After one of the longest bull runs we have seen in a while, conversations about the stock market have occurred more frequently within the last few years; which may be occurring a little too late to reap any substantial benefits. For the past ten years, stocks have been going up in value considerably. In some households investing in stocks were part of lessons that have been passed down from generation to generation. Some communities debate that investing in the stock market is “gambling,” which has deterred many from investing. However, if you are still on the fence about investing into stocks, here are 5 simple reasons to consider while you decide.
1. Your money makes more in the stock market than it will sitting in a bank account.
Saving money isn’t bad but leaving your money to grow in an account with low interest yields is a mistake. I was listening to a podcast the other day and heard an investor say something I found very interesting. He said, “If you are planning on leaving money in a bank to grow, it would be smarter to buy stock in your bank and grow your money as the bank grows in value instead of getting a couple of cents on your dollar.” It’s a great way to save and have your money grow in value at the same time.
2. Dividend stocks and the power of re-investing.
Some companies pay a dividend for owning shares of their stock. Many investors invest in these stocks and are able to get paid quarterly, monthly, etc. Some of the companies that pay great dividends are companies we use every day. Some of these companies include ATT, Apple, Home Depot, Proctor and Gamble and so much more. One strategy that can be used to help compound your money is reinvesting your dividend. Reinvesting will not only help increase growth and value in your stock but also create a nest egg for the future. That nest egg can help pay for child’s schooling or be passed down to keep wealth building in the family.
3. REIT’s can create passive income
Real Estate Investment Trusts are companies that own income generating real estate properties. These properties include hospitals, malls, apartments, houses, hotels, and even commercial forest’s. REIT’s pay a dividend to their shareholders and the yields are higher than most dividend paying stocks. REITs are a great way to add another stream of income and create passive income.
4. Investing in stocks can help to build wealth
In the black community there’s not a lot that is passed down for many families. We tend to see more money being passed upward instead. What I mean by this is that some children have to start allocating money to take care of their parents (passing money upward) especially due to rising health cost. Investing in index funds to create a nest egg for the next generation can be very impactful especially when it also includes life insurance policies that will help take care of you in your senior years. When I looked back at the 90’s a lot of the company stocks were 60% cheaper than they are now. So historically stocks have gone up. I’m not saying we should only invest in stocks, but it should be something to consider if building wealth is a priority.
5. After years of consistent investing your stocks could potentially pay for your luxuries.
When I learned how the rich pay for their lifestyle, I was amazed. One, because I was never taught or really heard too much about this when I was younger. Some of the rich use stocks to compound their money and then have the stocks pay for their homes, cars, and vacations. The interesting thing is their stocks don’t lose value because they have their dividends pay for their luxuries. As mentioned above reinvesting your dividends is a very powerful tool to growing your money.
6. Stocks are one of the easiest investments to make.
Many investments require lots of paperwork and you most likely have to go through the bank. Once you create an account with a reputable stockbroker company, buying stocks is as simple as making an online purchase. If you are the type of person that will stare at your stocks all day to see if it goes up or down, or when the market drops you panic sell, you may want to make sure you have a level head before investing. Investing in stocks requires you to remove emotions. Remember we should be looking at investing as a long-term transaction. Remember, investing and day trading are two different things. If you are unsure about investing and would like to learn, please reach out to a certified financial advisor.
Thank you for reading my post “5 Simple reasons we should consider investing in stocks”. I hope that this post helps you to make an informed decision on whether stocks can be a good investment for you. We are living in times where having multiple streams of income is very important. Stocks can provide us with great capital gains and those gains can help us to create wealth for the next generation. Are there any other reasons to consider investing in stocks? Please share below. Also, if you are investing in the stock market, how are things going for you? What are some tips that you can share? If this post can be helpful, please feel free to share and if you are new to Millennial Oaks, please subscribe 😊.