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Reasons:
There are many reasons to invest your money in stocks, such as in any ten year period in history, the growth of the stock market has increased.  Remember when your personal finance teacher told you that 'uninvested money is wasted money?"  Any time you invest,. You are putting something of yours into something else in order to achieve something greater.

All in all, whenever you are saving for something, whether it is your retirement, you children's college tuition, or evenjust a new stereo system, conservatively investing in stocks will increase your wealth over time.  Thus, you want to invest in order to create wealth, and investing in the stock market will give you more money for your retirement so you can plan that trip to Europe with your significant other.  You invest because whatever it is you invest in, you assume its value will appreciate over time.

Over the long haul, the stock market outperforms money-market funds and long term bonds and, not to mention, a regular savings account.  It is true that investing in stocks is risky, never be fooled into thinking otherwise.  But as Peter Lynch said, "It isn't like playing a seven card stud poker hand, it's like playing a 70 card stud poker hand."  Thus, if it is done properly, risk can be reduced with some education and proper implementation.


Compounding Effect of Buy and Hold Strategies:
When investment returns begin to earn returns as well, small amounts of money can mushroom very quickly.  If you extend the period of time or raise the rate of return, results increase geometrically.

The table below shows how a single investment of $100 will grow at various rates of return:

As you can see, the longer investments are held and reinvested, the greater the rate of return.  You can also see the difference between interest rates accrued from a money market account (5%) and a conservative investment in the stock market (10%).


Dollar Cost Averaging:
Using this technique in combination with compounding will leave you ahead of the game when saving for your future.

As the Beardstown Ladies put it, "buying stocks when the market picks up, and avoiding the market when it turns downward, is like buying underwear at Marshall Field's when you can get the same brand at Wal-Mart.  There's a good chance that you'll be paying more than you need to."

Dollar cost averaging is a stock purchasing technique that requires making regular purchases of a particular stock or set of stocks with a set sum regardless of the market's level.  When stock prices dip, you will receive more shares for your money.  When they go up, you will receive fewer shares of stock.  After an extended period of time, you will find that your average price per share is lower.

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