Why People Trade Stocks

There are two distinct groups of people in the stock market: traders, who look out for stocks with the potential to appreciate in value over a short period of times and investors who look to purchase stocks of companies with great value proposition.

At the heart of nearly every business news broadcast or newspaper publication virtually anywhere in the globe are daily briefs of prices or rates in stock exchange markets.

There are two distinct groups of people in the stock market: traders, who look out for stocks with the potential to appreciate in value over a short period of times and investors who look to purchase stocks of companies with great value proposition, market performance and future prospect.

The stock market has a broad base of investors such as individuals, families, social groups, organisations and even corporates all look to the stock market for a piece of the pie. While some are keen on investing on the short term, some others are there on the long haul.

While no investment is without its risk, it can truly be a daunting endeavour especially if you are not versatile with the market or abreast with trends in the economic climate as a given stock price can be affected by factors inside the company, such as a faulty product or by events outside of the company control such as political or market events.

Warren Buffet undoubtedly considered to be one of the most successful investors in the world attributed his wealth to prudent purchase of stocks and equity. Here are some why people explore opportunities in trading stocks:

To Grow Funds

This is undoubtedly the primary reason why anyone and everyone makes any form of investment. Investing in shares is a unique benefit of accumulating and multiplying wealth.

Investing in the stock generally is known to deliver good returns in the long term.

To Attain Return On Investment (ROI)

The money invested in Shares are known to appreciate when the stock price rise especially as traders adopt the principle of buy low and sell high. Receiving dividend payment which comes as the company share earnings with stakeholders.

Ownership

Investing in shares is taking ownership of piece of a company. Ownership of a business through investment in stock hold the possibility of interaction wit the company overtime and establishing a stronger relationship with the company.

It provides the ability for investors to vote and influence of the company.

No cap on your potential earnings

Many investors see value in stocks because there are no limits to the income traders can generate the market. The down side to this is that one can equally lose under unfavourable circumstances.

Diversify Your Investments

Investments in stocks provides a means of diversification of investment in addition to good levels of protection from the inherent volatility of the financial market.

Flexible Investments

Unlike many other investment types that require a minimum investment tenure, investing in stocks provides a flexible investment opportunity which can easily be liquidated without any fears of penalty.

In conclusion, investment in stocks offer investors the significant potential for growth over the long haul. Investors willing to stick with stocks over long periods of time generally have been rewarded with strong, positive returns. Traders are typically investors who leverage on short term trade for liquidity and to maximise profit.

Written by Lawretta Egba