Three reasons why you should start investing in shares

Julie Brownlee, Fsp Invest, 10 Sep. 2015

Tags: investing in shares, reasons to invest in shares, investing, reasons to invest, benefits of investing,

Have you considered investing in shares, but haven’t plucked up the courage to do it yet?

Investing in shares in a great way to grow your wealth over the long-term.

If you need more convincing, read on to uncover why you should start now…

#1: Investing in shares can boost your wealth

The primary reason behind most people investing in shares is for capital growth. In other words, you buy shares with the hope of selling them in the future at a higher price, making a capital gain.

There are two key factors that push a share price higher:

  • A company grows its revenues over the years; and
  • A company increases its earnings over the years.

If you invest in a company that manages to do this, you should see its share price rising

Over the long-term, stock markets have risen in value.

#2: Your risks are limited investing in shares

When you invest in shares, you know right from the start what your maximum risk is. The worse that can happen is you lose your initial investment. You can’t lose any more than that.

It’s unlikely you’ll lose all of your investment capital, but you could see the value of the shares you buy drop.

You only realise a profit or loss from investing in shares when you sell them. Until then you’ve either made a nominal gain or loss.

#3: Investing in shares can pay you an income

Depending on the shares you buy, some of the companies may pay you dividends.

Dividends are your share of a company’s profits which you normally receive twice a year. Dividends add to the overall return you make from investing in shares.

A company paying dividends is a sign of a healthy company, especially if the company increases these dividend payments over the years.

So there you have it. Three reasons why you should start investing in shares.

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