Why do people invest in the stock market?

Why do people invest in the stock market?

Most people put their savings in the bank. A lot of people want their money to grow more than what is possible by keeping it in the bank. That is why they choose to invest their money. Some of the options are to buy land, buildings, stocks, bonds or gold. Over the last 50 years, the one that has grown the most is the stock market.

Different Investment Options

While no one knows what will happen in the future. But when you compare the different types of investments, you can see which ones have grown the most in the past. Here is a chart that compares how much each investment type has grown between 1988 to 2018.

From this chart, you see that the stock market has grown the most. While gold has grown the least.

Here is another way to look at it. In this chart, you can see the growth of $100 from 1972 to 2018.

Would you choose to have $401 or $1,612?

That is a big difference considering both started as $100. 

Summary

Let’s pretend that your money starts out as a seed. If you plant that seed today it will have more time to grow into a strong and healthy tree.

If you keep your money in a savings account, it is like keeping your seeds in a cookie jar. They will be safe, but how can they grow?

When you invest your money, you are allowing your money to grow. That is because it is the same as planting your seeds in the ground.

That is why people invest in the stock market. Over the last 50 years it has proven to be the best way to grow your savings. Understanding how to invest is so important because it determines how much your money is worth when you retire.