Why Buy Stocks?

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Reina Ng Ipot

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Have you thought of why people buy stocks? Owning stock in a company means that you have stock in that company. You have an investment, however little, in the success and failure of that company and for this reason you have a little bit of ownership in the company as well.

People buy stocks for many different reasons. There are people who hope to accumulate a large amount of stock within a company so that they may wield some level of power within that company. This is not always the case though in most companies those that own large quantities of stock do have a bit of a voice when it comes to the decisions being made concerning the future of the company (companies are responsible to those that hold shares of stock after all).

There are others who want to own a little piece of a company that produces a product they believe in. Example for a chocolate lover chocolate, it makes perfect sense to invest money in Hershey stocks. It's a product that the person believes has a solid future, an excellent product, and real potential for new products, and an eye on emerging markets. These are things that should be looked at before buying stock. At the same time, Hershey stocks are very established and any earnings on a few stocks are going to be minimal. At the same time, this is a very stable stock that is likely to bring in some money year after year. Not a sprint stock to be sure but an endurance stock that one can get a kick out of including in their portfolio. In other words, some people buy stock simply because they like the product.

Day traders buy and sell stocks like some in anticipation of making money and nothing more (well for the most part, some do it for the rush and the thrill of the hunt for those elusive stock market moments of triumph). Of course most people buy stocks in hopes of ample returns on their investments, some just expect more immediate returns than others. Day trading is a drive through type of investing compared to the long lines that people stand in inside waiting for the long term payoffs that retirements are funded upon.

You will find as many reasons for investing, as you will find reasons to purchase stock. The questions you should be finding out for yourself is why people buy certain stocks and that is the question that is going to be individual to each person for each stock they purchase. There are no magic formulas for success though there are many things you can do to lessen the risks of failure when investing in stocks in bonds.

If you are planning to buy stocks, your first stop should be the library. There are many books on the history of stocks, financial planning, and that offer excellent advice on building a portfolio. Once you have a few questions in mind you should take your savings and your questions to a reputable stock broker and create a strategy that is tailored to meet your investing needs.