Investing in the stock market means having a piece of the company in which you buy a stock. The stock market has traditionally produced huge returns to investors over time, but it is also volatile, allowing investors to generate gains as well as losses.
Investing in the stock market has a lot of benefits, including the potential for dividends and a 10-percent average annualized return. However, according to Deepak Kharbanda, the stock market is so volatile that returns are never guaranteed.
Following are some major pros and cons that you should consider before stepping into the world of investing in the stock market:
Economic Growth
A corporation’s earnings rise in sync with the economy. As a result, economic growth gives rise to the development of jobs, which leads to the generation of revenue and sales. Investing in the stock market is one of the best ways to keep up with this growing economy as the returns on stocks increase with this growth.
Accessing your Investment
Stocks are liquid. Liquidity is a term used to represent the capacity to convert your shares into cash quickly and at a low cost. You can sell your stock on the stock market at any time in exchange for cash. This liquidity is one of the ultimate causes you need to invest in the stock market. This is essential if you require funds urgently. The stock market is open for business every weekday, and you can buy and sell stocks. Deepak Kharbanda also argues that just because you can sell stocks quickly does not mean you should. Instead, you should buy and hold onto them in the long term.
Investing in Stock Market is Risky Indeed
Deepak Kharbanda believes that if done incorrectly, you may lose all of your money by investing in the stock market. If a company does not perform well, investors will sell its shares, leading the stock price to drop. If you sell at this point, you will lose your initial investment. If you can’t afford to lose your original investment, then you should consider other less-risky investment options like bonds.
Rise & Fall of Stock Market
Stock prices rise and fall on a second-by-second basis, making it a volatile investing option. As a result, people are more inclined to buy high and sell low, respectively, which results in losses.
If we talk about stock investing, returns are not guaranteed, and the risks are high. If you have ended up investing, you should check the stock market after reasonable intervals. Constantly checking stock price fluctuations can make you worried and paranoid.
Conclusion
Stocks have a rising potential that few other investments can relate to. However, it is advised by Deepak Kharbanda that you do not follow carelessly and do some research on stock market investment, so you know what you are doing. Investing in stocks can make you wealthy, but it usually takes decades, not weeks or months.
