Why do people invest in the stock market?

Answer 1

In hopes of a rate of return that is significantly higher than fixed rates at banks. CD rates have averaged 3.5% for the past 70 years, where stocks have averaged 10.5% during the same period.

Answer 2

people invest in the stock marketto grow their wealth. There are many ways in life to make money besides an hourly wage.
The stock market is a way to make money with brains instead of brawn. True it takes some knowledge to invest wisely, but with knowledge you can increase your income greatly. To gain ownership on an organization/company and to make profits out of the upward movements in the price of a stock. These are the two main reasons as to why people invest in the Stock Market.

Answer 3

There are a few of us who has ever adopted a planned and systematic approach to investing. The approach has always been largely ad hoc in nature. For instance, most of us put an alarm to wake us up in the month of March every year so that we can primarily save taxes and consequently make good investments so that it give us a tax break and would help us to reduce our tax liability. So let us see why one should invest in stock market.

Why Do People Invest In Stocks?

People invest in stock market for various reasons, however the two most common reasons are:

1. Making investments aimed at realizing his long-term financial goals.

2. Some investors will just make an investment because they see some of their friends investing in the market

Therefore, in order to attain this, the key is to undertake a logical and a planned approach to investments. To adopt a systematic approach towards investing, an investor needs to undertake the financial planning exercise. Financial planning involves setting and estimating financial goals and managing your income, expenses and cash in order to be able to achieve these goals.

Advantages Of Financial Planning

There are many advantages of financial planning. When you create and adhere to a financial plan, it enables you to mitigate the adverse effects of rising cost of living. The cost of living has risen significantly over the years. Cost of living rises because of inflation. Our aspirations are ever increasing with the increase in consumerism. Today, we all aspire for a higher standard of living that encompasses more and better life style products. So, people invest in the Indian stock market to reap better benefits. Financial Planning is a step-by-step process and involves identifying your goals and placing a time frame and money value to them. It also involves in estimating your earnings/receipts during your lifetime.

It is really important to understand your investment risk personality and then investing in the market taking into account your risk personality. It is also very important to review your financial plan. To reap greater benefits and to lead a good lifestyle is the main reason why one should invest in the stock market.

ALTERNATIVE ANSWER

In general, stock investing, when approached conservatively and with the proper discipline, is a prudent approach to saving for the future, and for some, building wealth. However, as I write this it is November, 2008, the world's financial system is in a state of chaos. It is your responsibility, therefore, to approach the stock market with extreme caution.

The market today is so depressed compared to recent historical levels that many assume the bottom is near. Nothing could be further from the truth. Before the markets will recover, the economy must recover. Before the economy can recover, people will have to be put back to work. Before Americans can be put back to work, two things must happen -- the construction industry must recover and Americans will have to start buying more goods made by Americans. Before the construction industry can recover, the current inventory of houses, including foreclosed properties, will have to sold. Before Americans can afford to buy from Americans, import barriers will have to be initiated, either that or further economic decay will have to take place, and create a situation where even Walmart is driven out of business. Before the current inventory of houses are sold off, mortgage rates will have to be reduced to 1% or lower.

Realize that America exported its economy. There's very little left for Americans. Construction. Agriculture. Retail. Manufacturing and all those good jobs are gone. Or if they're still here, they're in the process of leaving.

There's a better then even chance the S&P will see 500 before it sees 1000.

Ever stop to wonder what might happen to the rest of the economies in the world without the engine of the American consumer? I have. And I fail to understand who's going to be lending America the funds to finance our national debt every year. And if there is a lender, at what interest rate?

If you're not frightened, you should be.

Answer 4

They are investing their money into securities, or stocks, in the hope of making a quick profit.