People invest in the stock market for 4 main reasons. it’s not for everyone, but here’s why millions do it:
- Beat inflation
Cash sitting in savings account loses value. inflation in Sri Lanka averaged ~6-15% in recent years.
If your money grows less than inflation, you are actually getting poorer.
The CSE all share index has returned ~12% annually over the long run, and the US S&P 500 ~ 10% over the last 100 years. that outplace inflation.
2.Componding = money makes money
You earn returns on your returns.
Example: 5000LKR/month at 10% annual return becomes ~ 1.1 million LKR in 10 years, and ~ 3.8 million in 20 years. you only put in 1.2M yourself. the rest is growth
3. Own real businesses
Buying stocks = owning part of companyies. when they ptofit and expand, you profit too. you are not trading paper – you are buying productive assets that generate value.
4. Build long – term wealth
Real estate needs huge capital. business need time + skill. stocks let you start with 1000LKR. over decades, it’s one of the most accessible ways to build wealth for retirment, kid’s education, or financial freedom.
- But the trade – off: Price drop too. short term it’s risky and volatile. you can lose money, especially if you panic sell or pick bad companies.
