Stock Market Risks: Is My Money Really Worth It?
So, finally, you have your money you can call your own.
Naturally, you want to see your money grow. Saving your money in
a bank doesn't entice you, seeing it offer too little growth
potential. You want something that gives a little more risk,
with the hopes of having a much larger financial return. You
turn to the stock market.
But wait! Are the risks involved in investing in the stock
market worth my money? Investing is a good tool to increase you
money, but you have to keep an open mind and know what to look
for.
Needless to say, investing in stocks is a risky business. There
are some risks that fortunately, you can control.
For example, you must guard against investing in "hot" stocks.
True, some get wealthy in investing in "hot" stocks such as the
"dot-com" bubble in the 1990s, but when the initial buzz around
these stocks begin to slide, so does your investment. Once they
fall, they really fall hard in a short period of time. This
includes your money and others like you who invested in these
stocks. If you really need to invest in these stocks, you have
to keep a constant eye on them and try to sell them when they
start to level off or drop.
To avoid such risks, you must diversify your portfolio.
Basically, it means buying a little bit of a lot of different
types of stocks and bonds. In that way, if one stock gets down,
another one of your stock might be up and will help you recover
some of your losses. It is a good idea to have some stocks in
the technology sector, telecommunications, biomedical, and
consumer corporations. In time, you could add your portfolio
with precious metal and diamond indexes, and some general
investment funds.
There are also companies that offer "safety stocks". It will be
a sound decision to have several shares of companies such as
this in your portfolio. This is because such stocks rarely
fluctuate and most often offer a slow and steady growth, thus
giving you an assurance in your investments.
Do not rely on tips saying that this stock is "going to be big"
and the like. These tips are often unfounded, and these stocks
are almost worthless. Investing in these stocks might give you a
higher return but in the long run, these stocks will just give
you worries. Read the Wall Street Journal or watch the stock
reports on news networks to know more about your stocks. Also
check relevant websites to see how your stocks have been
performing in recent weeks.