Assume that you have 100k $ and are faced with the following investment opportunities:
- Savings in a bank with term
- Buy some shares on the stock market
- Buy foreign currency
- Buy gold
- Buy real estate
- Open a business
You will decide where to put that 100K $ depending on the return earning, risk level and liquidity.
Depositing money in a bank with an interest rate of 7% is of course the safest, which will be the basis for comparison with other forms.
Buying a stock essentially means that you own part of the business and receive dividends from it. An enterprise listed on the stock market has a profit margin higher than that of 7% bank deposits, paying dividends in cash and at least 5 years is a lot. So the simplest is that you choose that company and buy its stock at any time (because the price at any time is reasonable). Then forget it, get the annual dividend cash. And when you need cash, you can sell it at any time because the price at any time is reasonable (higher than when you bought it, it's good, but lower than that).
You can invest in this way, just remember 3 conditions:
Choose a company with the highest profitability ratio (of course higher than interest on deposits at banks). That ratio has been stable in the past for at least 3 years and has a business line that is less dependent, or dependent on the external environment in the future. If it is not known whether the independent or dependent company is suitable for the outside world in the future, then choose the company with the number of years of paying cash dividends with a rate of return that tends to equal or gradually increase. A company that has paid a cash dividend of 5 years, 7 years, 10 years or more demonstrates that it has a competitive advantage that helps to stabilize returns for shareholders in the future. And note that dividends must be paid in cash.
Must buy with money you have (not borrowed money).
Forget about it like you put money in a bank; The longer you deposit, the higher the interest rate.