. If the company performs poorly then you may lose some or all of your money.
In any type of investments, there are advantages as well as disadvantages.
Advantages- Stocks have a long historical track record of outperforming other types of investments.- Shareholders have voting rights and can therefore influence the affairs of the company.- While your voting rights gives you some influence over the affairs of the company, you are not involved in the ongoing daily operations of the company.- Suitable for long term investors who do not mind taking on some risk.
Disadvantages- Returns are not guaranteed as stock prices often go up and down. Not ideal for short term investments but if you are willing to buy and hold long term then your chances of getting a decent return is huge.- A shareholder may lose part or all of his money.- Unless you have good advisors, it can be hard to manage by yourself.
Hopefully I have given you enough basics on what stock market investing is and how you should also consider it in your wealth building goals.
We will also give you more investment tips later on.
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