0 Invest in Stocks: a Must for 2014

The beginning of the year is a perfect time to make solid financial commitments toward gaining financial freedom, such as increasing their savings and paying off credit card debt. In order to achieve these, some people choose to place investments able to yield the best possible returns and profit.
One of the most popular investment options for 2014 is stocks. Although investing in stocks have many risks due to the volatile nature of the market, they still remain a popular investment option. Below are some of the reasons why stocks remain popular for 2014:

1.     Easy to Acquire

It’s easy to acquire stocks. In the past, you’d need to contact a broker or a financial planner to buy stocks. Now, you can purchase stocks simply by going online and doing some research.

2.     High Returns

Although stocks do not guarantee a fixed amount of profit, investing in stocks for a long period of time can yield good returns. As the economy grows, consumer demand increases. In turn, revenues of the companies you invest in also go up.

3.    Easy to Sell

Because investors are buying and selling stocks regularly, this makes stocks not only easy to buy, but easy to sell, as well. In comparison, other forms of assets such as houses, jewelry, or cars can be harder to sell because there are more factors to consider such as the condition of the property you’re selling, and the fact that there are other people selling the same assets, some of them in better condition or at cheaper prices. Stocks, on the other hand, can be sold any time you choose. Also, the rules are rather simple: buy low and sell high.

4.     Gets You Ahead of Inflation

According to CNN Investing Basics, stocks usually have an average annual return of 10%, a rate significantly higher than the average annual inflation rate of 3.2%. This means you can prevent the value of your purchased currency from decreasing because the companies you’re investing in will still yield higher returns than the annual inflation rate. Even if the economy gets bad, people will still continue making purchases, which is why you can still be ahead of inflation when you invest in stocks.

5.     Tax Relief

Purchasing stocks doesn’t entail having to pay taxes on what you earn every year, just like what investors do for bonds or bank accounts. When you purchase a stock, and its value increases, you’re not required to file a return on your earnings. You’ll only be required to file your stock profits when you sell your shares. You can also adjust the taxes you file for stock gains when you lose money in purchasing a stock.

6.    Higher Interest Rates

If you are finance-savvy and like to save, then you’d be pleased to know that money invested in shares will yield you higher interest returns compared to other forms of investment. For instance, fixed-deposit accounts generally yield around 4% compounded interest per year, while investing in a unit trust fund can yield 5%-20% compounded interest.

By comparison, investing in stocks can provide you with 50%-100% compounded interest. For those who want more interest rates in terms of profits, you can try investing in foreign exchange trading. However, remember that higher-earning stocks also come with bigger risks.

7.    Extra Funds

Whether you hope to earn money for a short period of time or aspire to grow your money in the long term, you can have additional funds for better cash flow management through stock investments. Investing in stocks can provide you with a source of income so you wouldn’t have to rely solely on credit cards any more to supplement your regular income.

With all these advantages of investing in stocks, it is easy to see why the number of Filipino stock investors is growing year by year. So for 2014, make it your goal to set aside part of your savings to invest in well-researched stocks and watch your money grow. 

The article is contributed by Michael Vincent from Money Hero, Hong Kong’s up and coming financial comparison website. Users can compare a broad range of financial products like credit cards and insurance plans side by side, thus enabling them to make better financial decisions when looking for financial products.