investing in shares

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:

Club Thrifty ~ Shows us a Really easy way to save a few pounds!

Stacking Benjamins ~ Discusses the difference between Active & Passive Investments

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Make Money Your Way ~ Discusses Mutual and Index Funds

Modest Money ~ Insights into the changing world of link building

Reach Financial Independence ~ More insights into Guatemalan living

Canadian Budget Binder ~ Budgeting help for low-income families

Frugal Rules ~ Talks about the freedom money can bring

Mo Money Mo Houses ~ Shows us how to land a new job fast!

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8 Responses to Is Buying Shares Worthwhile?

  1. Matt Becker says:

    I stick with index funds. The probability of success is just so much higher than trying to pick your own stocks. But to each their own. Thanks for the shout out and enjoy the weekend!
    Matt Becker recently posted…Roth IRA as an Emergency Fund – Is it a Good Idea?My Profile

  2. I thinking buying company stock is almost always a worthy move especially when one does their homework, buys what they can afford as you say it and have the discipline to stick it out for the long haul (just look at Buffet :) )
    Patience is what most people lack and what is crucial for stocks to realize the gains.
    Appreciate the mention Robert.
    Simon @ Modest Money recently posted…The Condo Buying Saga is Finally OverMy Profile

  3. Mark Ross says:

    I really think buying shares are worthwhile. It’s a good investment to make for as long as you are patient, because as what you have said, it really takes time to make great profits.
    Mark Ross recently posted…Getting A Car Loan: Is It Beneficial or NotMy Profile

  4. Thanks so much for mentioning my post!

    Hope you had a great weekend!
    Holly@ClubThrifty recently posted…Save America’s History: Have an Expensive WeddingMy Profile

  5. Chipamogli says:

    I bought some shares and won some and lost even more… I think I’m going to stick with ETFs from now on :)
    Chipamogli recently posted…Secured debt doesn’t count as debtMy Profile

  6. I like the idea of index funds too, as Matt mentioned. If we were going to buy individual shares we would, as you mentioned, stick with a huge company with a long-term history.
    Laurie @thefrugalfarmer recently posted…How to Save Money: Buying Used Instead of NewMy Profile

  7. I agree that it takes time which most people don’t think about. Nothing happens over night. I’m doing research now but I know nothing is instant. Thanks mate.
    canadianbudgetbinder recently posted…Network Marketing: What is it and is it right for you?My Profile

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