Why buy shares?

Why buy shares?…to make money of course! With shares there are two ways of making money, through a rise in a company’s share price and through dividends paid out to shareholders.

1. Financial returns

Investors can realistically make a 50%+ return a year on their capital, this compared to the interest rate offered in banks (often around 1-5%), is a massive difference.

Example

Obviously a 50%+ return would require a good education in trading stocks, but providing you had this, here is a financial example.

– You have $20,000
– 3% interest from a regular bank savings account would give you $600 a year.
– A 50% return from the stock market would give you $10,000 a year.

Investing in the stock market is often a major reason why the rich are rich, they can grow their money faster than other people.

2. Beating recession

You can make money when the market is going down! This is achieved by a marvelous concept called shorting. You certainly can’t make money with property when the market is in recession.

3. The lifestyle

You can work for yourself at home! No pressure from the boss, no orders around and you don’t have to deal with anyone else’s problems! That’s 4 reasons right there…

4. Tax advantages

When trading shares (UK) you are given a £9,600 capital gain tax allowance so you can make up to £9,600 without paying tax. This allowance, compared with the £6,035 income tax allowance, means you can earn an extra £3,565 tax free.

Next steps

Still can’t decide whether trading shares is a good idea? Here are a few extra reasons to help you decide…

1. Take the risk out of trading with stop losses
2. Earn a salary from stocks with dividend payments

To learn the steps needed to be taken to trade shares successfully, view the step by step guide to trading shares.

To practice trading shares for free, check out our recommended fantasy trading accounts.

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