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 2-5%), is a massive difference.
Example
Obviously a 50%+ return would require a good stock trading education, but providing you had this, here is a financial example.
- You have $20,000
- 3% interest from a 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 stocks is often a major reason why the rich are rich and those who aren't rich are not!
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! You can do this without receiving pressure from the boss, you will not get ordered around and you don't have to deal with anyone else's problems! That's 4 reasons in one!
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.
Still cant 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 how to go about trading shares view the step by step guide to trading shares.
To practice trading shares for free, check out our recommended
practice accounts.
