Key Benefits of Investing In Stocks

KEY BENEFITS OF INVESTING

Introduction

Stocks can be a valuable part of your investment portfolio. Owning stocks in different companies can help you build your savings, protect your money from inflation and taxes, and maximize income from your investments. It's important to know that there are risks when investing in the stock market. Like any investment, it helps to understand the risk/return relationship and your own tolerance for risk.

Benefits of investing in stocks

Build

Historically, long-term equity returns have been better than returns from cash or fixed-income investments such as bonds. However, stock prices tend to rise and fall over time. Investors may want to consider a long-term perspective for their equity portfolio because these stock-market fluctuations do tend to smooth out over longer periods of time.

Protect

Taxes and inflation can impact your wealth. Equity investments can give investors better tax treatment over the long term, which can help slow or prevent the negative effects of both taxes and inflation.

Maximize

Some companies pay shareholders dividends or special distributions. These payments can provide you with regular investment income and enhance your return, while the favourable tax treatment for Canadian equities can leave more money in your pocket.

Different Stocks, Different Benefits

Common Shares

Capital growth

The price of a stock will go up or down over time. When it goes up, shareholders can choose to sell their shares at a profit.

Dividend income

Many companies pay dividends to their shareholders, which can be a source of tax-efficient income for investors.

Voting privileges

The ability to vote means shareholders have some measure of control over who runs the company and how.

Different Stocks, Different Benefits

Reliable income stream

It come with a fixed dividend amount that must be paid before any dividends are paid to common shareholders

Preferred Shares

Compared to common shares, preferred shares tend to pay higher dividends.

Higher income Variety

There are many types of preferred shares, each with different features.