Ever thought why invest in stock market? Many of us don’t understand the real need to invest until we hit 40 years. If one understands also, the next question arises i.e. where to invest our money? Knowing why to invest gets you started with the research phase of identifying different types of investment opportunities.
You may consider different investment opportunities like real estate, gold, fixed deposits & stock markets. Each type of investment has its own set of pros & cons. If you look at return’s points of view, Stock markets might be a favorable choice for investments.
There could be a long debate on which is the best investment opportunity, we have tried our best to make you understand why investing in stock markets is favorable. By the end of this read, you will have a clear understanding of why to invest in stock markets. So, let’s get started with why to invest in stock markets.
Regular investments like fixed deposits yield lower returns as compared to rising inflation rates. One needs to beat the rising inflation rate to make its return on investment worth.
Investing in stock markets also allows creating an abundance of wealth over a long period. Simple compounding interest increases the overall corpus value of your investments to an unimaginable figure.
Top 3 assets available for investments
1.Fixed Income Schems
Fixed deposits are a great example of a fixed income scheme. It allows investors to gain interest for there invested amount. Investors can be guaranteed returns at the end of the maturity period. Other examples of fixed income schemes can be bonds issued by Government or local corporations.
Even though real estate generates profits in the long run, liquidity is one of the biggest pain points. You need to find the right buyers to sell your owned properties. Another issue with real estate is you need a large amount of capital to invest in real estate.
Investing & trading in stock markets involves buying & selling of financial securities listed under stock exchange. Investing in stock markets is considered when one buys & holds shares of stock exchange-listed companies with an expectation of an increase in price over a certain period.
Returns are not guaranteed in stock markets as compared with real estate and fixed income schemes. But diversifying your portfolio creates possibilities of higher returns. With compounding returns, investing in stock markets are more favorable as investing options. Additionally, there are also certain tax benefits with equity investments.
It’s always a wise choice to diversify your entire investment plans using asset allocation strategies based on your risk appetite. With the above-mentioned information, we can conclude that investing in stock markets does not guarantee a return but a well-balanced stock market investment strategy can help you beat inflation rate & allow creating an abundance of wealth.