Ten Reasons You Should Love Stock-Market investing
In my last two articles I discussed the first six reasons why you should love stock-market investing. Let me continue with the last four.
7.) Investing in the stock market the proper way is more stress-free
When you hear the phrase “stock-market investing” what comes to your mind? Well, for most people, they picture geeky people staring on computer screens like zombies all day.
So why do I say that investing in the stock market the proper way is more stress-free? The majority of us think that the stock market is stressful because of its volatility. But that’s only true if you are a day trader. However, in the long term, the stock market is quite simple.
I am not saying that you don’t have to work hard to succeed in stock-market investing. You might have to do some heavy reading on annual reports, books, business news and other stuff that might update you about the companies you are buying. You may have to work hard, but you will enjoy it and it isn’t as stressful as you imagined. This, of course, will only happen if you do stock market investing the proper way.
You think that Warren Buffett, who is the world’s greatest investor, would have a very hectic schedule and a very stressful life? Well, he once said: “I really like my life. I’ve arranged my life so that I can do what I want.”
8.) Investing in the stock market makes you sharper mentally
Since news makes sense to you, you become more alert of the events that are happening in the world that you live in. Your mental processes start to work and you will learn to tap into your brainpower more than the average human being. You start to pick up isolated facts that you picked up along the way as you progressed in your life. These are the stuff you learn in school, the book you read, the speeches you have listened to, and your experiences. As you read and apply what you have learned, you start to put them into a certain form, a usable mental model that will guide you in every investment decision that you make.
Charlie Munger, vice president of Berkshire Hathway, Warren Buffett’s partner and best friend, describes this as a “Latticework of mental models.” He once said, “. . .You’ve got to have models in your head. And you’ve got to array your experience—both vicarious and direct—on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head . . . And the models have to come from multiple disciplines . . .”
When you invest in the stock market the proper way, you spend more time learning more not only about stock market investing but also about business, management, economics, finance, accounting, law and even philosophy and the sciences. This will help you build your mental models and sharpen your thinking.
9.) Investing in the stock market forces you to set aside money to invest more
Some people complain that they can’t force themselves to save because once they get their salaries, they are tempted to spend it. My advice is, why not try investing your money in the stock market. It helps you set aside money to invest more.
When you approach stock-market investing from a business perspective, you become excited when your stake in a great company grows. As you read more about the company you become excited about its potentials. You want to buy more of this great company so you set aside more money from your income in order that you could buy more stocks at the right price.
10.) Investing in the stock market helps build the nation
Of all the reasons given, this is probably the noblest one. Take note that the main reason companies want to get listed on the stock exchange is to infuse capital into their business. This way, they could further expand the business. More capital translates to more business, which, in turn, translates to more jobs. More jobs and more business mean more taxes for the government. So when you invest money in the stock market you are actually helping increase economic activity, eventually contributing to nation-building.
Zigfred Diaz is a registered financial planner of RFP Philippines. To learn more about stock selection and investing, attend the 10th Accredited Financial Analyst (AFA) program this January 2017. To inquire, e-mail firstname.lastname@example.org or text <name><e-mail> <AFP> at 0917-9689774.
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