What Does Stock Market Investing Provide? It’s a good question. And since we spend so much time here thinking about stock investing, it makes sense to spend some time reflecting on what investing actually provides you.
In this short blog post we’ll look at what stock market investing provides, for individual and retail investors. The truth is, stock market investing provides more than most people can imagine. But for some reason or another it’s not something most of learn in school.
The sad truth is:
Money is an important part of life. And while a lot of people will say it’s taboo to discuss, if you want to get ahead you need to be comfortable with your capital. So let’s look at what stock market investing can do for you…
Here’s What Stock Market Investing Provides:
I’ve thought long and hard about what stock market investing provides. So below is a list of ideas that you’d be wise to keep in mind if you’re thinking about investing your money in the stock market.
Income: Investing in the stock market allows you to buy mutual funds, index funds and even common stock that all generate income. Dividend yielding companies are a great way to grow your passive revenue. And by accumulating a portfolio of income generating companies you can watch your net worth snowball over time. Dividend reinvestment accounts make it easy for investors of all shapes and sizes to grow their income generating investments over time.
Capital Appreciation: Investing in the stock market doesn’t just provide income. It also has the potential for capital appreciation. That’s because when you buy common stocks in a publicly traded company you have a chance the stocks will go up. Of course, they can also go down too. But long term investors can count on a couple percent of capital appreciation each year. When combined with dividend income this can really do a lot to grow your net worth.
Liquid Assets: Unlike buying a house, investing in the stock market is an easy way to get liquid assets. With discount brokerages and direct investing options, you can buy and sell stocks yourself, for a very limited commission. Instead of paying thousands of dollars to your real estate agent and waiting a few months to sell your house, you can get in and out of your stock portfolio incredibly easily. This liquidity that the stock market provides is another great reason to invest in your best stock picks.
Global Exposure: Investing in the stock market is an easy way to get exposure to other economies around the world. If you want to diversify beyond where you live, the stock market can provide you with ample investment opportunities to whichever country you like. There’s no other easy way to get this global exposure provided by the market.
Inflation Protection: While this might be a little-bit debated, stock market investing generally provides better inflation protection than buying bonds or leaving your money in cash. Since stocks are priced in dollars, they’ll tend to adjust for inflation. Additionally if you invest in food and energy companies, the cost of inflation can generally be passed on to the customer so you are provided with further inflation protection.
As you can see, there are myriad benefits provided by stock market investing. And as you might have guessed, this little blog post is only scratching at the surface. I’m sure if you put your head to it you could think of even more benefits stock market investing provides. No matter your age or income, stock market investing is an important part of your wealth management strategy.
And by The Way: If you want to learn more about improving your approach to the stock market, I encourage you to download your free copy of my eBook below. You’ll learn how I developed a common sense approach to the stock market. You’ll also get free tips and tools each week to help you make more money in the markets.