Potential for High Returns:
Potential for High Returns: Stocks can provide higher average
returns compared to other investment methods such as FDs when
invested in the right companies over the long term.
Diversification:
Stock market investing allows investors to diversify their
portfolios across different industries, sectors, and geographic
regions. Diversification helps spread risk and minimise the impact
of poor performance in any single stock or sector on the overall
portfolio.
Liquidity:
Stocks are highly liquid investments, meaning they can be bought
or sold quickly on public stock exchanges during trading hours.
Dividend Income: Many publicly traded companies distribute a
portion of their profits to shareholders in the form of dividends.
Market Volatility:
Market Volatility: Prices fluctuate daily in response to various
factors such as economic conditions, corporate earnings,
geopolitical events, and investor sentiment. Market volatility can
lead to significant short-term price swings and uncertainty,
potentially causing panic among investors.
Risk of Loss:
Risk of Loss: Investing in stocks carries the risk of losing
capital, especially in the short term. Stock prices can be
influenced by unpredictable factors, including market speculation,
company-specific issues, regulatory changes, and external shocks.
Emotional Investing:
Emotional Investing: Stock market investing can evoke emotions
such as fear, greed, and overconfidence, leading to impulsive
decision-making and irrational behavior.