There is no minimum amount required to enter the stock market. Anybody with whatever money they got can start investing right away in the stock market. You can pump in new money, or reinvest the dividend money in order to grow your investment. The amount of money you make is directly proportional to the time invested in the stock market. Longer you stay with the stock market, the higher your growth potential.
2 - Money Making More Money
This is a classic case of money making more money. The more money you put to work, the more money gets earned. There are lot of blue chip stocks that has a great growth potential, and shares its profits to the investors every quarter in the form of dividends. Stock value goes up during good times and goes down during bad times.
3 - No Limit to Rewards
There is no limit on how high the stock can go. As long as the fundamentals are correct, the stock will keep raising up in value. This is applicable to both growth stock and dividend stock. When it comes to growth stock, the value appreciates more rapidly than the dividend stock, but dividend stock has an advantage to bring in cash flow from your investment. The cash-flow when effectively reinvested can grow even bigger investment in the long run.
4 - Liquidity
The biggest advantage of holding the assets in the form of stock is that it can be liquidated pretty easily. Often takes only a couple of mouse clicks to convert huge investment into cash, and vice versa.
5 - Tax Benefits
There are no tax liabilities just owning stock investment. Let me clarify, you need to pay taxes on dividends and other cash flow you receive from your investment, but there are no taxes for just owning the stock. There are no maintenance cost, no property tax to be paid etc., Cash you receive in the form of dividends can have tax benefits as well. Qualified dividends are subjected to lower taxes than the non-qualified dividends.
6 - Improves Emotional Intelligence
In most cases, it is like swimming against the waves. It is tough mentally and physically when the easiest thing to do is go with the flow, and follow the crowd. If you are a serious investor and would like to be in the market in the long run, you know that you should not follow the crowd. It takes great deal of emotional strength to buy stock when everyone is selling, and sell the stocks when everyone is buying. Emotional outcomes are not logical, and so every ten years the market crashes for no logical reason. This is logical time for the new investors to get in. The stock market is neither your friend nor enemy. It is a reflection of the economic condition of the country. It is a system created and maintained by humans. So it has the strength and weakness of a human being. You are better of using your emotion to think instead of thinking with your emotion.
7 - Cashflow
Dividend paying stocks provides a healthy cash flow for the investors. Dividend money is a portion of a Company’s earnings approved by board of directors to be distributed to the shareholders. Dividends are usually issued as cash payments either quarterly or on a monthly basis. Adding more stocks to your portfolio increases the cash flow from your stock investment. If planned and executed carefully, this can be a way to financial independence for long term investors.
8 - Power of Compound Interest
Power of compounding directly proportional to the duration of the investment. The key to the power of compounding is the snowball effect that happens when dividends and capital gains accumulate over a period of time to make your money grow faster and faster as the years go on.
9 - Beat Inflation
The best way to beat the inflation is to invest in stock market. Historically, stocks have averaged an annual return of over 10% which is much higher than the average inflation rate of 3.2%.
10 - Powered by Main Street
Wall street is not the enemy of main street. In fact, wall street depends on the prosperity of the main street. Wall street focus is on generating money, using money to make more money and globalize business and employment opportunity in order to save money, whereas Main street creates livelihoods, provides employment opportunity needs in the society and advances the human interest. It is the heart and soul of capitalism. Without the main street, wall street is like your shiny mobile phone without the software.
No comments:
Post a Comment