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The importance of investing in financial markets

Saving money is important but just having a savings account isn’t enough. Starting with a savings account is the normal thing to do. What the majority of people are not realising is that at one point you have to invest an amount from your savings account.

The goal of investing for the majority is to access at some point financial freedom. it is not guaranteed that you will become financially independent.
There are always some advantages and some disadvantages to investing.

Few advantages

  • best way to stay ahead of inflation: Historically, over the long term stocks have yielded a generous annualised return.
  • stocks are easy to buy: stock markets make it easy to buy shares of companies, you can easily buy stocks through a broker as soon as your account is set.
  • takes advantage of a growing economy: economic growth creates jobs, which creates income, which creates sales. As the economy grows so do corporate earnings.

Few disadvantages

  • Risk: the most important of them all is risk. you can end up losing your entire investment
  • Taxes: tax is another factor to consider as a disadvantage and this is because if you sell your stock at a loss, you may be able to get a tax break, however if you sell your stock for a profit you would have to pay capital gains taxes.
  • Emotional roller coaster: Stock prices rise and fall second by second. individuals tend to buy high out of greed and sell low out of fear. The best thing to do is not constantly looking at the price going up and down and just checking in on a regular basis.