Why Invest in Stocks?

Investing in stocks can be a great way to grow your wealth over time. Historically, stocks have delivered excellent returns to investors over the long term.

For example, since the inception of the S&P 500 index (a stock market index that is composed of 500 large US companies) in 1926, it has generated annual returns of around 10% on average. This is a much higher return than the returns generated by other assets such as government bonds and cash savings.

It’s important to realise that not every stock performs this well. That level of return is an average across all stocks in the index.

It’s also important to understand that stocks don’t rise in a straight line. Stocks prices can move down as well as up and stocks tend to experience periods of bad performance every now and then.

Don’t let this put you off, though. Time and time again, studies have shown that stocks are one of the best long-term investments you can make.

5 advantages of investing in stocks:

• Stocks tend to produce high returns over the long term
• Stocks can help you protect your money against inflation
• Stocks are easier to buy and sell than other assets such as real estate
• You can start investing in stocks with a relatively small amount of money
• You can spread your money over many different stocks to lower your investment portfolio risk