Why Should You Invest In The Stock Market?

Why invest in the stock market? The stock market provides the greatest opportunity for an investor to grow their money. Even in tough financial times where many investors experienced significant losses, the time to invest is now, when prices are low. There are tremendous values that exist in the stock market.

What Many Investors Do

Many investors have a follow the herd mentality when it comes to investing. They invest based on “hot tips” that they get from a neighbor or colleague or chase returns of stocks that did well a year ago. The axiom “buy low, sell high” always seems to end up becoming “buy high, sell low” for many investors. This is due mainly to the lack of financial planning when it comes to stock market investing on the part of most investors.

Creating a Diversified Investment Strategy

Part of a diversified investment strategy should include a portion of one’s assets in the stock market. The risk due to changes in the market price of a stock can be balanced by investing assets in correlated assets such as bonds. This helps balance returns and keep an investor from being too heavily invested in one side of the market. This also helps reduce the volatility when the market takes a downturn by bolstering stock market losses with interest rate increases.

 

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