If you’re interested in South Africa trading and are curious about some of the key benefits of choosing to invest in the stock market, you’ve come to the right place. Simply continue reading to discover 5 reasons why you should start investing in stocks.
The number one reason why it’s foolish to save all of your retirement funds in a bank account is that the money which you save in your bank account will depreciate quickly. Especially as interest rates for savers are a fraction of what they used to be, so you won’t be able to enjoy the same level of compound interest as previous generations. Just think, if you were to put $100,000 into your bank account today, in 20 years time the same money will be worth less than $100,000 today.
You can earn dividends from owning stocks:
One of the benefits of owning stocks is that most stocks offer competitive dividend rates. If you purchase regular dividends, you’ll typically receive dividends twice a year. However, if you invest in blue chip stocks, you’ll enjoy regular, monthly dividends. Which you’ll instantly be able to reinvest. When you’re browsing possible companies to invest in, try to invest in companies which offer sustainable yet competitive dividend rates of 5-11% per annum. As often companies which offer 15% dividend rates, end up filing for bankruptcy.
You may be able to retire early off the passive income which you receive from your stock portfolio:
If you continue to invest in dividend paying stocks, you’ll continue to increase your passive income. Passive income refers to money which you bring in, which you don’t have to work for. If you invest heavily into the stock market in 10 years you may find that you’ll earn enough passive income each month, to be able to retire early. Especially if you also earn passive income from other revenue streams, such as renting out properties and owning royalties.
There are two ways of earning money from stocks:
Stocks generate two types of wealth. As mentioned above, you can earn dividends from your stocks. The second way that you can earn money from your stocks is to select stocks which you think will increase in price, over time. As if you sell your stocks for a higher price, then you purchased them for, you’ll make a profit which is known as capital appreciation.
You’ll be able to help shape the world:
By investing in the stock market and putting your money where your mouth is, you’ll be able to have a direct impact on the world. As an example, if you care about equality, you may want to invest in companies who are committed to embracing diversity and feature women and people of color on their board of directors. Or if you care about reducing carbon emissions you may want to invest in companies who are creating renewable sources of energy.
So if you want to reap all of the rewards which are associated with choosing to invest in the stock market, it’s well worth researching the first few companies, which you hope to invest in!