What are the benefits of investing in stocks?
Posted by admin in Finance Thursday, 18 August 2011 16:25 4 Comments
I am very interested in investing, but I really don’t know how or what the benefits. How does it work in simple terms? I guess I need to read “Investing for Dummies” or something. Basically, if I put $20 towards a stock, if the company is still around in 10 years will I make a bunch of money? Or if I invest in something like Hannah Montana, will I not get anything in ten years since she won’t be popular?
capital gains and dividends if you do your homework there are decent returns to be made obviously there is risk you may loose it all
The main benefit is the potential for long term growth above the rate of inflation. Historically, stocks and shares in general have almost always outperformed the other asset classes (cash, fixed interest and property) over the long term.
Of course, as mentioned above, there is a lot of risk involved and you could potentially lose money if the company you invest in doesn’t do well.
If you are unsure of what to invest in, I would suggest you look at Mutual Funds.
Mutual Funds basically pool your money together with lots of other investors (totalling millions and sometimes billions of pounds/dollars). This money is used to invest in not just one company, but spread across lots of different companies. So this will be less risky than investing all your money into just one company.
Each mutual fund has a professional fund manager who will ultimately decide which companies to invest in when to sell and invest in something else.
There are thousands of funds out there, all specialising in different areas. Unfortunately, I’m not sure where you should look for them in the US, as I live in the UK, but I’m sure you can get some more information from Google.
Hope this helps.
First, take 6 months in learning about stocks and trying it out with fake money in a stimulation web site like Yahoo! Finance.
http://www.finance.yahoo.com
The stocks you want to focus on is consumer staples, consumer discretionary, and healthcare. These are DEFENSIVE stocks that will survive through good and bad times. Most of my positions are in these stocks. Some names include 3M, Procter & Gamble, Kimberly Clark, Exxon Mobil, Walmart, Costco. Everybody’s got to eat and wipe their butts regardless of the state of economy. Many of these companies survived through the Great Depression.
That’s the benefits. You can sleep at night knowing your money is doing well. There are NO guarantees that you won’t lose money. It’s just that these stocks are the best. They pay good dividends too.
The key word to richness is wise investment, and wise investment generates “money-from-money”. Rich people are financially intelligent. They know the power of investment. This is no rocket science to find that money makes money. Since long, people make investment in real estate, stocks, bonds, mutual funds etc. But does that make them financially intelligent? No, not at all, they invest and then spend their earnings to accumulate more Liabilities (buy a car, house, gadget, vacation…). Ones habit to buy liabilities makes them financially non-intelligent. Investment in assets gives ability to your money to make more money.
For more basics on investment you can visit this website. I have found it to be very basis yet very informative.You will like it for sure
ww.getmoneyrich.com