Did you know that over the last decade the stock market’s average annualized returns amounted to 13.9%?
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This number fluctuates as the stock market changes but the point is you could be earning big returns on your money. Keep reading below to learn why you should start investing in stocks.
You Don’t Need To Be Rich or a Genius To Invest
The stock market today is more accessible to regular people than it’s ever been.
New investors can choose to trade on their own, hire a professional broker, use an automated app, or take more advantage of a 401K. More important, investors can be as risky or conservative as they want.
Here are four tips for stock market beginners:
- Use the stock market for long-term investments
- Do your research on companies and follow stock market news
- Assess how much risk you’re willing to take and don’t overreach
- Diversify your stocks so all of your eggs aren’t in one basket
Penny stocks are an excellent option for beginners. These are stocks from a small company that trades for less than $5 per share. Check out some of these top penny stocks.
Use the Stock Market for a Better Return on Savings
Does your extra money go into a savings account each month? Saving is one of the smartest things you can do for your future. But, you may not be getting a high return.
Most savings accounts will only get you a 2% annual percentage yield or APY. The average stock market return, on the other hand, is about 10%. This means you could be missing out on growing your money.
Of course, everyone’s situation is different. Don’t start investing if you don’t have a $10,000 emergency fund saved or you plan to make a major purchase in the next five years.
Benefits of Investing in Stocks vs. Real Estate
Real estate has historically been a safe and effective way to invest. Besides the occasional market lull, home prices typically go up and that means more equity.
The biggest advantage of investing in the stock market is that it’s liquid. Stocks can quickly be turned into cash without losing any market value. You also receive dividends from owning stocks.
If you do choose stocks over real estate be prepared for a risky venture. The market goes up and down daily. You’ll also need to pay capital gains tax on any earnings.
Investing in real estate can be just as risky as the stock market. Simply look at what happened to the market in 2008.
Think about which investment would serve you best. Or you can invest in both to diversify your portfolio.
Ready To Start Investing in Stocks?
It may seem scary at first but investing in the stock market can make you a lot of money. The important thing is to start slow and assess how much you’re willing to risk.
Are you looking for more informative articles on investing? Check out the rest of our site to learn about choosing the right online broker, mutual funds, and bitcoin.