Stocks can be
a valuable part of your investment portfolio. Owning stocks in different
companies can help you build your savings, protect your money from inflation
and taxes, and maximize income from your investments.
Benefits of
investing in stocks :
High Return on
investment
Historically,
long-term equity returns have been better than returns from cash or
fixed-income investments such as Bank Fixed Deposits, PPF, Post Office Deposit
etc. However, stock prices tend to rise and fall over time. Investors may want
to consider a long-term perspective for their equity portfolio because these
stock-market fluctuations do tend to smooth out over longer periods of time.
Protection
against inflation
Taxes and
inflation can impact your wealth. Equity investments can give investors better
tax treatment over the long term, which can help slow or prevent the negative
effects of both taxes and inflation.
Regular income
on investments
Major Blue
chip companies pay shareholders high dividends or special distributions. These
payments can provide you with regular investment income and enhance your return.
“It is rightly said
that if one stays invested in the equity markets for longer-term, the
investment is likely to generate magnificent returns in the long-run.”
Investors should not select the stocks
for investment based only on historical returns. They should also consider the
fundamentals of the company before picking up stocks for investment. The stocks
with strong fundamentals are likely to earn good returns in the long-run.
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