The stock market is an important element in growing economy and tends to react to all the economic growth indicators like GDP, inflation, corporate earnings, and so on. Stock market gives the opportunity to take direct advantage of a booming economy and the value of the investment in stock market grows in proportion to economic growth.
As the economy grows, corporate earnings are boosted. That’s because economic growth creates jobs, which creates income, which creates sales as a result of which the average income of an individual increases. This in turn, affects consumer demand, leading to an uptick in sales. Hence, the value of the investment in a particular company increases i.e the share price increases.
2. Helps to stay ahead of inflation
Stocks have averaged an annualized return of 10% historically. This is better than the average annualized inflation rate which usually tends to be 3-4%. This means that long term investment is better in stocks.
3. Benefit of Dividend
A dividend is an extra income for investors, which is paid annually by most companies. Dividend payments arrive even if the stock has lost value and thus give additional income on top of any profits with trading stocks.
These dividend incomes too have a lot of benefits. They can fund a retirement, Help you grow your investment portfolio etc.
4. Easy to buy
Stock trading makes buying stocks of the companies, easy. You can purchase them through a broker like Winstone Prime. After Account setup, you can buy stocks in minutes. Few online brokers like Winstone Prime, let you buy and sell stocks with low commission.
5. Make money in two ways
Most of the traders intend to buy low and then sell high. They choose fast-growing companies that appreciate in value. Both day traders and long term investors get attracted by this.
Day traders hope to take advantage of short-term trends, whereas the long term traders expect to see the company’s earnings and stock price grow over time. Both of them trust that their stock-picking skills will lead them to make success in the market.
The rest traders prefer a regular stream of cash. They deal with stocks of companies that pay dividends. Those companies grow at a moderate rate.