Why choose to invest in stock market
We invest to grow our wealth, for our retirement or whatever purposes. However, different investor has their own criteria to invest in different type of investment, there are a lot of investments in this world for us to invest in, except stock, typically we have real estate, commodity, mutual fund and bonds to invest in.
First, you may keep cash, this is also a kind of investment, you invest in cash, you place your cash in the bank and they will pay you interest. This isn’t wise because the bank interest nowadays is so low that it cannot even offset the inflation rate.
Real estate provides massive income and is relatively safer investment, but the problem is, the capital required for this investment is very high. Moreover, if you collateral or take the mortgage from bank to invest real estate, you need to have even more professionalism and complete research into the industry, any small mistake you made may hurt you badly.
Commodity like gold and silver is a good hedge for investment, especially in economic bad times, but it doesn’t provide us any cash flow. Do your gold and silver pieces give you any income? You need to sell them to realize a profit, and that’s capital gain. Other commodity like oil palm, rubber or crude oil provides capital gain, you may probably buying them in a contract basis, i.e. you need to sell them within 1 month. You may not have long term growth and increasing cash flow with this investment.
Bond is a safer investment in paper asset, it no doubt, provides more stable income than bond, but the amount we can ventures into it might be limited. Moreover, bond provides relatively less space of growth, that mean it is usually not good in long term return, and it’s not so suitable for the youngster’s investment.
Mutual funds are manage by a group of fund managers, consequently, the entry charges for the investment is relatively high, mutual funds have risk, and for many people, the risk and reward may not be interesting.
It’s better to get yourself educated than to let other people manage your investment portfolio without even knowing what’s actually happen. Stock investing, although it’s risky in most people’s view, but if you truly understand and educated with it, it does provide good investment opportunity.
To invest in stocks or equities, you do not need huge amount of money for the entry, just maybe a few thousand or even less you will be able to ventures into this investment. Stock investment provide good long term income and capital growth, high liquidity, and relatively easy to monitor. Stock investment provides two type of income: Capital gain and cashflow income. The appreciation of stock prices is the capital gain and the constant receive of dividend from the stock you bought is your passive income! It’s part of your positive cashflow. However, Investment like Forex and commodity can only provide you capital gain, and investment which only relies on capital gain is risky.