Stock Market helps our Economy

The stock market is a place where investors and business come together to benefit both parties. It is a necessary part of the economy.

There are two reasons why the stock market plays such a big role in our economy.

1.       It helps business grow. The first way the stock market helps us is by helping business.  A business needs money to grow, and lots of it.  To raise money a business can issue stock or a piece of itself to investors.  They can then use this money it receives to grow or pay for its debt.

2.       It can help individuals save for retirement.  In addition to helping out big business the stock market also allows the little guy save for retirement by earning an income and grow their own money. When you buy a share or a piece of a business you can share in the growth of that business in two ways.

You earn money as the company makes money.  When a company makes money they can choose to give that money to their shareholders in the form of dividends.  So for each share of stock you buy you get a small amount from your stock through dividends.

Not all stocks offer dividends, however.  Some stocks only allow you to profit from the appreciation of the stock.   This is the second way the little guy can profit from the stocks they own.

As a business grows then the shares of its stock will also increase in price.  So if you invest in the shares of a company and the company’s stock appreciated you make money on the appreciated stock.

Everyone should invest or trade in the stock market because it offers you the best way to save for retirement.  Without this market it would be much harder for people to fight against inflation.

To learn about the history of the stock market visit http://www.stocks-simplified.com/History_of_The_Stock_Market.html

To learn about how the stock market works visit http://www.stocks-simplified.com/How_the_Stock_Market_Works.html