It definately seems like everyone wants to buy a stock in order to sell it. It is the common view. Buy low and sell high. However one of the big stock tips big investors will tell you is to buy a stock to own it. Do not buy anything that you would not be willing to own for the long term.
There are a ton of advantages to this strategy.
1. Investment Keeps Growing
If you buy a stock for $70 and sell it for $80 you made money. But once you have turned it into cash it has stopped growing. If you spend that money it has vanished and is just as good as if you lost it. On the other hand if you keep your money invested then it will keep appreciating.
As the stock increases in value so does the stock that you own. Over the long term this can be a very powerful strategy, especially if you own stock in high quality companies.
2. Dividends
One other advantage is that some of these companies have dividend stocks. These are stocks that pay you a nice consistent income. As the company and the stock grows so to does the dividend. That means that over the long term you are also building some passive income by investing into stocks for a long time period.
3. You Buy Something Solid
If you want to trade the markets in the short term there isn’t a guarentee that you will make money. Actually only 10% of people who approach the world of stock market trading actually make money in it. When you look at the other end of this, by buying a company that has solid fundamentals then you are investing into something that is solid.
If the company really is strong then it will increase in value over the long term. It makes sense, companies that are fundamentally stronger then the average stock will outperform the market. Every business will have its ups and downs, but if a company is ran right it will see a lot more up days then down days. Why shouldn’t you invest into something like that and then be confident that your money is backed by something with real potential?
