Making money
Todays post is a short introduction for why you should invest in the stock market.
I have posted many posts about different stock to invest in, but many people are frightened to go into the stock market for different reasons. Many people feel that they don't know enough to be able to invest in the stock market or they might be afraid that they are going to lose their money. In this article I will provide three reasons why you might want to invest.
1) Keeping your purchasing power
The number one thing that you should care about is not losing the value on your well-earned money. Many people have their wealth in bank accounts accumulating interest. This is a risk-free option that most people go for, it's safe. The problem is that the interest that you earn in bank account are very low, especially in the low rate climate that we are seeing now. With inflation on a couple percent, you are basically losing your purchasing power every year. To combat this you need to invest your money where you can be granted a higher return.
2) Meeting your financial goals
The financial markets have historically returned annual returns on average of 11.31% from 1928 through 2010. This means that after inflation not only did you maintain your purchasing power, but you could have improved it by over 10% annualy. This means that the stock market could be a great place to invest your money if you are saving up for a goal of your (buying an apartment, travelling etc.). Over a smaller period of time the stock market can correct down many percent, but if your horizon is longer then most investors can ride out the downfalls. Many investors can invest smaller amounts over a longer time period to mitigate not timing the market. This could be a good strategy for beginners.
3) Black or white
When people talk about investing in the stock market it's often very one-sided. To invest or not to invest. The good thing about the market is that you can invest smaller amounts of money. You don't need to go big to start to investing. It's usually a smart idea to start out with smaller amounts of money to see how you handle volatility and see how you tolerate markets swings.
If you liked this post, be sure to check out my other ones:
In my first entry here on Steemit I tried to explain what the dividend growth investing strategy is. I highly recommend to read this one first, you can find it here:
https://steemit.com/money/@nordal/start-earning-passive-income-from-stocks-dgi