Most common questions used to investigate
Are you aware of the risks that come with stock market investing?
Do you plan to invest all your money in the same company?
Do you want a steady stream of income?
Can you decipher market news?
Have you decided which part of the stock market you should invest in?
Do you know the expenses that come with stock market investing?
Common conclusions
Though stock markets have historically provided good returns in the long run, it also comes with many risks. This is because the stock market itself is volatile and can have big swings. This becomes all the more a problem if you want to invest for short-term gains. Research shows that the stock market offers about a 7% return in the long run, but the short-term returns may vary greatly. So, understand the risks before you invest.
Parking all your money in the same corporation is risky simply because if that company tanks due to a host of reasons, all your money is gone. A better way to invest in the stock market is to diversify your offering across different segments and companies, so the profits and losses will even out, to give a decent return on your money in the long-run.
Companies pay something called dividend at the end of every quarter as a way to share its profits with its investors. However, there is no fixed amount and it depends on a host of factors such as the company's board of directors' decisions, prevailing market conditions, and more. All this means, stocks are not the foolproof way to get a steady stream of income, and if that is your financial goal, bank deposits are your best bet.
Knowing the financial markets and how to decipher the market news is the key to making the right investment decisions. You'll have to follow these steps closely to decide which company's stocks should you buy and when you should sell. Doing this at the right time makes the difference between profit and loss. Due to these reasons, learn to decipher the market news before you start making investment decisions.
Stock market is an ocean by itself. It consists of many investment streams such as the secondary market where you invest directly in the stocks of companies, ETFs and mutual funds where an experienced manager invests your money across different companies to give you the best profits and in the process, charge a fee for their services, you can invest in the futures markets, and more. Understand these different flavors and decide which part of the stock market you want to invest in.
Besides tax, there are many other expenses that add up such as subscription fees for news, brokerage charges, ETF or mutual fund fees, and more. Make sure to understand it all before you take the plunge.
Great! Plan for it accordingly.
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