Why Bernanke Wants You To Invest in Stocks
So now oil prices are hitting the roof. The feds are not in a mood to decrease interest rates as they fear there may be inflation. How they can know that after my bills kept on rising this whole year is way beyond me. Sometimes I think I can do their job better than they can. Cramer has stopped crying on TV ,and you are being warned about investing in stocks.
This is the right time to start investing in stocks.When guys are screaming get out, start looking for bargains. Stock bargains do not have to be in the USA only. The world is now full of great companies to invest in. If you fear the USA stock market, go shopping around the world and you might find a few great bargains. I got one in a small country called Kenya. A cell phone company called Safaricom that has introduced the first method of moving funds from your bank account to any human being in the world using your cell phone. It cost me all of 8cts a share.
Whatever you do, stick with stocks. There are 3 main reasons that I stick with stock trading. You have some funds in your savings account, your 401k is maxed out, you have your mortgage in control, now think about stocks.
1. Stocks Outperform other Investments
In the long run and sometimes in the very long run,stocks outperform other forms of safe investments. The simple reason is that stock prices are set by the market.In the long run the market is made to reward risk. The danger of trading in stock is that our minds are set to make quick profits. However, as long as you choose your stocks in markets that you know and have a good money management plan, when your fellow stock traders can not take a market hit, you will be there to reap the profits.
Just don’t gamble away your hard earned cash with quick hits.I would suggest you read the myriad of books on Warren Buffet and you might be surprised at what you may learn.
2.Potential of Keeping Up with Inflation
Bonds are good investments, the only problem is that when their interest rates are set over a period of time, that is it. If you have an interest rate of 10% with bonds and the inflation rate goes to 15% ,there is nothing you can do. However, stocks if chosen in well managed companies can actually increase in value during inflationary periods .It the price of a commodity goes up , the company may be forced to increase it’s dividend in order to keep up with the inflation.
3. Taxation And Stocks
Long term capital gains are normally taxed less than short term gains. You also get to be taxed only when you sell your stocks. If you are living in some countries, you are able to borrow on your stock portfolio. So instead of selling your stocks, you can borrow on your gains and earn even more tax gains .That is if you use your loans wisely. Products like 401k’s IRA’s even make it a wiser investment if trying to avoid the tax man.
To me the best reason to buy stocks is the knowledge some other people are working for me. I tend to buy stocks in companies whose products I am using. It is very easy to track the performance of your stocks if you are using their own products. All in all in the long run, stocks in companies that you know about will be more profitable in the long run or the very very long run.
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