There are various reasons why you should invest into stocks. In this post, a few main reasons are mentioned. Although the benefits of investing into stocks are obvious, there is one main disadvantage of investing into stocks.
When you invest in stocks, you need to assume risk. The stock market changes almost daily. You can easily loose your live savings instantly if your investments are not managed and controlled correctly. So be sure, to do enough research before investing.
Reasons to Invest in Stocks:
- High Returns: overtime stocks tend to outperform bonds, CDs, mutual funds and real estate investments. In fact, stocks accumulate about 9% per year, while other investments accumulate 6% on average.
- Taxes: stocks are generally taxed at a much lower rate than other types of investment. Just to see the difference clearly, stocks are taxed at approximately 12% of total profit, while certificates of deposits are taxed at about 35% per year.
- Diversification: you can easily diversify your stock investments in a number of ways. First, you can trade the stocks at different market exchanges. (for example, TSX and NYSE) Second, you can invest your money into different market industries and various publicly traded corporations. On the other hand, it’s very difficult, in fact almost impossible to diversify real estate investments.
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