7 Reasons To Learn and Invest In The Stock Market

October 18, 2016

Are you aware that investing in the stock market is one of the most assured ways of securing your future after retirement? However, before you can use investment through the stock market to create wealth, you will need to learn the stock market basics, which will give you more insight and intelligence as a beginner.

 Why do you need the learn about the stock market

Most people trade in the stock market in order to close their retirement income gap, but having no knowledge on how the market works will only lead to loss of savings and bad investment.

However, learning about the stock market before staking your savings up for investment will help to reduce the risk of losing your investment, increase your chances of profiting from your investments and you will get to know how Wall Street really works.

Above all, if you can acquire the right knowledge of the stock market, you will get to understand the following:

  • Stock market investment is easy to understand and all it requires is learning the basics of investment.
  • Several mediocre financial brokers will help to squander your savings if you do not have an idea of how to invest in the stock market.
  • You will get to save more while managing your stock market investments on your own than when you hire a broker.

I am not saying that hiring a financial planner or advisor is disadvantageous, all you need to know is that understanding the stock market will pay you better than outsourcing the role.

Why invest in stock market?

We shall be discussing the 7 most salient reasons why you and everyone else should get involved in stock market trading and investment. These reasons are discussed in the following paragraphs:

1. Passive income:

You have probably heard that it takes several streams of income to create enough wealth to sustain you beyond retirement.

Most of the wealthy people today who create wealth outside their regular jobs acquire such wealth through passive income from investments in the stock market. This is the reason why the rich becomes richer, by investing in liquid assets like stock.

Investing in the stock market is just like putting some money up for business; trading with it and watching it increase as the interest compounds over time. Investing in stock is better than engaging in a business because your presence is not needed before you can make profit.

2. It requires as low as $20 to start up:

Most public servants and company workers nurture the idea that stock trading and stock market investment is a rich man’s business. However, the truth is that everybody is entitled to trade on stock as much as you can afford to stack $20.

However, trading stocks was not always as cheap as it is today.

Before the recent times, you could not purchase stock without paying for any charges or paying for the services of a stockbroker, but with the right knowledge today, you can invest in the stock market with no help from a stockbroker of a financial adviser.

3. Stock market investment promotes financial security:

One of the ways of fighting the negative effects of inflation on savings is through the investment of your savings into the stock market.

Today, $287.80 was worth $100 in 1980. Therefore, if you would have left $287.80 in a savings account with no interest or charges added or removed since the year 1980, you must have lost $187.80 to inflation even though you still have your $287.80 in the account, which is now the market value of $100 from $287.80 back in 1980.

4. Stock market investment will help you to gain control over your financial life:

The beauty of stock market investment is felt through the liberality, easiness and liquidity ratio at which you can turn your stock into money. It is also felt in the freedom to buy stock from the company or business establishment of your choice.

Therefore, you easily sell some percentage of your stock and get cash when you are faced with an emergency. In addition, you can also get to collaborate with a brand you trust.

5. Investment in the stock market educates and broadens your understanding of financial matters:

We have already mentioned above that there are several reasons why you need to learn and study the stock market before staking your savings. Through this process of learning, you will get to understand how the financial/stock market works.

You will be surprised that you are developing interest in other viable ways of investing your savings such as real estate and bond trading in order to secure your future after retirement.

6. You will learn valuable financial skills:

Investing in stock will force you to apply the knowledge you have gained while buying and selling stocks. Therefore, there will be no room for idle knowledge. Nevertheless, the more you stake and trade in the stock market, the more skills you will acquire over time.

7. You can make consistent profits through stock marketing:

Investment in  The Stock market is known to increase at the minimum rate of 8% per year. With compound interest, an investment of $9,600 will yield over $200,000 over 40 years. This would show you how consistent profits from stock investment would compound over years.

Therefore, if you have the plans of retiring well after years of active service, I urge you to earn and invest in the stock market today.