Theme: Have Your Savings Multiply by Putting It in Stocks
June 22, 2009What’s the wisest thing to do when you’ve a whopping amount of money on your hands? It is hard to resist spending each dollar of it, but you will totally lose all your money after a while. Saving the money is superior, but making your money grow over time is a more attractive option. So how do you make your money grow? Invest your money in stocks. That way, you can increase your funds as time goes by.
Stocks—what are they?
For those who are not familiar with various investing terms, a stock or share is a part of a company that the public can purchase. The individuals who buy stocks own a part of a certain company. That simply means you’re of a company’s owners after you’ve bought its shares or stocks. But only those who have invested a huge sum of money or have purchased majority of the company’s shares can greatly influence the management policies of the company.
While you hold a stock, its price or value may drop in the short term but will grow with increased profits over time. You earn greater profits if you hold your stock for a longer time. The value of your stock increases if the issuing company is doing well. But your stock value decreases if the company is not earning enough revenues. Sometimes, investors or stockholders are entitled to cash payments called dividends.
Common stocks and preferred stocks are the two types of stocks that are issued by companies. As a basic form of company ownership, the common stock grants its investors to claim the revenues and assets of a company after the preferred stockholders have gotten theirs. Preferred stocks, on the other hand, offer higher profits and security for its investors compared to common stocks. If a company goes out of business, preferred stockholders have greater chances of getting a portion of money they have invested than common stockholders.
Why invest in the stock market?
A stock can earn its investor the highest profit compared to other investment types such as gold coins and bonds. So when you invest in the stock market, you are likely to make your money grow after a few years.
Investments in the stock market also tend to do better compared to other investment options. In the past three decades, the usual return on stocks (the amount stockholders get from investing stocks) has been roughly 8 percent. In contrast, a passbook account has been producing just 3 percent return on investments—and this figure does not factor in yet the taxes that’ll be deducted.
How to begin investing in stocks
Stock investing is an best way to earn profits out of your hard-earned cash, but it isn’t free from risks, just like other investment choices. If you plan to invest in stocks, it is ideal to research thoroughly on it and seek expert advice on stock investing. One way to help you invest in stocks is to use a investment program, financial software, or stock trading program.