What are stocks? Why to invest in them? Is it necessary to consider investment in stocks for money management?
Stocks, commonly referred to as "shares", are portions of companies which people can buy and therefore own a part of the company. Company issues shares to the general public when it analyzes the need to raise the funds required to run and expand the business to maintain its goodwill.
Shares are of two types - common shares and preferred shares. When the company holds its goodwill, both the shares yield well. The profit difference among both is observed when the company (you have invested in) cannot maintain its goodwill in a long run. Common shares, as the name suggests are common and the profit distribution and the loss calculation is done after considering the creditors and preferred share owners.
After understanding what the stocks are, next we need to know why investment in stocks is necessary and how investment in stocks is beneficial.
Money can be earned in two ways - first, by exchanging your efforts and labor or services for money. Second, by making your money to earn that additional money. Many people opt for saving schemes, which yield tangible interests that are not sufficient to beat the inflation. Many or consider almost 90% of the people earn money by the first method, many of them don't even have a seldom knowledge of the second one i.e. investing money in stocks and shares or have knowledge but consider them as risk.
Investment in stocks is one of the easiest and fastest ways of earning money. The five good reasons for investment in stocks are:
* Stock markets do not care for you. This implies that whatever you invest, you may either earn benefit or you may have to lose your share. Investment in stock market requires proper research of the stocks you are interested in and starting with a small amount of investment.
* Stock markets always poise for growth, The value of the stock will remain high until an investor has confident in the company's stocks and the prices will start falling once the investors lose confident and sell them out. Again over a period, the value of the same stocks will rise when again the investors will gain confidence. Thus, profits in Stocks are very must inconsistent, they may at a time point may give very high returns or may incur losses, but the conditions are always reversible.
* In stock investment, there are new regulations which always keep ongoing and help the market play safe. Many of these regulations are investor friendly making them more transparent and easy for a common man to understand and help in stock investment.
* Stock investment is the only option where you can earn money in short period (in the form of investment) as well as in the long run.
* The most considered and valuable reason to invest in stocks - you can trade in them, buy them when you want and sell them out at a higher price or when you require money.
Stock investment is the best and the easiest way of earning money provided you have sufficient knowledge, conduct proper and thorough research before investing.