Benefits of investing in the stock market

Undoubtedly, one of the most important choices for any investment is to choose the right market for the investment. Among the existing parallel markets, one of the attractive choices for investing is the stock market. In this article, we will name 10 benefits of investing in the stock market.

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What is investing in the stock market?

These days, most people prefer to invest their extra capital in a place where the financial value of their capital is not devalued, rather than keeping cash. Investing in the stock market is a good option for many people who can work in any amount of capital.

Investing in the stock , the countries, institutions, businesses and individuals allows the company’s stock markets and stock trading securities are bought and sold.

10 advantages of investing in the stock market

Undoubtedly, one of the most important choices of any investment is choosing the right market for investment. Among the existing parallel markets, one of the attractive choices for investing is the stock market.

The advantage of investing in the stock market is the special conditions that exist in the stock market and will arise in the future and investors will benefit from it. The stock market has advantages over other markets, which are: lack of capital allowed to invest in the stock market, high liquidity in the capital market and higher returns due to optimal risk than other markets.

1- Lack of capital limit allowed for investing in the stock market:

You can invest in the stock market without financial restrictions. In the stock market, you can operate with minimal capital and buy and sell stocks.

2- High liquidity capability in the capital market:

In the current record situation in the housing markets, gold, dollars and coins, etc., there is a shortage of customers, and in fact, the speed of converting stocks into liquidity is much faster than the speed of converting currency and gold into liquidity.

3- Higher returns due to less risk:

Compared to the stock market and other markets, it should be noted that in the long run, stocks have grown better than liquidity in the dollar, housing, etc.

In addition to the above, the following can be mentioned:

4- Enjoying legal protection

All the activities of the shareholders and the changes made in the stock market are carried out under the supervision of the stock exchange organization.

In fact, illegal transactions do not take place outside the organization. The stock market is legal, so everyone who invests in the stock market has legal protection.

5- Making a profit

The most important goal of people entering the stock market is to make a profit. Whenever a stock is accompanied by a price increase, shareholders benefit from the difference between the purchase price and the new price. Another type of dividend is cash dividends that are given to shareholders if the shares are held until the annual general meeting. The sum of these two returns is the return on the total share. Since the stock market is risky and price changes cannot be accurately predicted, the desired rate of return cannot be calculated accurately. Because the stock market has a lot of potential for profit and is attractive to many people.

6- Protecting capital against inflation

As inflation rises, the country’s currency is devalued. People can cover this devaluation if they invest their liquidity in the right market. The capital market can achieve this goal well. By investing in the stock market, the value of one’s assets is protected against inflation. Because over time, the company’s assets are also subject to inflation and its value increases as a result, the value of the company’s shares increases.

7- Taking advantage of tax exemption

Tax is one of the criteria that is of special importance in the financial statements. The role of this factor in the company’s costs and its impact on profit reduction is not hidden from anyone. Fortunately, the tax exemption law encourages companies to join the stock market. In other words, the profits from investing in the stock market in many countries are tax-exempt or tax-exempt. Companies listed on the stock exchange also benefit from tax exemption benefits.

8- Variety of investment time period

The stock market is diverse in terms of investment period and one of the advantages of investing in the stock market is that any investor can enter it with any time view. Some people enter the market with the intention of making short-term investments and making periodic profits. They can earn money by buying stocks that are of interest in a short period of time. Medium-term shareholders use more time and skills to choose their stock and can make a profit by keeping the stock for at least 6 months. Finally, some people want to invest their money in the stock market for a long time. The long-term horizon and patience of these shareholders can be a good return for them.

9- Ease of investment

There are several ways to trade on the stock exchange. In-person transactions, telephone transactions, investing in portfolio managers, and online transactions by the investor himself are some of the ways you can be present in the stock market. You can get a stock exchange code by entering the stock exchange brokerages and performing the necessary steps that do not take much time, and enter this market easily. The easiest way to invest is to use online trading systems. This market does not require heavy capital or a complicated process to enter, and by learning the necessary skills, you can succeed in this market and achieve profitable investment.

10- Attracting capital in efficient industries

Capitalists do their best to direct their capital to companies that are more efficient and more prosperous and profitable in their industries. This leads to the development of companies that have better operations and better management, and is a factor in encouraging companies to do better to attract more capital. The stock market makes it possible for capital to be directed to the target industries. The more accurate the valuation of companies and the more professional the people in the market, the more it is possible to direct capital to the target industries and increase development.

Classifying the benefits of investing in the stock market from a macro perspective

The stock market, as one of the centers of capital accumulation and a place of investment, has a significant role in economic growth and development. Collecting micro-savings and using it in production and financing can highlight the role of the stock market. By using small and stagnant savings and investing in companies, the ground for economic growth is provided.
In the event of inflation, the government can issue bonds to control inflation. The government controls its contractionary policy by selling these bonds and collecting liquidity from society and controlling inflation.
Capital markets help to develop a culture of investment by creating public participation. Buying and selling corporate stocks helps to increase the speed of money circulation and the degree of liquidity of wealth in the community.
With the proper diversion of capital to development-oriented companies, the distribution of wealth and economic balance will increase.
The capital market makes the distribution of wealth more equitable by expanding public ownership and equity participation.

The last word

Investing in the stock market can be a good choice if the applicants act with patience and sufficient knowledge. You are familiar with the most important advantage of investing in the stock market. However, investing in the stock market has many benefits, one of which is the possibility of earning money. For example, the stock exchange can be used in the following cases;