Is Buying Shares Worthwhile?
At some point in their lives most people consider the idea of buying some shares. After all, isn’t that how rich people make even more money very easily? Well, it can be a fascinating and financially rewarding pastime provided that you take the following issues into account.
Less Risk Means Less Potential Gain
The first point to consider here is that not all shares are the same. For example, if you want a safe, solid investment then you should look at the big, multinational companies or the likes of well known insurance companies, energy providers and other well established firms. There is no guarantee that their prices will hold but you would expect them to perform consistently over time. Of course, you will need to pay more for shares like this in the first place and the chances of making a killing are relatively small. On the other hand, you could look at cheap shares in smaller, newer companies. This is the kind of deal which could either earn you a fortune or could lose you whatever you invested in it. For example, you could buy some cheap shares (sometimes known as penny shares, although they don’t have to cost a penny to get that name) in a new mining company which is exploring a new territory. Let’s say that they find precious metal; in this case you are in the money. However, if they come up empty handed their price could slump or they could even go bust. What all of this means is that you need to work out early on whether you want a steady performance or you want to try and make a fortune.
Don’t Risk What You Can’t Afford to Lose
Once you get started on buying shares it can be tempting to get carried away and spend a lot of money on them. This is especially true now that online trading makes it so quick and easy to buy and sell shares. If you hear about possible bargains or want to try out new areas then you could end up spending more money than you should do, which leaves you open to losses you can’t handle. This is a situation which can end up with you chasing your losses and getting deeper in to debt each time, as you feel forced to invest more money in riskier shares. The best way to avoid this is to set yourself a budget for share trading and stick to it. You might like to re-invest your profits but you shouldn’t ever put at risk money you can’t afford to lose.
It Takes Time
If you want to make a success of investing in the stock market you will need to dedicate some time to it, which is something many people don’t consider when they first start out. The simplest and least time consuming approach is to stick to the shares in big, established firms, as you won’t have to keep your eye on them too much. However, if you want to try and earn money on lower priced shares then the key is in identifying the right shares and then buying and selling at the right time. All of this takes time and if you let a day or two pass without reviewing your portfolio and taking the appropriate actions it could cost you. If you want to invest in shares then it can turn out to be a great move, but you really need to have the time to check out the market and make the right trades. You could get daily stock market emails sent to you but you will still need the time to read them and do something about them.
As it’s the weekend here’s a round up of other great blog posts for you to enjoy:
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