The concept of investing in stock markets has been extremely popular for a long time now. It has successfully been able to deliver a number of generous returns to all their respective investors. But, at the same time, the systematic progress of investing in stock markets has also significantly gone down to a great extent.
This has resulted in presenting all such investors with the possible opportunity to earn profits as well as losses from such investments that are made in such marketing areas.
|Benefits of Investing in Stock Market||Drawbacks of Investing in Stock Market|
|Ensures significant growth along with the economy||Exposed to higher risk strategies|
|Stays much ahead of inflations||Extremely time-consuming|
|Extremely easy to purchase and sell||Involves emotional ups and downs|
|Ensures good returns on investment||Negatively impacted by global economy|
Advantages of Investing in Stock Market:
• Ensures significant growth along with the economy:
By strategically investing in stock markets, an individual can definitely take complete advantage of the growing economic structure. Therefore, along with a significant growth of the economy, the corporate earnings also seem to reach new heights.
This takes place entirely due to the fact that such economic developments lead to wider job opportunities which ultimately helps in creating income. This in a way leads to the creation of sales. Investing strategically in the stock markets cab definitely help in understanding the various phases of the business cycle.
• Stays much ahead of inflations:
Over the time, it has been seen that the stock markets have significantly averaged to a particular annualized return of nearly 10%. This has been predicted to be much better as compared to the average annualized rate of inflation ranging upto 2.9%.
This therefore, throws light upon the fact that an individual must then have a comparatively longer period of time horizon. It is in this particular manner that one can easily purchase and even hold the amount if it undergoes a temporary fall.
• Extremely easy to purchase and sell:
The stock market areas have definitely benefited the investors to purchase as well as sell certain shares of various companies. They cannot be purchased from a broker or even from a financial planner online.
After setting up a financial account, one can easily opt for buying the most effective shares in the stock market in just a few minutes. At the same time, the stock market also provides the investors with the opportunity to sell their stocks as per his or her choices and preferences.
• Ensures good returns on investment:
Studies have revealed the fact that the returns pertaining to the investments made in the stock markets have been seen to outperform various other types of investments. Anindividual might be seen to place his or her personal finances within the range of the stock markets. This can certainly result in giving him or her the opportunity to outgrow such finances over a significant period of time.
There are a number of well renowned companies that have been involved in paying various dividends to the respective investors. This results in increasing the overall financial returns on the investment.
Disadvantages of Investing in Stock Market:
• Exposed to higher risk strategies:
Investing in stock markets have quite often led to such situations wherein an individual is seen to lose all his investments in a fraction of a second. When a company is seen to perform poorly, investors are automatically involved in selling as well as sending the plummeting of the stock price.
However, one can easily get hold of an income tax break if he or she ends up losing their money on the stock loss. Such individuals are also expected to pay a certain amount of capital gains oriented taxes if he or she is seen to make money.
• Extremely time-consuming:
While purchasing stocks on their own, such investors are expected to have a complete knowledge regarding the various companies before finalizing the same. This should be done so as to ensure that such individuals can gain an idea regarding how much profit they might earn while investing in such stick markets.
One must also research about the ways of reading various financial statements as well as annual reports so as to follow the company’s evolution as per the latest news. Therefore, this makes the entire process extremely intricate as well as time-consuming.
• Involves emotional ups and downs:
Investing in stock markets definitely makes it an emotional roller coaster ride. This is because of the fact that most of the stock prices are seen to undergo changes frequently within short spans of time. They may rise or fall in every second. Investors are more commonly seen to purchase higher stocks, mostly out of greed which can ultimately cost him a lot.
They are also seen to sell much lower due to the fear of undergoing heavy losses. This should be taken care of by not just keeping a constant check uponfluctuating prices of the stocks. But instead, one must be sure enough to keep a thorough check on a regular basis.
• Negatively impacted by global economy:
It is quite unreasonable to think that an economy can maintain a consistency all throughout so as to help the investors earn maximum profits from the shares. Sudden changes in the global economy results in investors becoming extremely tired of the entire process and therefore try to escape from the same.
Therefore, it is advisable to invest in stock markets only if one is absolutely sure of dealing with such negative situations with enough confidence. Otherwise, he or she must not get involved in such uncertainties which can create an immense impact on their financial progress.
Investing in stock markets has definitely reached new heights in the modern times of the ongoing 21st century. People who have been involved in this particular domain have definitely been able to experience the highs and lows of investing in stock markets.
While some have been able to create a huge amount of profit, others have been emotionally drained due to the losses that they have suffered from such investments. It is advisable to gain complete knowledge regarding the same and proceed accordingly.