There are many advantages to investing in stocks. One is that you don’t need much money to buy them, like you do for other assets like real estate or businesses. Buying just one share makes you an instant business owner without having to invest your life savings or take on all the risk.
Altho ugh there’s no guarantee that every stock will increase in value, since 1926, the average large stock has returned close to 10% a year.
The biggest advantage of stocks is that they offer the greatest potential for growth. Although there’s no guarantee that every stock will increase in value, since 1926, the average large stock has returned close to 10% a year.
If you’re investing for a long-term goal like retirement. stocks turbo charge your portfolio and give you the growth you’ll need to achieve it. Over the long term, no other type of common investment performs better than stocks.
The major disadvantage to investing in stocks is that prices can be volatile and spike up or plummet quickly as trading volume fluctuates. News, earnings forecasts, and quarterly financial statements are just a few triggers that cause investors to buy or sell shares, and that activity influences a stock's price.
Price volatility is why stocks are one of the riskiest investments to own in the short term. Investing at the wrong time could wipe out your portfolio or cause you to lose money if you need to sell on a day when the price is below what you originally paid for the shares.
