Although stock markets and the economy have ups and downs, you should consider investing your cash in stocks to have a higher long-term return. Over the long-run, stocks have provided a return of nearly 10% year on year. However, stock markets are risky and you have to be aware of the risk by building as much knowledge as possible. But it is easier than you think! I will provide you with 7 reasons, why you should invest in stocks:
1. Interests for Your Savings are low
At the moment, the interest rate on your savings account is on average 2%. So if you have $ 5,000 you will get only $100 as a yearly return. Due to inflation, you are basically losing money!
2. Guaranteed Return Over the Long-Run
Although the stock market has its ups and downs, over the long-run you will make profits. You just have to be aware that you have to might have to sit out crisis. The S&P 500 has generated an annually return of 9.5% over the last 90 years!
3. You Don’t Have to be an Expert
Stock markets seem to be complicated and I don’t want to make false promises: They are complicated and sometimes you cannot understand their behavior. However, you can learn to understand how stock markets function. If you do not feel confident enough, there are still several ways to spread the risk while achieving a decent return. You can simply invest in stock indices or index funds to spread the risk.
4. You Want to Impress Your Friends
In the US, only 54% of the citizens invest in stocks. You can be part of the group and show your friends and parents that you let your money work for you. You can achieve a nice passive income just by investing in stocks.
5. You Can Save Taxes
Yes, you have read correctly! You can save taxes by investing in stocks. You can open an IRA and write it off on your income tax. Tax-free! It is possible to invest up to $ 5,500 in an IRA every year!
6. Warren Buffett Got Rich on the Stock Market
There are so many people, who got rich on the stock markets. Warren Buffett is probably one of the most famous examples. He became a billionaire by investing in stocks! You can do it too!
7. You Want to Save for Your Retirement
Maybe you are working in a company without a 401(k) retirement plan. So you have to take care of your own financials. Investing in stocks is a great opportunity to have more money and less stress when you are older. This will help you to live your dreams during your retirement!