Investing your money in the stock exchange may seem to be quite intimidating at first, particularly when you are new to investing. In any case, the stock market is quite unpredictable, and the stocks can lose value sometimes. You should note that stocks offer many advantages over other investments.
You should note that stocks are considered risky assets. That means they do not offer a guarantee for returns, and you can lose your money. In the long run, the stock market has been upward. In fact, stocks have a higher return on investment for the long-term. You should note that the stock market has grown by over 10% a year for the last 60 years. During the same period, government bonds have only grown by 5%. Thus, if you can withstand market swings, you can get the highest returns on your money when you invest in the stock market.
You should note that the stock market is a massive auction house. Each day, investors are purchasing and selling their shares. That explains why stocks are called liquid investments. If you want to cash out, it is easy to find a buyer. Some assets are more difficult to sell. If you have invested in an investment property, it may take several months to get a buyer and get your invested money back. Fortunately, with stocks, you can find a buyer on the following day.
You should note that stocks benefit from delayed taxation. If you purchase stock and it goes up, you do not have to file returns on your earnings. Rather, you should stock gains when selling shares for a profit. On the other hand, if you lost money on the stock purchase, you can use the given loss to reduce taxes on the stock gains. However, if you had put your money on investments that earn interests, such as bank account or bond, you are required to pay tax on the earnings each year.
The good thing about the stock market is that it is closely monitored across the world. If you want to sell your stock, you will need to release the financial statements that reveal how it is run. The regulatory body checks the statements to ensure they are true. Moreover, since financial reporters keep reporting on stocks each day, it becomes easy to research your investments in the stock exchange.