Owning stocks has it advantages and disadvantages. It can really give you some big gains if you invest wisely, however if you don't it can give you some massive losses.
First let us look at what a stock is. A stock represents part of the ownership of a company. When you buy a stock you own part of the company that backs that stock. There are some advantages to buying stocks.
The first positive thing about owning a stock is that it can grow through appreciation. If the company does well then their stock will appreciate and you will make money. There are many different indicators out there to decide if a stock will appreciate, but in the long term if the company is solid it will probably see its stock price increase.
The second big advantage of owning a stock is the dividends that it pays out. Dividends are simply a way for the company to share some of its earning with its owners. Whenever a company makes money it can split the profits up between its owners and these payments can become very consistent and go on for years.
Dividend paying stocks can be a very nice way to make money and they can even pay for themselves after a long time period, but in order to get any significant amount of money through dividends you really need to own a lot of shares, so they are a secondary way of making money for most people.
Owning stocks also comes with one big disadvantage. Most of the stock market tips that you hear from professional money managers is to invest into the stock market for the long term. And while that has been good idea in the past there is no guarantee in the stock market.
The stock market simply does not come with any guarantees. The companies you invest into may take off and make you money or they may go bankrupt and lose you money. However if you do your research this is very unlikely.
Stocks can be a great investment but there is always risk involved. They come with risks, but also offer larger returns.
First let us look at what a stock is. A stock represents part of the ownership of a company. When you buy a stock you own part of the company that backs that stock. There are some advantages to buying stocks.
The first positive thing about owning a stock is that it can grow through appreciation. If the company does well then their stock will appreciate and you will make money. There are many different indicators out there to decide if a stock will appreciate, but in the long term if the company is solid it will probably see its stock price increase.
The second big advantage of owning a stock is the dividends that it pays out. Dividends are simply a way for the company to share some of its earning with its owners. Whenever a company makes money it can split the profits up between its owners and these payments can become very consistent and go on for years.
Dividend paying stocks can be a very nice way to make money and they can even pay for themselves after a long time period, but in order to get any significant amount of money through dividends you really need to own a lot of shares, so they are a secondary way of making money for most people.
Owning stocks also comes with one big disadvantage. Most of the stock market tips that you hear from professional money managers is to invest into the stock market for the long term. And while that has been good idea in the past there is no guarantee in the stock market.
The stock market simply does not come with any guarantees. The companies you invest into may take off and make you money or they may go bankrupt and lose you money. However if you do your research this is very unlikely.
Stocks can be a great investment but there is always risk involved. They come with risks, but also offer larger returns.
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