Saving and investing are both important, but they’re not the same thing. While both can help one achieve a more comfortable financial future, one needs to know the differences and when it’s best to save and when it’s best to invest. The biggest difference between saving and investing is the risk versus the reward.
Saving typically allows one to earn a lower return but with virtually no risk. In contrast, investing allows one to earn a higher return, but taking on the risk of loss in order to do so.
Putting money in a capital market can seem intimidating at first, especially to new and risk averse investors. After all, the market can be unpredictable. Investors can step out of their comfort zones to realise significant gains by investing in the capital market. Warren Buffet is one of the richest men in the whole world with an astounding fortune of over $70 billion. He achieved all this because he is a shrewd investor in stock markets. His is one story of many. Most of the world's richest people are wise and knowledgeable investors who play in the capital market. This is the ultimate undeniable proof that there is opportunity in the capital markets. All waiting to be claimed.
Capital markets should be a priority place for savings. While market performance is often volatile in the short term, investing on the capital markets in the long term however, generates higher returns than keeping one’s savings under the mattress.
Stock markets are huge auction houses. Every day, investors are buying and selling their shares. This makes securities a liquid investment. When investors want to exit an investment, it is quick and easy to find a buyer. Other assets are much more difficult to sell. If you invested in an investment property, it could take time to find a buyer and get your money out. With securities, investors can find a buyer the very day. C-TRADE comes handy for investors who wish to exit as they are given the option of exiting whenever they want to.
Given that the price of securities fluctuates depending on the performance of the companies as well as other developments in the economy there is a real opportunity for investors to make a profit in the sale of securities in the secondary market. C-TRADE further enables investors to keep in touch with their investments remotely so they can make quick decisions in certain market conditions which needs to be acted on urgently. The general principle is very simple; one should buy a security when the price is low and sell the security when the price is high.
Investors can benefit from income in the form of a dividend. While not all securities offer dividends, those that do deliver annual payments to investors. These payments arrive even if the stock has lost value and represent income on top of any profits that come from eventually selling the stock. Investors can hold on to their shares whilst benefiting from dividends.
Buying shares means taking on an ownership stake in the company an investor purchases equity in. This means that investing on the capital market also brings benefits that are part of being one of a business owners. Shareholders vote on corporate board members and certain business decisions. They also receive annual reports to learn more about the company.
Investors further benefit from protection through the obligation of listed companies to disclose information related to their everyday business. Price sensitive information is available to the public.
Shareholders, through the transparent listing and trading rules, are in a position to be updated regularly and on a daily basis on the events taking place at the company. Based on real-time demand and supply of securities, they are able to make decisions for investments in that type of security.
In conclusion dear reader, reflect on this truth; the maverick billionaires of the world are investors in capital markets. Whether they are high risk takers such as George Soros or the conservative type like Warren Buffet, the one thing they have in common is their appetite for investing in the securities market.
When will you start trading? C-TRADE is at your fingertips. To find out more on investing in shares visit ctrade.co.zw