Diversification

• If all of your money is sitting in a bank account, it will do you good to spread some of your assets around in different types of investments, including stocks. Additionally, inflation is a reality in our economy and if you do not make some investments in equities or instruments outside of your mattress or savings account, you may end up with a zero or negative return over a course of several years.
  
  

Forced Savings

• When you buy stocks, you are essentially forcing yourself to save the excess cash in your pocket rather than hand it over to the clutches of consumerism. Granted, stocks can go down, but they can also go up or even stay the same. Although it may seem like you are spending money when you buy shares of stock, you are really just transferring your cash to another asset class. Additionally, you can always sell shares if you are desperate for cash and in some cases, you can even borrow against the stock.
  
  

Receive Dividends

• While not all stocks pay dividends, there are many that do and it is easy to identify which stocks pay dividends and which ones do not. You can even look back at historical data to see which stocks have a pattern of raising their dividend every year. If you have funds earning interest in a savings account at less than 1 percent interest, you can find several stocks which pay dividend yields of 2 percent, 3 percent or even 5 percent or higher. That means, you can start earning more in guaranteed payments for each dollar you have invested versus each dollar in your account.
  
  

Upside Potential

• Historically, stocks have significantly outperformed dollars invested in savings accounts. If you invested $1 in 1950, it would be worth nearly eight times as much versus the dollar when adjusted for inflation. Certainly, stocks can go down and in some years they do, but for chances at higher return on your investment and capital appreciation, stocks are the way to go over the long-term. Note that historical performance is not an indicator of future results.