Friday, 21 August 2015



Basically because they tend to make more money than simply putting your money in the bank.


Well picked shares should increase in value and pay out dividends generally speaking it shouldn't be too hard to find shares that yeild over 5% per annum and hold their value. Where at the time of writing this most bank accounts will struggle to yeild over 2%

Shares can increase or decrease in value as well so if you pick your stocks well, you can pull in your dividend and gain an increase in the value of your stock holdings as well.

So lets say you buy $10000 worth of shares in a company you might get a 5% dividend and the stock might also increase in value by 5% (not uncommon in shares) so if you sold your holdings  you could have made 10% in one year versus 2% by holding your money in the bank


Shares can also decrease in value. You need to be aware of this.

Companies (just like any business) can have good and bad years or in some cases go broke. Shares are also subject to market sentiment, Which means that a company can be going well but fear, or panic in the market can artificially push the value of that company down. For example in a market crash or even the GFC which happened a few years back.

Either way with trading, time is your friend. If you buy in gradually (don't use money you need in the short term) most well thought out investments will pay out for you in the long term even if you suffer a short term drop. Generally speaking if you buy in a reasonable time (not at a market peak) and can hold out for a while the markets tend to go upwards.

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