Why Should I Invest in the Stock Market? The Truth Revealed!

Why do people invest in stocks? For some, it's like gambling. They high associated to the adrenaline that comes as a result of throwing hundreds or thousands of dollars into high-risk, high-reward endeavors. Of course, many individuals are highly calculated and look at investing in the stock market as a way to fund their future, perhaps in an extremely comfortable fashion. Of course, this is actually very possible to do, but not without the proper psychology, mechanics, and discipline in place. 

So why should we invest in the stock market? 

No matter how you look at it, your stock picks will be a gamble. It is possible for an undisciplined individual to bankrupt themselves very quickly. With that being said, there are several advantages of stock trading and investing that far outweigh the risks involved. 

Firstly, with a long-term focus, there is seldom a regulated market that doesn't rebound. This means that with a bit of due diligence, you can continually invest in an index fund whether the market is weak or strong, and chances are good that you'll come out on top eventually. 

Imaging this scenario. You invest in the stock market in a fairly low risk way, meaning you pick an  index fund (you can even invest in the NASDAQ itself) and invest $300 per month into your fund. What happens when the market goes up? Your stocks are worth more! But what happens when the market goes down? While the pessimist may panic, the wise man or woman will simply view this as an opportunity to purchase even MORE shares for that same 300 bucks! 

Then, when the market goes back up, you've got LOADS of shares enjoying this increase in value. Does this make sense? I know it's pretty basic stuff, but the basics are where a LOT of people unfortunately make their mistakes. 

Another reason I invest in the stock market, and why I firmly believe you should, too, is that you can get out of a bad decision in a heartbeat. Just sell your shares. Done. Do you think you have that kind of freedom to just walk away in the real estate business? Not a chance!

 The point is - and hear me loud and clear, I LOVE real estate - the stock market is a far more streamlined investment. For all intents and purposes, it's digital vs. physical. Both are valid in terms of return on investment, but only the stock market allows you to be incredibly efficient with your investment maneuvers. 

Consider starting small, if you're a beginning investor. And above all else, educate yourself. Read books, attend courses, join and converse with Femvestorsglobal... it's YOUR capital, so you'd better know your stuff! Do NOT blindly trust the "experts," as they're just people... and they can be just as wrong as anybody else!

Remember, education is everything!

Ladies- What are your Investment Goals?

One of the most important aspects of investing your money is your investment goals.

The first question you ask when looking to invest your money, whether in a new pair of shoes or an investment type, is what outcome you want from your investment. Just as the shoes can provide either heels for a cocktail party or comfortable work shoes, the investment can provide income (such as dividends, rental income and/or profits), an increase in value (which can include property price increases), emergency funds, or a combination of these. 

The main investment objectives are: 

• Capital Preservation-being there when you want it 

• Capital Appreciation-increasing in value 

• Income-paying out money during ownership 

Today we'll look at combining objectives. We all want the best of everything, so naturally we ask why we can't get more than one of these major objectives from an investment. As a general rule, if you are focusing on one objective, then you will sacrifice a little of the return toward that objective when you throw in a second objective. 

This is much like the search for the perfect little black dress that we want to serve two purposes; we want to be able to wear to it work but we also want to wear it to cocktail parties. If it is too formal, then we won't be able to dress it down, but if it is too causal, then we won't be able to dress it up, however, some dresses will meet both objectives. If we focus on one objective more than the other, we sacrifice the goal of it providing the perfect outfit for each type of occasion. The good news is that like the little black dress, there are definitely investments that both increase in value, and provide income at the same time, particularly when an investor considers the overall price trend of an investment class before buying and selling it. 

Some types of investments that are known to pay out decent income are high yield bonds, real estate, commodities. These investments normally pay out the highest income during riskier times, because they have to make higher payouts to attract investors for higher risks. 

This also typically coincides with the low end of the price range for that particular type of investment. When an investor buys such an asset at the low end of the price range, she will receive capital appreciation once the investment increases in value back to more normal valuations. In the meantime, she will receive the income from that investment, so it is meeting two objectives. 

Once again, investment objectives are like most other things in our lives; we begin our search with the outcome we want. 

Begin with first knowing the main thing that you want from an investment; for it to be there when you want it, grow in value or pay out income. 

Understanding and considering your investment goals is one of the first steps toward successful investing that everyone must take. 

Investing For Beginners

Why does investing seem so complicated? 

The number of ways you can invest is mind boggling. The worst part is that investment world uses a different terminology. If you are new to investing it won't be long before you encounter words like "moving averages, average weighted price, open interest, futures and option, book closure" etc. Let me stop before I put you to sleep. All you really want to do is to put your money in something where it will be safe and grow. Is that too much to ask for? 

Why are there so many different investing alternatives? 

Are they really different! If you have ever been to a grocery store you will see bottles of different cleaning products, most of which will be labeled "new!" "Improved!" or even better "New and Improved!" But no matter what they call it, when its all said and done these bottles are filled with nothing more than SOAP, same as they have always been. 

Investments are no different. At first glance it may appear that all these mutual funds, Exchange Traded Funds, Index Funds, unit trust, REIT's, options, futures are unique and require encyclopedic knowledge to understand the technicalities. But more often than not what you are looking at is nothing more than just an old way of investing in a new bottle. 

Understanding investing in simple terms: 

In a family tree you will have a male and a female at top of the list from where all the other branches came out. Similarly in investments at the top you have stock and bond. All other forms of investments are some form or other of these two. And their differences can be spotted just as easily as you can distinguish a man from a woman. 

What are stocks and bonds and what is the difference between the two? 

I will compare stocks to a flashy car; all powerful snazzy, attractive, dangerous, accident prone and bonds to the family car; nothing much to look at, slow, always takes you where you are going, always there for you. 

Some basic traits of the two: 

• People investing in stocks want to see a return on their money, bond holders want to make sure the return of their money. 
• Stocks are about taking risk and bonds are about avoiding risk. 
• Stocks offer unlimited upside potential, bonds offer limited downside potential. 
• Stocks mean ownership and bonds denote loaning. So we can say one is an ownership investment and the other is a loan investment. 
• The difference between an ownership investment and a loan investment is not too hard to understand. The differences are obvious once you know what to look for. 
• An ownership investment does not have an ending date. (When you buy a stock it never becomes due, you have to sell it to get cash) 
• Loan investments almost always have a due date (e.g. your fixed deposits with the bank). An Ownership investments rarely promise a specific return. A stock price can go up 10 times or remain static for years. 
• Loan investments nearly always promise a fixed return. A 12 month deposit certificate promises 2% return. 

Third major distinction is whether you will get your money back. 

In ownership investment there might be no such guarantee.

 A stock's price can go to zero. 

The loan investments are usually backed by the guarantee of the bank, corporation or the government. 

With the above distinctions in your mind try to figure out what you are invested in. 

Few examples are: 

• your bank account or Government bonds 
• loan investment stock or mutual fund
• ownership investment 

What should I invest in? 

Having too much investment in one type can be bad for the investor. Loan investments are unable to keep pace with inflation, you might have your money safe but the purchasing power goes down. Too much risk avoidance will result in less return. 

Similarly Ownership investments can leave you without a penny in your pocket. The Idea is to keep a balance between the two. 

Neither is in a category of good or bad or one better than the other investment rather they serve different needs.

 Needs which can vary from one person to the other depending on ones investment time horizon and risk appetite. 

Stocks and bonds complement each other. 

In case you are new to investing first check your risk appetite, needs and time horizon of investments to decide where you should put your money.