Investing in the stock market implies owning a piece of the company in which you buy a stock. The stock market has traditionally produced huge returns to investors over time, but it is also volatile in nature, allowing investors to generate gains as well as losses.
Investing in the stock market has several benefits, including the potential for dividends and a 10-percent average annualized return. However, according to William D King, the stock market is so volatile that returns are never guaranteed.
Following are some major pros and cons that you should consider before stepping into the world of investing in the stock market:
A corporation’s earnings rise in sync with the economy. This is because economic growth leads to the development of jobs, which in turn leads to the generation of revenue, and the generation of sales. Investing in the stock market is one of the best ways to keep up with this growing economy as the returns on stocks increase with this growth.
Accessing your Investment
Stocks are liquid in nature. Liquidity is a term used to represent the capacity to convert your shares into cash quickly and at a low cost.
You can sell your stock on the stock market at any time in exchange for cash. This liquidity is one of the best reasons you need to invest in the stock market. This is crucial if you require funds abruptly. The stock market is open for business every weekday, and you can buy and sell stocks. That said, William D King also argues that just because you can sell stocks quickly does not mean you should. Instead, you should buy and hold onto them in the long term.
Investing in Stock Market is Risky Indeed
William D King believes that if done wrong, you may lose all of your money by investing in the stock market. If a company performs poorly, investors will sell its shares, leading the stock price to drop. If you sell at this point, you will lose your initial investment. If you can’t afford to lose your original investment, then you should consider other less-risky investment options like bonds.
Rise & Fall of Stock Market
Stock prices rise and fall on a second-by-second basis, making it a very volatile investing option. When this happens, people are more likely to buy high and sell low, respectively, which leads to losses.
As mentioned earlier, when it comes to stock investing, returns are not guaranteed, and the risks are high. But if you do end up investing, you should check the stock market after reasonable intervals. Constantly monitoring stock price fluctuations can make you anxious and paranoid.
Stocks have a growth potential that few other investments can match. However, it is suggested by William D King that you don’t go about it carelessly and do some research on stock market investing, so you know what you’re doing. Investing in stocks can make you wealthy, but it usually takes decades, not weeks or months.