Why Invest in Stocks ?


Why Invest in Stocks?
Have you ever wondered why investors behave this way? For example, why do people invest in bonds or stocks or not? Since I am a defender of equity investment, let me analyze the issue of equity investment.
So, why invest in stocks? No, I will not just invest in any kind of stock. There are targets associated with investing inequities. As a start, equity investors want to be compensated more than if they put their money in the bank. anything else ? - Yes Yes. Equity investors want to be compensated more than the risk-free interest rate, which currently yields about 4.7%. For your information, the risk rate here is the 10-year Treasury Bond, which is backed by the US government and is considered to be free from default risk.
So, when we invest in stocks, we want a return that exceeds 4.7%. How much is left? This varies among individuals. Some want a 5% return and others satisfied about 6% of revenue. Personally, I want at least a 7% return on my stock investment. There are reasons for that. Equity investment is relatively volatile and full of uncertainty. Interest rates go up and down which will hinder our return as equity investors. For example, if the interest rate rises to 8%, is it designed to achieve a 7% return on your equity investment worth the risk? Maybe not. In this case, most people prefer to put their money in the bank and enjoy a higher return.
Having said that, we need to know how many stocks have historically been given to investors. For the stock market in the United States, the return of the last century was within 10%. This my friend is the only reason to invest in stocks is not that you want to own a piece of American companies. You invest in stocks because they historically give you better returns than other investment alternatives and no other investments boast about this high return over the last century, not even real estate.

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