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  Friday November 24, 2017

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WHAT ARE SOME ADVANTAGES OF OWNING COMMON STOCK?
Learn even more about this topic with the Encyclopedia of Personal Finance™

The biggest reason people invest in common stock is their personal financial bottom line. Over time, nothing has so reliably appreciated in value as common stock. Despite downturns, recessions, and even a few serious crashes, the stock market has continued to climb since the New York Stock Exchange opened its doors in 1792. While you may not get rich as quickly and painlessly as discovering oil in your backyard, the stock market has continued to provide an overall annualized growth rate over 10 percent over time?with some stocks performing even better.

In addition, we've noted a few other advantages earlier in this tutorial:

? Voting rights in company elections

? Ability to participate in company earnings through dividends

But that's not all. Another big advantage of owning common stocks is their ability to provide a hedge against inflation?unlike bonds and certain other investments that can lock you into low interest rates. The prices of stocks tend to move up right along with the rest of the economy.

Finally, owning common stock can have certain tax advantages. For instance, a capital loss can be used to offset capital gains. You may want to check with your tax professional for details

Naturally, there also are a few disadvantages to owning common stock. We will cover those next.




LEARN EVEN MORE WITH THE ENCYCLOPEDIA OF PERSONAL FINANCE. CLICK HERE!

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