An investment portfolio should be diversified to make it less volatile to inflation. Stocks are a perfect addition to an investment portfolio. What happens when you buy a stock? If you buy stocks in different companies, you are literally building your savings. More so, it gives you added protection from taxes and inflation. If you purchase the right stocks and manage your investment wisely, you can maximize your income from your investment alone. However, one thing to keep in mind when investing is that it always comes with risks. So when you plan on investing in stock, you have to make sure you understand how it works and the risk and return aspects. That way, you can gauge your tolerance for risk.

There are tons of benefits to investing in stocks, but we will tackle the obvious in this article.

• It builds your investment portfolio – 

If you are looking for ways to build a solid investment portfolio, the answer would be investing in stocks. It leads to a better return on investment when compared to bonds. What you do need to know is that stocks are highly volatile. They can rise and fall in just a short period of time. If you are going to invest in the stock, it would be helpful if you are going to look at it from a long-term perspective as stocks tend to perform well over time.

• It adds a layer of protection – 

Your wealth can be severely affected not only by inflation but by taxes too. You can get a better tax treatment by investing in stocks, especially if you look at it from a long-term perspective.

• It maximizes your investment – 

Some companies pay dividends to their shareholder. Some give it in the form of special distributions, thus providing you a regular investment income, which, over time, can increase your return on investment.