Why Should You Buy Stocks: A Guide for Beginners

After the big stock market crash in the wake of the Coronavirus crisis, the trading situation returned to normal. The slump in the stock market sector was overcome and many shareholders are rebuilding their portfolios. Our today’s article will make the process of entering the world of crypto much easier for beginners. 

Even for beginners, now could be the right time to start trading on a stock exchange. Because the prices of most shares are still at a comparatively low level due to the Coronavirus crisis. But what should beginners who want to buy stocks watch out for? The following article sheds light on the subject and helps beginners to build a successful stock portfolio. Let’s get started!

Why Should I Buy Stocks?

Beginners thinking about stocks often turn to the subject out of disappointment. They are disappointed with the long period of low-interest rates, which barely enables savers to increase their money. If you add the rate of increase in costs of living — such as rising prices for housing and groceries — savers today often lose their net profit when saving. In other words, the money you save in fact costs less.

So if you want to get rich, you will have to deal with other investment products and thus also with stocks. Beginners will often be a little unsure whether they should invest in stocks at all.

  • Is it too risky?
  • Are stocks only for gamblers?
  • Will I lose all my savings on stocks?

These are just three of the typical questions that beginners ask themselves. The worries are often unfounded. Anyone who doesn’t invest in stocks from scratch, but rather is well informed and has a strategy beforehand, can significantly reduce the risk of losses and increase the chance of a good, long-term profit.

Will Stock Prices Continue to Rise in the Future?

Of course, we can’t say with certainty that stock prices will continue to rise. Even investor legends like Warren Buffett cannot predict whether their stock portfolio will still generate income in five, ten, or twenty years. It’s like looking into the crystal ball.

However, there are good reasons to think that stocks could continue to generate income in the future. In addition to historical development, this includes economic growth. Despite all the crises, the world economy has been growing for centuries. In the last few decades, the upward trend was even greater. 

If you look at the development since 2005, the global economy has grown by around 3 to 6 percent annually. The only exceptions to this time corridor are the year 2009 with the consequences of the financial crisis and the current year 2020 with the Coronavirus crisis.

Economic growth is based on successful companies that offer products and services that are in high demand. In other words, if the economy grows, so do companies. As a result, the stocks that these companies offer on a stock exchange also benefit. Ultimately, investors benefit from this and can look forward to rising yields and dividend payments.

Golden Rule: Patience Is a Skill

However, beginners shouldn’t get impatient if the stock price doesn’t rise immediately. Anyone who invests in the stock market should be patient enough. Stocks are subject to high volatility so that prices can fluctuate. Here it’s also possible that investors end up in the red. However, you shouldn’t sell everything immediately. What matters is whether the stocks can generate returns over the long term.

What do think about stocks? Feel free to share your opinion in the comments!

Leave a Reply

Your email address will not be published.