Advantages and disadvantages of investing in stocks

The very act of investing in any asset - be it securities, currency, gold, bitcoinsAll sorts of start-ups are very interesting and, most importantly, profitable. Investing in shares brings competent investors good money, but, as in other financial markets, has its advantages and disadvantages.

Equity investments

Advantages of investing in the stock market

The advantages of investing in stocks are many. It is not for nothing that the number of clients Mosbirgs is growing at a rapid pace, and the profits from the transactions have been increasing monthly for quite some time. But let's take a closer look at these pluses:

  • Investing in stocks is among the most popular ways to steadily increase your capital.
  • Unlike many other instruments on the financial markets, stocks are a real asset. You can, as they call it, touch them with your hands.
  • By buying stock, an investor is essentially buying a share of the business of the company that issued the securities.
  • When the stock price rises sharply on the stock exchange, an investor can make a very, very solid return.
  • When investing in shares, you can make money not only on the change in their market value, but also by getting dividends.
  • With enough shares, you can directly influence the company's operations.
  • The activities of the stock market and stock exchanges are regulated by relevant laws. In addition, the state protects investor's funds at the legislative level.
  • Every broker operating on the stock market is obliged to undergo an inspection by the Central Bank of the Russian Federation and obtain an exchange license.
  • Even using trust management services, the investor is still directly involved in the management of his deposit.
  • At the end of the day, investing the stock market is just plain fun and gives some ownership of the leading companies in their industries.

Disadvantages of investing in shares

But of course, where there are pluses, there are also minuses. Let's look at the disadvantages of investing in securities.

  • The stock market, like any other market, cannot be predicted in advance. There is an element of risk in it - you can significantly increase your investments, or you can lose them. At the same time, the higher the potential profit, the greater the possible risks.
  • In order to influence the company's activities, you must have a set number of shares, i.e. be a majority shareholder.
  • High entry threshold compared to other markets. For example, in order to receive a significant amount of dividends, it is necessary to buy a significant number of shares.
  • It is impossible to buy shares on your own; all stock market transactions are carried out through a broker or management company.
  • In addition to possible profit or loss, the investor incurs additional expenses. The broker charges commissions for each transaction, whether it is deposit or withdrawal of funds, buying or selling shares, or servicing the depository.
  • Gains in the equity market are taxed accordingly tax.

To summarize

Despite the fact that many investors and traders are of the opinion that "I came to the market for money, not to be smart", it is still very desirable to be smart. It is not necessary to be a candidate of economic sciences, but you should have at least basic knowledge in the field of investments and finance. Or be a reader of ForTrader, a magazine for traders.

Despite its apparent complexity, the stock market has understandability, a clear structure and strictly regulated mechanisms. Investing in shares can not only bring good profits, but, more importantly, do it permanently and over a long period of time.

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