Depending on who you ask, investing in the stock market can be a rewarding, exhilarating experience or a fruitless, disappointing one. It takes a keen eye and exceptional analytical skills to be able to predict the rise and fall of stocks. Most of those people are obviously professionals and have made a career out of it.
Pros of Investing in Stocks
Stocks Grow With The Economy, Usually As the economy grows (GDP), so do corporate earnings. This is because economic growth creates jobs, which in turn creates income, which then generates consumption from the consumer (you and me).
Stocks Help You Stay Ahead of Inflation
Over the last century, stocks have historically had an annual return of 10%. Inflation (or CPI) is typically 2-5%. so by holding onto your stocks for longer, you will still see a positive return, even if the value of the dollar temporarily drops.
Stocks Are Easy to Purchase
One of the great things about stocks is that you have a few different options when looking to buy. You can go through a stockbroker, use a financial planner, or do your own research and purchasing online. Stocks are also favorable because they can be bought in minutes.
Stocks Are Easy to Sell
Stocks are great because they are highly liquid. You can sell them at realistically anytime. The ability to turn shares into cash quickly can really come in handy when you're in a bind and need some cash.
Cons of Investing in Stocks
Stocks Are Risky Often stocks look great on the outside when you are not investing. The grass is greener on the other side they say.
Stockholders Are At The Bottom of the Payout Chain
Preferred stockholders, bondholders, and creditors are paid first when a company goes broke.
Stock Research Takes Time
If you choose not to use a stockbroker or a financial planner, you will need to do your own research on all possible companies and determine which ones will be most profitable.
You Will Lose Money Even If You Know What You're Doing
No one is perfect, and no one is going to pick the right stock every single time. Even if you consider yourself to be a seasoned pro at analyzing stocks, mistakes can be made.
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