So, Why Buy Stocks? For Today As Well As Tomorrow

By | October 15, 2013

Why buy stocks? This is an important question. One that I often hear and when you start trading you will hear as well. There are two main reasons. One, to make money. The other, is for the priceless knowledge that you tend to pick up automatically just from trading.

To Make Money, Of Course

moneyWhy buy stocks? Why of course to make money. Right. Yes, this is true. But there are many ways to make money. And if its only about the money for you, you may want to work with a full service broker. This may not be the important important reason, but without this factor, there would be no stock market.

Yes, you buy stocks to make money. You can make money in a down or an up market. When you buy a stock hoping it will go up, its called buying long. When you want a stock hoping it’ll go down, its called selling short.

You can also make money with stock options. All stock options are connected to a stock. When you buy an option, there is someone else on the other side selling it. This is not like a public company, when you buy stock outright. This is another investor involved. Anyone can sell an option. But, usually the person selling has to have the money already in the brokerage account, just in case the deal goes sour for him.

Before you tackle the selling of options, you should have some experience with buying options, as you can lose a lot of money this way. When you are betting on a stock option going up its called a "call" and when you bet on it going down, its called a "put".

Learn Today, Profit Tomorrow

Another answer to "why buy stocks?" is for the experience and education. For me, and for most other investors, its not all about the money that your making today. One of the reasons I’m trading today it for the priceless knowledge that I will receive. When I’m older and am playing with more money, I will still use most of the same things I know now to make larger profits.

The only difference will be that I will be trading larger sums of money. So its good to get started even if you only have a few hundred to work with.

Find Out What Makes A Business Really Tick

You also tend to catch onto the inner-workings of a business. You begin to understand how a balance sheet works and how money must be divided in order for a business to be successful. Also, when its good to go into debt and just how much debt is too much.

This is valuable knowledge that is important to learn. You may want to use this information some day in your own business. Also, of course the more familiar you get with this information, the easier it will be for you to spot a good, solid company.

Now Your Armed With The Answer

So, the next time someone asks you "why buy stocks?", you can let them know your reason. I am passionate about stock investing. The stock market is real. You can dig deep into a company to see what you are getting yourself into. You can watch the news and find new investment ideas. The stock market is connected to most everything around us. That’s my reason.