Why Invest In The Stock Market?

Written by: ItsOnlyFinance Staff

Did you know that there was an industry out there where you could buy a piece of any company on Earth and make money from it without having to buy any products? This industry allows you not only to buy a piece of the company, but you can buy and sell contracts that say you might buy a company and make money off of those contracts without actually buying the company. Depending on the amount of research that you do before you buy the company, it can become either an investment or a gamble. However, even if you do the research the price may not go in your favor. These are just a few examples of the ups and downs that can occur in the stock market.

It takes a certain type of person to trade stocks. While there are no limits on where you came from before you involved yourself in the stock market, you will obviously need to have some form of start-up money before you embark on this journey. Whether that comes from saving your money, or an inheritance, or a gift, a lot of people find the stock market a great use of their extra money.

Ideally you will also need to have control of your emotions and have time to study trends in the economic landscape. However, even if you don’t have much time, there are certain aids that exist that can help you trade by narrowing down certain stocks, and giving you reasons as to why you should buy it. Of course, in any of these situations, it is a good idea to do research on the group that you are working with that is giving you the stock advice.

Stock market investing attracts those with an entrepreneurial mindset. These are people who wish to have their money work for them and are looking for ways to do this. If possible, they would like to retire early and enjoy the benefits of life, and they believe that the stock market is a vehicle through which they can do this.

History of the stock market

While it is debatable when the exact date of the first stock market was open, early attempts at markets trading securities come as early as the 12th century where French debt collectors would trade debts between themselves that they collected for the banks. This had become more formal in 13th Century Venice where Venetian merchants would trade government securities amongst each other. It started in Venice, but eventually the city-states of Florence, Genoa, and Milan would join in.

The first forms of a stock market come again in the countries of Belgium and the Netherlands in the 15th and 16th century. Although they resemble the stock market of today, they did not actually trade stocks. It was more of a record keeping of different types of government and other companies that were recorded at the timje.

The first recorded stock was famously known as the East India Company. Back in the age of trading and exploration it was difficult to invest in the ships because it would be possible for the cargo to be lost to crashing ships or pirates. However, when an investor bought shares in the East India Company, they could buy a share of a few ships instead of a single ship so that if a ship was lost, the investor would still make a profit off of the journey. Once the system was brought to the Netherlands in 1602, it was put on the Amsterdam stock exchange under the name Dutch East India Company.

Stock markets were mostly unregulated and risky until the New York Stock Exchange was created in 1817. To this day, the NY Stock Exchange is open and people are trading every weekday.

Reasons why people do not invest in the stock market

As interesting as the stock markets are to a lot of people, there are many risks that keep many investors away. A lot of people don’t like how many moving parts there are, in other words there is a lot of studying to do considering there are over 10,000 companies on the New York stock exchange alone. This can be overwhelming to a lot of people. Also, the stock exchange can be considered an active investment. Most people who want to invest their money are looking for passive investments that grow over time. Keeping this in mind, many people would rather have a safer investment vehicle that pays less over time than to risk their portfolio in stocks that can grow quickly.

In essence, those who are looking for a passive investment or for less risk and aren’t trying to be hands on would not be interested in the stock market.

Advise vs. Personal research

Of course, when one decides to invest in the stock market they will question where to obtain their information. Some people will try to read all the books that they can get from their library or the stores about the stock market, while others will not mind paying a certain fee to obtain stock information researched by professionals.
This certain factor will depend on how much time you have to do research on, how well you do research, and how much money you have to pay for professional advice. You should take an inventory of how much free time and free income you have so that you can make the best decision on how to buy the stocks you want.

What does the future hold for the stock market?

Technology will continue to make the markets more accessible to normal people of lower incomes as well as in developing nations. Smartphone apps will become more ubiquitous, particularly for investors in developing economies who don’t have much money and their primary means of internet communication is through their phones. Of course, one of the more promising industries is blockchain. From the blockchain concept all kinds of new securities and market systems can be built. There are already several markets that deal in trading cryptocurrencies such as Bitcoin and Ripple. With Ethereum, companies can create smart contracts that work similar to stocks and possibly trade them. The future is really only limited to the imaginations of those who move money. We must continue to stay vigilant for new opportunities.


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Why Invest In The Stock Market?

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