Trading stocks is one of the most common ways traders like to participate in the markets, and it has been an investment mainstay for decades. If you are on the fence about this investment route and don’t know if you should give it a try, here are 10 compelling reasons why you should trade stocks.
1. You do not need a huge starting capital
Trading stocks does not require a significant amount of money upfront. Though you can choose to buy a larger number of shares, it is not a requirement. Share prices also vary, which means you can choose companies you want to invest in that makes sense in relation to your budget. For example, you can invest in penny stocks, or you can invest in more expensive blue-chip stocks.
2. Education is accessible
Another reason you may consider getting into stock trading is that it is accessible. There are many resources online for you to learn how to trade and analyse stocks. There are also webinars and tutorials, and you can learn from more experienced traders anytime. This makes it very easy to get into stock trading.
3. Trading is accessible
Aside from education being accessible, it is always extremely easy for traders to place a trade and start investing. There are many online trading platforms, and all it takes is signing up. This can be a great way to ease yourself into investing from the comfort of your home. You can also create an account with a brick-and-mortar broker, and you can seek professional advice and guidance from their customer support or even visit in person.
4. A wide variety of stocks to choose from
One of the biggest appeals of stock trading is that there is a wide variety of stocks for traders to invest in. You can invest in different industries, sectors, and locations, and you can choose to invest in single stocks or several in a bundle (called an ETF). This makes it very flexible for traders, and they have a lot of choice in determining what exactly they want to put in their portfolio.
5. There is no one set technique to use
There is also choice in how you choose to trade stocks, giving traders much freedom in deciding how they want to manage their portfolio. There is no expiration date for stock trading, and investors can hold them in the long-term or trade them quickly. This flexibility makes it easy for stock trading to work with most lifestyles and schedules.
6. The stock market is open often
Another compelling reason why you may want to trade stocks is because it is convenient. The stock market from mornings to afternoons, with minimal trading holidays. Of course, it does depend on which stock market you choose, as markets tend to follow their own time zones. However, generally, the stock market is consistent with its opening hours which makes it easy for people to trade when they want to.
7. Big profit potential
There is of course the potential for profit when trading stocks. When you choose the right one, there is a big potential for huge profits. This is especially true for certain sectors with company share prices that tend to fluctuate greatly. Traders can capitalise on upward swings and gain huge profits, potentially, and that is an enticing reason why people participate in the market.
8. Hands-off investing
Even if you are not looking to go in and out of markets quickly and profit from dramatic fluctuations, the stock market continues to hold appeal. Long-term traders who invest in stocks may find slow but sure returns over the years, which is a great way to grow your savings to keep up with inflation. After you invest in more stable stocks, you also do not have to monitor them actively most of the time. This can be freeing.
9. Passive income in the form of dividends
Stock trading may also be compelling because some stocks offer dividends for shareholders. A dividend is a sum of money a company pays to its shareholders on a quarterly or annual basis. The money usually comes from the profit generated over a period. Not all companies offer dividends, but you can find one that does, and it can make a great avenue of passive income.
10. Ability to vote as a shareholder
Finally, stocks are compelling because you may be able to vote as a shareholder and influence the company’s operations and management structure. This is not always the case – some stocks do not give holders any voting rights. However, some do. Some operate by a case by case basis, depending on how much of their stock you purchase. However, if you are interested in learning how a company works and want to be able to influence its decision-making, stock investing is a great way to do so.
The bottom line
Stocks trading is a personal matter, and not everybody will want to participate in the stock market. However, it does present a compelling case. If you are on the fence about whether or not you want to start trading, you can think about the pros and cons of trading and see whether it suits your lifestyle and schedule.