The stock market is a strange thing. People either love it or hate it. No one, it seems, has an in-between view of Wall Street and the securities markets. Those who have been burned are glad to tell you all the dangers of investing in stocks. Many others, who have done well, enjoy giving out pointers and tips about the “next big thing” that can “make you a million dollars” and build a Steph Curry net worth in a short amount of time.
Perhaps no other financial topic is so rife with misinformation, disinformation, rumors and fallacies than the subject of stock market investing. The objective truth is much less exciting: putting your money in the stock market has risks and rewards, like everything else. There are no “get rich quick” strategies and no “money machine” investment programs. However, the stock market can be a good place to invest is you are aware of the pros and cons. Here’s a quick summary of what you should know before entering the hallowed halls of Wall Street:
The Upside and the “Fun Factor”
Investing in the stock market can be a profitable, educational and fun way to earn money. You can invest as little or as much as you want. While losses are inevitable, so are some gains. It’s even possible to score a big win if you are able to locate small companies that are poised to grow quickly. Of course, there are no guarantees but many people do earn a good living by investing in the stock market.
The Risks and Other Negatives
Yes, you could love every penny you have invested in the stock market. Corrections happen and people do lose fortunes. Investing wisely takes time, and you should be prepared to spend plenty of it doing research on the stocks you intend to buy. And don’t forget, no matter how smart you are, your competitors in the world of trading are seasoned professionals who do this every day for their jobs. You’ll be up against the best.
The emotional toll can be quite high and some investors even develop physical ailments, insomnia and stomach ulcers being the most common. Finally, if one of your favorite stocks is issued by a company that goes belly up, guess who is last in line of people to be paid by the bankruptcy court? You are, as a shareholder of common stock.
What’s the Verdict?
Stock trading is not for everyone. If you are interested, go in slowly and be sure to research every company you invest in. There’s no substitute for patience and due diligence, especially for new investors. Try to find a trading platform that allows you to paper-trade with fake money. It’s an effective way to get a feel for the market, and to get emotionally prepared for losses that are inevitable.
If you discover that your personality is not cut out to deal with the emotions of the stock market, “cut your losses” and stay away. There’s no sense in entering the world of Wall Street if your DNA is not suited for the roller coaster that it is.