Sometimes people ask why even buy stocks or other investments, and to me investing for incomes is the only logical answer.
Not the only one of course. Not everybody does things for reasons I consider logical, or a lot other things would be different about this world -- investing would be only a small change.
Exactly How Do Investments Make You Money?
The most obvious answer is to "make money," but of course that's too vague to be practical.
When your money is in a checking account, it's available to you on demand, whenever you write a check, pay for something with your debit card or get cash from an ATM machine. Therefore, it's not investing. All you should keep there is the money you need for your monthly bills and daily cash.
You Can Earn Interest
When you're willing to put a little restriction on the use of your money, you expect something in exchange, or you should. When you lend your money, what you get in return is called interest. It's known as the time value of money, because you're giving up the use of your money for a certain length of time, and that's why banks and other financial institutions are willing to pay you interest.
When you give up your money in the short term, you get a low rate of interest in return, and that's considered a low risk loan.
Stocks Let You Be a Partner of the Fortune 500 Companies
With stocks, you're also giving up use of your money, but they're a lot different because you're not loaning out your money, which implies you'll be paid back -- you're buying a share of ownership in the company.
Some people do this in the hope that they'll be able to sell the stock later on for a higher price than they paid. This is called investing for capital gains.
You Can Also Win Money In a Casino -- Sometimes
Can it work? Sure, although not as much as people believe. Many people are happy when they sell their stock for a profit, not realizing (and not trying to find out), that they would have made even more money had they invested in another company's stock, or in the market as a whole.
And there can be long periods when it's very difficult to sell for a profit.
I personally advocate investing for incomes -- that's buying up bonds, stocks and other financial securities that pay out income.
Bonds are loans that pay out interest until they mature, when you get your money back. The interest that bonds pay is fixed for the life of the bond.
Some stocks -- not all, but enough -- reward their owners by paying out dividends every quarter.
Good Companies Grow Their Dividends Over the Years
Most of these dividends seem low at first, but they grow over time so long as the company succeeds. Because stock dividends on the whole grow enough to match or exceed inflation, this is one good way for investors to grow their purchasing power even when inflation makes prices go higher.
In short, the best reason to invest is investing for incomes -- small streams of checks that grow over time, especially when you reinvest them instead of spending them.
Author Information: You can amass a retirement portfolio of income producing securities. Click here to get the information you need to effectively make money from your investments whether the markets go up or down. If you're ready to discover how investing for incomes can help you retire with financial security, visit this page, enter your email address into the form and click on the Submit Button. Then go to your inbox and verify that. It's free for the taking. http://www.incomeinvesthome.com/.
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