If you are thinking of investing the money you have safely and without the risk of losing it, a good option may be to invest in the stock market. Although making this type of investment has its advantages and disadvantages that you should consider before venturing to invest. If you want to know what these pros and cons are, stay with us and read the entire topic What are the advantages and disadvantages of investing my money in stock markets?
What are the advantages and disadvantages of investing my money in stock markets?
If you are looking for the best options to invest your money and multiply it, surely investing in the stock market came to mind; Now let us know its advantages and disadvantages:
- High profitability index: investing in the stock market, for the investor, could mean generating a lot of money, compared to other sources of income; Of course, only if it’s done correctly.
- Variety of options: the stock market offers various options to invest, which in this field are called investment instruments, in which the investor can choose the one that best suits their tastes and requirements. Likewise, not only company shares are traded on the stock market, but also certificates of deposit, future contracts, bonds, etc.
- Low margin of loss: investing in the stock market rarely represents losing the entire investment at some point, since it is taken into account that you are investing in stable and adequate companies.
- Opportunity to become an owner: I think about this, acquiring a share means having part of a company and therefore obtaining the right to receive profits if the company has profits and even depending on the rank of the share that you have, there is the possibility of intervene and vote at shareholders’ meetings.
- Flexible hours: investing in the stock market is one of those ways to earn extra money without giving up your job, because you do not have to always be aware of the investment made, since it does not freeze your savings, on the contrary, it takes time prudence to multiply the value of the investment.
- Access to the real economy: a final advantage of investing in the stock market is that it allows the investor to integrate into the real economy, that is, it allows the investor to access an economic sector with growth prospects without the need to be particularly linked to said economy. exercise.
- Investment at the right time: one of the biggest disadvantages of investing in the stock market is the fact that you must know the right and precise time in which to invest, for which you must resort to stock market analysis or reports.
- Short-term losses: it is possible that, when investing in the stock market, there is a margin of short-term loss, however this can be moderately counteracted by reading the stock market analyses, taking advice and knowing what is being done, and ultimately instance, sell the shares to recover the lost money.
- Volatility: the various options of financial assets, that is, the investment instruments, are controlled by the volatile nature of the market, in addition to being linked to economic cycles, political conditions, etc. that can negatively affect this sector.
- Liquidity risk: when wanting to sell an asset in the future, there are risks such as lack of buyers, susceptibility to interest risks or loss of original value that may cause the investment to be sold at a price lower than expected.
Previous knowledge necessary to invest in the stock market
Before risking investing in the stock market, you should know that in order not to lose your money you need to have basic notions about topics such as what is the stock market, what is an asset, what is the stock market and what are shares. This type of knowledge is what will allow you to move correctly and not be lost in the vast universe of investments.
As in the stock market you can win and lose, you must understand the functions and objectives of the stock market and know well how it works, in addition to understanding the advantages and disadvantages that we explained above; In this way, you will know what you are doing.