You want to invest in stocks but are they really safe or even an option for you?
Here is what you need to know before you start investing in stocks.
- Buying stocks is fundamentally risky and not safe. The price of a stock varies constantly, every day, every hour, every second. You might know the price of a stock when you buy it, but not when you sell it. And that’s the risky part.
- Putting all your money into one stock is fundamentally wrong and you will have approximately a 80% chance of losing your money if you do, because you will probably invest too late or too early and pay the wrong price.
- Finding a good stock is time consuming and research intensive, there are thousands of stocks available to buy, but finding the right one, aka stock picking, can be very challenging, for beginners or professionals alike.
- Professional investors will buy groups of stocks, it increases their chance of finding and buying a lot of good stocks at the right price.
- That’s why you should always buy groups of stocks, like the professionals, to make sure you pick a lot of good ones. But how do you do this?
- It’s quite simple, you buy Funds aka Mutual Funds, or Exchange Traded Funds aka ETFs, it’s like a stock made of hundreds of stocks, with a price that is more stable over time than a single stock.
Mutual Funds and ETFs are therefore less risky than buying one stock and will increase your chance of not losing money by at least 90% because they are invested in hundreds of stocks with the same investing angle.
In short, Mutual Funds and ETFs are your light saber when you start investing. Do not go out there to invest without one.
Did you know this or is this totally new for you? Just post your comments below to share your thoughts.