Why Do People Buy Stocks?

Why do people buy stocks? Is it because buying stocks is thought of as a great way to quickly earn a lot of money? There used to be a time when only the wealthy could indulge in buying stocks, but these days there are opportunities for people with only meager earnings to buy and sell stocks. The foremost reason for the purchase of stocks is, of course, to earn money by investment. There are several ways that this can be done, depending on the kind of stock that you would like to purchase.

Those who do not mind waiting, because they have faith in the strength of a company, prefer to buy blue-chip stocks. These stocks are from established corporations that are usually good, solid earners. This means that if you invest your money in buying stocks from these companies, your money is relatively safe. People who already have an investment portfolio usually have some of these.

Sometimes people buy penny stocks because they want to invest in stocks but do not have a lot of disposable income. Penny stocks are also known as penny shares or small capital stocks. Unlike blue chip stocks, you do not have the same level of safety when it comes to earning money. Why do people buy stocks like penny stocks? If you’re the type of person who likes to take risks, investing in penny stocks will certainly be more exciting because you will not really be sure when or if your penny stocks will give good returns on your investment. A downside of this kind of stock is that it is easy to be “fobbed off” by scammers, especially in this day and age when transactions can be completed over the internet.

As people often say, if something seems too good to be true, then it probably is! Scammers will promise to give you a large dividend on your penny stocks, but they might just be waiting for the stocks to rise really high then they dump them and leave you with nothing.

Another reason why people buy stocks is to support a company they like. It is funny to think of investing for sentimental reasons, but if you’re the type of person who likes a product or a company and you wish to help ensure that it stays successful within the market, then this reason for stock investment describes you. Some people also want the power to help in making company decisions and this will happen when you become a shareholder. Shareholders can attend meetings that help the company they invest in make decisions that affect its income. Some people like having that kind of power and that is the only reason they need when you ask them “why do people buy stocks?”

Posted at December 12th, 2011.

One Response to “Why Do People Buy Stocks?”

  1. Genus says:

    I believe people buy stocks for wealth creation and bartering purposes.

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