Why Millenials should invest in the stock market

The history we teach; but not the part about the great march of capitalism and the role that companies have played in changing the way we live. The Maths we teach but not the part about how simple arithmetic can be used to tell the story of a company and help us figure out whether it will succeed or fail in what it is trying to do and whether might profit from owning shares of its stock.

We are being taught how to cook, even how to stick to a budget and balance a checkbook. What’s often left out is how saving money from an early age is the key to future prosperity, how investing that money in stocks is the best move a person can make. We are being taught patriotism but we talk more about politics and government than we do about the millions of businesses, large and small that are the key to our prosperity and our strength as a nation.

One of the hurdles many millennials face is the general lack of knowledge on investing. Investing in a broader sense will probably be about spending time or money to improve his or her own life or the lives of others. In the field of finance, investing is the purchasing of securities, real estate, and other items of value in the pursuit of capital gains or income. One of the ways millennials can invest their money or risky capital will be to invest in the stock market. Millennials have the idea that the stock market is for the rich and affluent people. The thought of this makes the idea of investing in the stock market a scary one.

The stock market can be referred to as the market where regular activities of buying, selling and issuance shares of publicly held companies take place. The stock market provides a secure and regulated environment where market participants can transact in shares and other eligible financial instruments with confidence with zero–to–low operational risk. The stock exchange shoulder the responsibility of ensuring price transparency, liquidity, price disclosure, and fair dealings in such trading activities.

Owning a stock implies that the shareholders own a slice of the company which is equal to the number of shares held as a proportion of the company’s total outstanding shares. Entrepreneurs and companies issue shares to raise capital. In order for their ideas to germinate into an operating company.

These entrepreneurs need to lease offices, hire employees, and buy equipment and raw materials. These resources require significant amounts of capital which basically depends on the scale and scope of the startup.

Inflation is another reason for millennials to start investing in the stock market. Purchasing power decreases over the years, meaning that the price of bread which is 2 cedis today could cost 4 cedis in the years after. Keeping up with inflation is good, however, investing in the stock market is a better way to move ahead of inflation. When inflation kicks in and increases the cost of goods the companies that manufactures these goods see an increase in their value which is great for investors.

The spikes witnessed through the growths in the physical and financial assets of the companies involved transcends into growths in the market value of their shares. Higher growths may be seen in increments in EPS, P/E ratios and a further increase in the enterprise values on the listed companies.

Millennials may have a savings account with a bank, however, it’s more financially prudent to diversify their investments. Not investing in stocks, millennials are giving themselves fewer financial legs to stand on. The lack of fair wage or salary can leave millennials missing out on an income they’ve rightfully earned, While investing in the stock market may not be about to make up for stagnant wages entirely, it can make life a bit easier after on. Listed securities often pay out dividends or interest which provides a cushion for investors.

You will learn how to manage risk, how to diversify your assets, and how to spend your time to keep your finances intact. We might feel we are being safe by staying out of the stock market, but you may actually be taking more risk by falling behind inflation. Listed companies are bound by strict regulations as well as stricter code of governance principles that they must abide by always, violation of which will lead to the imposition of penalties or surcharges on the Board of directors or key management staff.

This level of security is dormant from unlisted companies. Of the dissolved commercial banks during the banking sector clean-up exercise by the Bank of Ghana, only one was a listed company. This shows the level of integrity Listed companies have and portray in their activities. More so, there is a high level of transparency associated with listed companies. This is witnessed in the timely and continuous disclosure of price-sensitive information such as annual and quarterly financial results, disclosure about changes in the Board of directors, opening or closing down key operational wings of the company, etc.

The world’s greatest investor, Warren Buffet, is known to have compounded returns around 22% for the last five decades. ‘Compound interest is the 8^th wonder of the world. He who understands it, earns it, He who doesn’t –pays it. Albert Einstein. Investing in the stock market gives you the advantages of compound interest, which grows your wealth exponentially. Peter Lync, a renowned fund manager ‘Investing in stocks is for everyone” You don’t need to be a rocket scientist to invest in the stock market. Investing in the stock market makes money works for you. Lack of money is the cause of the most problems and investing is the solution to this problem.

The principles of finance are simple and easily grasped. Principle number one is that savings equal investment. Money that you keep in a piggy bank or a cookie jar doesn’t count as an investment, but any time you put money in the bank, or buy a savings bond, or buy stock in a company, you’re investing. Somebody else will take that money and use it to build new stores, new houses, or new factories, which creates jobs.

More jobs mean more paychecks for more workers. If those workers can manage to set aside some of their earnings to save and invest, the whole process begins all over again. It’s the same story for every family, every company, and every country. Whether it’s Belgium or Botswana, China or Chile, Mozambique or Mexico, General Motors or General Electric, Unilever or MTN, your family or mine, those who save and invest for the future will be more prosperous in the future than those who run out and spend all the money they get their hands on.

Many people wait until they are in their thirties, forties, and fifties to start saving money. It dawns on them that they’re not getting any younger, and soon enough they’ll need extra cash for retirement so they can afford a cabin on the lake or a trip around the world. The trouble is, by the time they realize they ought to be investing, they’ve lost valuable years when stocks could have been working in their favor. Their money could have been piling up. Instead, they spend what they have as if there’s no tomorrow.

Many of their expenses are unavoidable. They’ve got children to support, doctor bills, tuition bills, insurance bills, home repair bills, you name it. If there’s nothing left over, there’s not much they can do about it. But often enough, there is something left over, and still, they don’t invest it. They use it to pay the tab at fancy restaurants or to make the down payment on the most expensive car in the showroom.

Before they know it, they’re heading off into the sunset with nothing but a social security check in their pockets. They have to squeeze themselves into a tight budget at the very time they’re supposed to be enjoying life because you can’t live it up on social security. It’s hard enough just to survive on social security.

Invest now Millennials!