Why Invest In The Stock Market?

The potential for higher returns are far better from the stock market than from many of the safe investments available. $1 wisely invested in the stock market can bring many multiples in returns when compared to leaving money in a bank (where interest can be shockingly low).

Many people believe that the stock market is too risky – yes, there is an element of risk, and yes you could potentially lose your capital…but investors who take the time to educate themselves and fine-tune their investment skills have a far better chance of getting much better returns on their capital than those who opt for 100% safe investments. It’s also important to note that often, when one leaves their money in a bank, the actual returns from the interest do not even cover the cost of inflation – in some cases it’s possible to actually lose money in real terms because inflation is higher than the general interest received.

In fact, investing in the stock market offers something for every type of investor, from risk averse to those who are willing to take on calculated risks in order to achieve higher returns. There are also scores of investment funds where the investor does not need to know anything about stock markets or investment – the fund manager invests on your behalf, usually in return for a fee. There is of course no guarantee that a fund will deliver outstanding performance (or will not incur a loss) but if anyone ought to know about beating the market it would be fund managers.

Having said all this there are also risks inherent with stock market investment. When you deposit your money in a bank your capital is not really at risk – with stock market investment you run the risk of losing all the money that you invest if the stock goes bust. Also, while many analysts look at past performance of companies and markets we all know of the disclaimer that says “the past is not necessarily a guide to future performance” – in other words what has brought success before may not always bring success in the future. The market can be a real enigma at times.

Explore posts in the same categories: Currencies, Currency Trading, Day Trading, Foreign Exchange, Forex, Investing, Nasdaq, Nyse, Stock Market, Stocks, Swing Trading, Trading

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