Equity Market

Why Invest in the Stock Market?

We saw in the previous section what the stock market is for, we will now see the interest of the stock market for investors. Why take an interest in the stock market and invest your capital in it?

 

Profitability on the Stock Market

The first element that encourages an investor to place his money on the stock market is its profitability. In fact, over the long term, the financial profitability of stock market assets is unmatched and therefore superior to a traditional real estate or banking investment. This profitability is very variable and is never acquired, due to the possible fluctuation of prices. However, over the long term, the average return on stock market assets is 10% per year on average. The Stock Exchange therefore offers the possibility of “making your money work” and thus obtaining a return on its capital. From a fiscal point of view, capital gains tax is often seen as an obstacle to investing in the financial markets, but many niches make it possible to limit these impacts: innovative companies or companies located in the EU territories, holding times for securities, etc.

 

The Flexibility of its Investments in the Stock Market

The second advantage of investing in the stock market is that most stock markets are liquid and allow you to quickly recover or immediately see the funds invested. Unlike an investment that is completely blocked over several years (life insurance, etc.), the Stock Exchange allows you to recover your capital at any time without losing all of the profits made. The availability of funds also makes it possible to manage your money in real time and to adapt your investments according to current events, the financial health of a sector or quite simply its needs … It is always pleasant to have control on its capital.

 

The Diversity Offered by the Stock Markets

Financial markets also allow diversification of one’s investments, assets, as the popular saying goes “it is never good to put all your eggs in one basket”. By diversifying his investments in the financial market, an investor can therefore hope for good profitability while protecting himself from the downfall of another sector. The diversity of the markets also allows any investor to find the investment (s) that suit them among the myriad of existing financial assets.

 

Investing in the Stock Market to Understand the World of Today and Tomorrow

The Stock Exchange is also an excellent prism for understanding the world around us. To invest in the stock market it is necessary to be interested in and understand subjects as varied as:

  • Economy
  • History
  • Geography
  • Geopolitics
  • Politics
  • Finance
  • Taxation

and more generally to follow the news of any kind continuously. To be a wise investor, you need to be constantly connected to the world around us and to its current affairs. The Stock Exchange is therefore an excellent way to understand and take an interest in current affairs, which reflect our world.

More than a simple vector of knowledge and learning, the Stock Exchange also makes it possible to get involved and get involved in economic life. Indeed, even if 90% of the market is now speculative, there is still between 10 and 15% of investment having a concrete impact on the economy (and therefore on other speculative products). The stock market is therefore an excellent way to support companies or economic models in which we believe and more generally to support the economy.

Finally, be aware that if you do not invest your capital yourself and let it sleep in a bank account, this money is placed on the financial markets by other than you: either directly by your bank or by a investment fund managing dormant assets. When you invest your capital yourself, you decide your own choices and therefore have the possibility of focusing on assets that are known to you and that you control.

Finally, investing in the stock market quickly becomes a passion. Besides the lure of profit, which can be exhilarating at times, the stock market is fascinating (and can even become addictive at times) since it is a reflection of our world, its good sides as well as its faults. Understanding the fluctuations of the financial markets means better understanding the world, which is why we must not think that the Stock Exchange and the financial markets are necessarily bad, they are the image of our society and its people.

Trading in FX and CFDs involves a high risk of loss due to the leveraged nature of the trading which might lead to the total loss of your capital and which might not be appropriate for all types of investors. Please ensure that you understand the risks involved prior to proceeding, taking into consideration your relevant experience. Seek independent advice if necessary. The information contained in this website and disclosure documents is of a general nature only, and does not take into account your personal circumstances, financial situation or needs. You should consider our Client Agreement carefully, and seek independent advice before deciding whether trading in such products is suitable for you.

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