Stock market for beginners
Should you embrace investment risks? Are they really worth it? The investment community isn't free of con artists, scammers and professionals of deceit. There are many people and pseudo-organizations that look for investors that are unaware of the realities of the market. One of their typical tactics is to tell the public that they can make anyone rich. The reality is that none of those strategies really work. Investing in stocks is a risky business. There are some risks you have some control over and others that you can only guard against. However, if you never take any risk it may be difficult to reach your financial goals.
When the market collapses - good stocks as well as bad stocks suffer as investors stampede out of the market. Taking more risk with your investments in an uncertain economy is, well, risky. Unfortunately, there are always those willing to tempt investors with promises or implied promises of high returns a low risk. Whether the stock market is hot or cold and whether the economy is booming or in the middle of a bust, one thing remains constant: There are no high returns with low risk. The expectation of a high return in a short time frame is not realistic. However, you must understand that the market works on a rigid risk-reward basis. If there is little risk to the investor, there will be a lower potential reward. For the investor, this means if you are after the big returns, you must be prepared to suffer more losses than rewards. There is no safe (or legal) way to earn a very high return on your money over a short period.
If the price of your stock goes up you win! If it drops, you lose! Isn't that why so many people got rich during the dot-com boom -- and why so many people lost their shirts in the recent recession? That’s how many new investors think of the stock market. The more you understand the true nature of stock market investment, the better and smarter you'll manage your money.