Playing the stock market is the investment activity of choice for many people. This investment strategy, often glamorized in movies and TV shows, can be lucrative if done properly. If you and your partner are considering dipping some of your hard-earned dough into stocks, it's important to take a look at some of the biggest reasons for taking the plunge.
You Can Make Money Right Away
While most people use stock market as an investment activity, some use it to earn an income. These individuals buy and sell stocks frequently, getting in when the stock price is low, and selling the shares as they rise. These individuals are commonly called "day traders." While working in this capacity may seem like a wonderful option, it comes with a high degree of risk and there is no guarantee of steady income. Selecting this type of trading activity is particularly challenging if you intend to have a family with your new spouse, as a long-term stock market slump—or a poorly timed high-dollar trade—could spell financial disaster for your young family.
You Can Build For the Future
Most stock traders are in it for the long haul and are working to build a nest egg. Generally, you will see the biggest return with the least effort by buying stocks when they are low and allowing them to increase gradually over time. This type of trading is particularly profitable if you happen to buy on the ground level of a business that ultimately booms. Imagine if you had been around to invest in Ford, for instance, during its infancy. If you elect to buy stocks in this manner, you will still need to monitor stock performance, but not as closely as if you were engaged in rapid-fire trading.
It Helps You Diversify Your Portfolio
By mixing stock trading into your investment plan, you can craft a diversified portfolio. Most financial advisors recommend creating a diversified portfolio, because it's an important safeguard if any one type of investment fails. By trading stocks, along with buying mutual funds and bonds and investing in a 401(k), you can ensure that you don’t put your entire nest egg into one basket.
It Can Be a Lot of Fun
Some individuals simply love the thrill of the chase associated with buying and selling stocks. By investing a bit of money in the stock market, you can play around with your cash and potentially have the thrill of seeing your initial investment grow dramatically. Many individuals, drawn to the market purely for entertainment purposes, invest small amounts to ensure that they would not be in a world of financial hurt if they lost the money. Consider engaging in this stock market exploration with your partner as a way to get your feet wet in the world of investments.
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