Why should I invest in stocks?

Here's why you should put your money in the stock market to maximize your net worth

There are a couple of major investment avenues most people consider:

Buying and selling stocks
Options
Flipping real estate
Buy-and-hold real estate
Crypto
Forex and other types of day trading

Here's why you should focus on buying and holding stocks

Leverage
No mortgage means no leverage and no fixed payments. Since I don't borrow to buy stocks (and neither should you!), I invest as much cash as I have, and no more. Not so with a mortgage. Interest rates go up and down, the job market goes up and down. Stock investment remains optional, but mortgage payments never are.

Inflation
Inflation is a big worry nowadays. Prices are rising rapidly and I want to make sure my investments keep up. This counts in favor of investing in stocks. Why? When prices go up, so do sales at the companies I own through the stock market. A couple of years down the line, this comes back to me as higher profits. Even if that profit is worth less due to inflation, I think this approach will cancel out inflation in the long run.

Returns
Stocks historically return almost double as much as real estate. The richest investor in history, Warren Buffett, is famous for his stock investments. The downside of stock investment is that you get much more volatility. However, the sheer return is enough to more than make up for it - if you have the nerve to hold on tight during down times.

Liquidity
One huge advantage that the stock market has over real estate is its liquidity. Ever try sitting on a house or building that just won't sell? Not fun. But you can sell all of your stock any time you want. You can get your money out almost instantly!

Invest any amount
With real estate, you have to invest in rather large chunks of money. If you don't have the capital to buy outright, or even the minimum amount for a down payment, good luck saving up forever. With stocks, you can put in tiny amounts and watch it start to grow.

Diversification
Most people put their entire net worth into a single house in a single neighbourhood, city, and state. This is an extreme form of putting all our eggs in one basket. With stocks you can invest in different industries in different parts of the country. Hell, you can even invest in real estate through Real Estate Investment Trusts. Which brings me to...

REITs
Real Estate Investment Trusts (REITs) offer the chance to invest in large-scale, professionally-managed real estate. With these trusts, you can own a slice of dozens or even hundreds of diversified properties all over the world. You never have to manage tenants. You never have to call a plumber at 3AM. You never have to collect rent. The only downside is you can't leverage your money using debt - but that's a double-edged sword anyway.

How to invest in stocks

ultimatestockpicker.com aims to simplify your stock investment workflow, showing you opportunities you would have missed, and saving you a lot of time. Sign up for a free account now!

Happy investing!

Fred