The stock market is one of the many potential places where you could invest your money. But according to Finance, investing in stocks is often risky. It draws attention to huge losses and gains of some investors. So, learning how to manage the risks is crucial, especially if you want to optimize your earnings.
As you learn to overcome the threats of the stock market, there you will surely receive the advantages of it. The Nest listed some of these advantages:
1. High guaranteed profitability. Stock market is undeniably increasing despite the risks that revolve around the market. It is considered to have the highest return on investment (ROI) among other businesses in the long term. The Federal Reserve stated that stock market has grown by almost 10 percent over the past 50 years. Government bonds, however, grew but only by 5 percent a year.
2. The stock market is like a huge auction house. Every day, investors keep selling and buying their shares. Whenever you need to cash out, it's easy and quick to turn your stocks to money compared to other assets that are more difficult to sell.
3. Investing in stocks also delays taxation of your gains. If you purchase a stock and it has an increase in value, you are not required to file a return for your earnings. You are just required to report it if you're selling your shares for profit. On the other hand, if you lost money on another stock transaction, loss can be used to reduce taxes on your other stock profits.
Stock market also has disadvantages by which the Monetos has shared.
1. Money must be left untouched long-term to achieve greater profit in the long run no matter how much you need the money.
2. It also require minimum deposit requirements if you're planning to invest on it. Its cost is also high in charges that could reduce earnings from your profit's ROI.
3. There is also a no guarantee of returns and also the risk of losing money is always possible.
So, in investing in stocks, don't forget that there is always a chance that you could lose your money. Be careful when you invest.
