The benefits of investing in stocks

A stock, also known as a share or equity, represents a unit of ownership in a company. When a company wants to raise money, it can issue stocks and sell them to the public. When you buy a stock, you become part-owner of the company, and you have the potential to make money if the company does well.

For example, if the company makes a profit, it may choose to distribute some of that profit to its shareholders in the form of dividends. Additionally, if the company becomes more valuable over time and its stock price increases, the stock you own would also be worth more and you could sell it for a higher price than you paid for it.

Generally, investing in good stocks can offer benefits such as:

• Higher returns compared to those of other investments such as bonds or savings accounts.  

• Investing in the stock market allows you to diversify your investment portfolio across different companies, industries and markets, which can help to spread your risk and potentially manage your losses.

• Liquidity as most stocks can be bought and sold easily and quickly in response to market conditions or your own investment goals.  Nowadays, trading stocks can be easily done on brokerage websites and mobile applications.

Reasons why investors stay away from the stock markets:

• The stock market is inherently risky, and the value of your investments can fluctuate rapidly in response to market conditions and news events.  Investing in the stock market carries a risk of losing all or a portion of the invested money.

• The stock market can be highly volatile, and prices can fluctuate rapidly in response to market conditions or news events. This can be stressful for some investors and may lead them to avoid the stock market.

So how can investors identify “the good stocks to invest in?”  The simplest answer is to research and understand the companies whose stocks you are considering investing in.  This includes understanding the company's financials, management, industry, competition, etc.  A good starting point would be to read the annual report, financial statements and any relevant news or press releases.  Such information should be easily accessible from the company’s website or another good resource would be the Stock Exchange of Thailand’s website.

Remember, like any other type of investments, investing in stock does not guarantee returns.  Before you make any investments, it is important to understand your cash position, your investment horizon, and risk tolerance for each investment type.  If you are unsure, seek consultation from a financial advisor to better understand your financial situation and investment goals.