Stock trading volume hit record highs in January 2021, with about 14 billion stocks getting traded every day. That’s more than double the average daily stock trading volume in 2019.
The pandemic is the main reason for such a sharp increase. New investors were looking to take advantage of the investment opportunity that stocks present.
The stock market continues to rise, even as other economic indicators show that the economy isn’t 100% at pre-pandemic levels.
Should you take advantage of this investment opportunity? Read on to learn the advantages of investing in the stock market.
1. Ownership of a Company
When you purchase stock in a certain company, you own a small percentage of that company. Shareholders have a say in some business decisions.
You can vote on a company’s merger or purchase of another company. Shareholders vote on the board of directors as well.
The good thing about stocks is that they are liquid assets. That means you can easily sell them for cash.
Compare that to real estate, where it can take months to sell. If you do go for a short sale, you’re likely to lose money on the deal.
The best investing tips tell you to diversify your investment portfolio, which is what stocks help you do. Bonds and real estate investments also go up or down.
If you have real estate in a slow market, you can make up for that loss because the stock market remains steady.
3. Dividend Income
Some stocks offer dividend payments. Dividends are the distribution of a company’s profits to shareholders.
How much you receive depends on the company’s profits and the number of shares you own.
Don’t expect to get a huge windfall from dividend payments. Apple paid investors about 22 cents a share in its last dividend payment.
If you owned 100 shares of the company in 2020, you would have received around $261 in dividends for the year.
4. Easy to Trade Yourself
Stocks are much more accessible to the everyday person than they were 20 years ago. You can a stocks trading app and have access to a broad range of markets.
Do your research and read company reports to determine the best stock investing strategies.
5. Protect Money
Stocks are a volatile investment, which is why many people stay away from stock investments.
What they don’t realize is that the investment opportunity of stocks protects wealth. Stocks grow at a faster pace than inflation. Keep your money in a savings account, it won’t grow that much.
The right stock investments will outpace inflation, so your financial assets are protected.
Hold on to your stock investment for more than a year, and you have to pay the long-term capital gains tax rate. That ranges between zero and 20%.
Stocks Are a Great Investment Opportunity
There’s no doubt that stocks are a fantastic investment opportunity. Your money is protected and diversified. They’re also easy to purchase and sell.
Be sure to learn the top investing strategies and investing tips before you buy your first stocks.
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