Everyone desires financial freedom, and it is achieved when you get wealthy.
People take the route of investing their money in order to become rich and wealthy.
However, the main question still lingers where you should invest your money so that your money earns you good rate of return, and you get a head start on the road to financial freedom and richness.
In this perspective, it has been seen that many people take the route of investing their money in the stock market with the idea of making big returns. They have a notion that by investing their money in the stock market, they will reap big profits and will become rich instantly.
However, the truth is slightly devastating.
The stock market has been seen tumbling down. It reflects big cycles of bearish trends and is often seen as a volatile segment. In fact, many investors end up losing their money in the stock market. So, stock market comes as high risk investment medium for investing your money. If you simply think that by investing your money in the stock market, you will become rich, it’s time to re-plan your investment strategy as the stock market is not a viable medium for making big returns.
I have plenty of reasons to support by stand.
Here under I have listed down the reasons Why You Should Not Invest in Stock Market
It goes down to show that Stock Market is not a Gateway for becoming Rich and Wealthy and that too if you want to make it quick and Fast. If you think that the stock market will make you rich, then it’s probably time to reconsider your decision.
So, let’s see why I say that you should not invest in Stock Market.
It’s not a “Get Rick Quickly” Scheme
Many people believe that by investing their money in the stock market, they will become rich instantly. They are of the notion that investing in the stock market will bring them quick riches instantly.
However, the fact is quite different.
In fact, stock market is not a “Get Rich Quickly” Scheme
If you are looking for instant gains, and that too in big volume, then stock market is probably not a place where you can have it done. Actually stock prices are dependent upon various economic factors as well on the performance of the company. Although there are fluctuations in the prices of stocks on a day-to-day basis, but with a return perspective, you cannot expect to make big gains by selling your stocks in a short period of time.
On the contrary, you have to demonstrate your perseverance and hold your stocks for a long period of time (say at least ten years) in order to expect substantial returns from investment in the stock market. Moreover, it’s a tough call to make whether to hold a particular stock or not for a long period of time. It’s not guaranteed that that price of stocks will appreciate over a given period of time. It finally comes to the performance of the said company of which stocks you are holding.
It might be possible that the stock prices do not appreciate much over a given length of time. You have no control what so ever on the prices of stocks. There is not a fixed or guaranteed rate of return that you can expect by investing your money in the stock market. Once you have bought stocks of a company, the only options you have with you are to hold them or can sell them. By holding them, you bear the risk of investment on your own shoulders.
So you see that investment in stocks is not a “Get Rich Quickly” Scheme. You only need to invest in the stock market when you are willing to bear the risk of investment and should also be willing to hold your stocks for a long period of time.
If you do not study the Company
Investment in Stock Market demands Study and Research. It is not like putting your money in a fixed deposit or Certificate of Deposit with the Bank. You have to make a lot of decisions. For instance, first and foremost you have to decide in which stocks you should invest your money. You cannot just pick a stock and put your money on it hoping that it will give you high returns. This would be quite foolish on your part.
So you have to choose a company’s stocks for investing your money. This in itself is a big decision and demands a lot of study, research, and analysis. You have to acquaint yourself with the business model of the company. Then you have to know its market value. You have to research and find out what future plans they have in terms of expansion or diversification. You got to know what the overall demand is and determine their market share and competition.
You got to ascertain their financials and balance sheet so that you can come to know their overall assets and liabilities. Then you have to gauge their past performance and ascertain the rate of fluctuation in their stock prices. You should know if their stock prices have appreciated in the past (say in the last five years) or they have depreciated instead.
So you see that you have to make an in-depth study when you want to invest in stock markets. If you find it difficult or hate to devote your time in the study of Stock Market, then you should not invest your money in Stock Market. Moreover, study of Stock Market or Company (for which you would like to buy the stock) does not guarantee that you will reap profits in your investment. It will only minimize the risks of investment. You just cannot control the way the stock market behaves in the future. So, the risk of investment is always there.
If you are investing your only savings in Stock Market
As we have already seen, investing in stock markets is a risky proposition. You cannot be sure of milking returns on your investment in stock markets. This suggests that you should adopt a precautionary approach while doing investments in stock market. So before taking up to investment in the stock market you should have built your savings fund. Moreover, you should not use your saving’s fund to make the investment in stock market. Suppose, for instance, you take out your whole savings and invest it in stocks thinking that it will give you fat returns.
On the contrary, it turns out that the stock market crashed, dipping the prices of stocks that you had bought. So, instead of making good returns, you end up making losses on your investment. Thus, you see that investing your only savings in the stock market can be a dangerous proposition altogether. If you limited savings, you should look for risk-free avenues of investment rather than investing your savings in stocks and shares. Investing in bonds and CDs could be a viable option for you.
You should play safe while investing in stock markets that my sincere advice to you. You cannot even go by the past performance of stocks as there is no guarantee that past performances and trends will necessarily repeat itself in the future. So, you should make a point to lock your savings in some safe investment instrument rather than to invest it in shares or stock market.
If You Are Looking for Intra-Day Trading
Most of the start-up investors take the route of Intra-Day Trading for making investments in stocks thinking that they will reap great profits. However, the picture is not so rosy as it looks to you. Most of the time, Intra-Day traders suffer huge losses and set-backs. Intra-Day trading occurs when you buy and sell stocks the day hoping that stock prices will appreciate the same day and thus you will reap profit when you sell the stocks on the very same day on which you have made the purchase.
However, there is no mechanism that will assure that you that stock prices will rise enabling you to sell off your stocks on the very day on which you have purchased your stocks.
On the contrary, it may happen that the stock prices can dip leaving you with losses if you happen to sell them on the very day itself. So, Intra-Day trading cannot give you guarantee that you will earn profits by investing in stocks. Hoping for profit is not the way to secure profits as far as investment in stocks is concerned. The same holds good even when you adopt Intra-Day Trading. So you should not invest in stocks hoping that you will make great profits by Intra Day Trading.
If You “Fear” Losing Your Money
There is always an element of risk when you go out and invest your money in stocks. Even the best of the investors have to encounter this factor called “risk”. You just cannot run away from the Risk Factor involved in the investment of Stocks. There can be prolonged Bearish Trends in the Stock Market, and stock prices of shares of companies could tumble down for reasons quite unknown to you. These are usual scenarios are not uncommon when it comes to investment in stock markets.
So it’s quite possible that you have to face losses when you start investing your money in the stock market. However, if you are such a person who is dreadful of the fact of losing your money in the stock market, then I can frankly say to say that stock market is not a place for you. So, it’s plain and hard truth. If you fear losing your money then simply stay away from the stock markets. It may happen that the fear is due to the fact that you have limited money for investment. You cannot just bear the risk of investment in stock markets. You might not possess the expertise. It might be that you just do not have the time with you to make the necessary research and analysis needed for making investments in stocks.
Whatever might be the reason for your fear, if you do fear losing your money in the stock market then do stay away from it.
So you see that Investment in Stock Market has inherent risks with it. If you are OK! With the risks, then go ahead and invest in stock markets. Otherwise, you should not invest in stock markets. The above points clearly enumerate Why You Should Not Invest in Stock Market.