Whenever a group of friends in their 20s or 30s comes together, it is not impossible for the topic to focus on every person’s investments. Some of them may say, “Oh, we just bought our second house. We are going to move there in a month or two.” Others speak about their new business venture and how they are practically set for life. Of course, you will only hear the friends cheering each other at this point.
Once someone talks about the investment he or she made in the stock market, that’s when you get mixed reactions. Many people may commend you for having the willpower to buy stocks and ride the trading wagon. The skeptical ones, meanwhile, may wonder about who influenced you to make such a “rash decision” and invest your hard-earned savings on something as volatile as the stock market.
Well, if another concerned friend or family member asks you again why you put your money and faith in stocks – and why they should do the same – you can give the following reasons.
- It’s Not Necessary To Invest Everything You Have
The most incredible thing about entering the stock market is that there is no minimum or maximum limit when it comes to the amount you can invest. You perhaps carry a hundred dollars on hand, and you will be able to find a company that will accept that in exchange for a tiny share. You may have an extra couple of thousands in your bank account, and you can also use that to fund your stocks. What this idea entails that you won’t ever need to max out your savings to start trading.
- A Drop In Value Doesn’t Mean A Total Loss
What makes people anxious about investing their money in the stock market is the news about the ups and downs that the value of stocks experience on a regular basis. They worry that when the stocks drop, all their hopes and dreams will fall as well. However, the reality that these folks may not be aware of is that it is sporadic for a company to get completely squashed. Its value may go down sometimes, but it can rise after a while, especially if it isn’t a newbie in the industry.
Considering there’s honestly no chance for redemption, you can always put those stocks on sale and invest elsewhere. Still not a total loss, right?
- Stocks Promise Better Returns Than Bonds And Other Small Investments
According to Standard & Poor’s (S&P) 500, your 100-dollar capital has a more significant opportunity of having a bigger value in comparison with short-term investments and bonds. The profits you will get can rise by approximately 10 percent annually when you have shares, while you may only see around three- or five-percent growth from the others, respectively. This market index has been keeping records of the changes in stocks’ worth from 1926 to 2017, so you can ensure that their research is invalid.
- Your Savings Can Increase Hassle-Free
In case you don’t want your money to sleep in the bank, but you are unsure either if you are ready to start a business or invest in a property, you are free to put some of it in stocks. Once you buy shares from a company of your choice, you merely have to keep track of the movement of the market. In case you don’t have time to understand it, you can hire a broker to help you manage the stocks. This way, your savings can still grow even if you don’t do anything.
Investing in the stock market may not be an easy decision for many, primarily when you have no background knowledge about it. Nevertheless, if you speak with the right people and spend some time to at least know the basics, you will realize that putting your money and faith in stocks is not a vague idea at all.