You can potentially increase the return on your investment by investing in the share market. Therefore, investing here can ultimately accelerate your wealth accumulation and allow you to achieve various life goals. Over a considerable period of time, you can make a pretty good profit if you purchase shares of a stable company.
However one of the most significant drawbacks of stocks is volatility. Approximately once every 11 months, the stock market declines 10% from its high, every four years about 20%, and more than 30% once every decade or more.
Investing in the stock markets can be both rewarding and risky, especially if you do not take measures to ensure that you are making informed decisions and controlling the risks associated with it.
Most people believe the upside potential of stocks outweighs the risk even though there are valid reasons not to buy stocks. Thus, even when the market is at an all-time high, it’s always a good idea to invest in stocks.
Investments are often made with the intention of buying low and then selling high. Their portfolio is composed of fast-growing companies with high appreciation potential. A buy-and-hold investor and a day trader alike will find that attractive. In the first scenario, investors plan to capitalise on short-term trends, while the latter anticipate greater long-term growth of earnings and stock price. A regular cash flow is preferred by other investors. A dividend-paying company’s stock is bought by them. A moderate rate of growth is observed for these companies.
Stocks can be sold anytime on the stock market. The term “liquid” is used by economists to describe shares that can be converted into cash quickly and with a low transaction cost. That’s important if you suddenly need your money.
Stocks can give some people great financial success, while others lose their money and become indebted. As a general rule, the more money you invest, the greater your gains or losses.