Are you interested in business and investments? Surely you have seen in movies, series and news how investors make a lot of money by putting their capital in shares of large companies. But how to buy stocks?
It seems like a fantasy or something out of science fiction, but in reality it is not. Making money by investing in stocks is perfectly possible. On the other side of the coin, it is also possible to lose money through bad investments. There is everything.
But before talking about advantages and disadvantages and long before buying shares it is important to explain the most important thing. What is a stock? It is simple, stocks are securities, the equal parts into which the capital of a company is divided. Investors own shares. There is no fixed number of shares. Each company is different. The total number of shares of a company is determined by the company itself at the time of issuing these securities.
If you buy 6000 shares of a company that has issued 60000 shares, then you will own nothing more and nothing less than 10% of the company. Not bad, right?
Acquiring shares allows you to participate in what are known as shareholders’ meetings and enjoy the corresponding part -depending on the percentage of shares you own- of the benefits established for shareholders.
It is in the Stock Exchange where the profitability or not of the shares is defined. That is why it is so important to be well informed before making the decision to invest in shares.
Advantages of acquiring and trading stocks
Let’s start with some good news: it is possible to obtain profits by investing in stocks while keeping the risk of loss low, a risk that would be limited to the amount of money we have invested. That’s a significant advantage to begin with.
So yes, it is true that if you invest well in stocks you could potentially make more money than you have invested. Could you become rich? That’s also a possibility, although there are no magic formulas and lucky breaks in this business are rare.
As I explained, a positive aspect of investing in shares is that losses are only limited to the initial investment, something that does not usually happen in other types of investments also very common, such as real estate investments where you can end up in debt and owing more money than you initially invested.
Another indisputable advantage of investing in shares is that shares offer liquidity because they can be converted into cash on the stock exchange, where we can trade shares at market price. They are a relatively quick and efficient way to acquire liquidity on almost any occasion.
Information is another obvious advantage of the stock market. Yes, information, because the markets tend to publish a lot of data, data that can be reviewed on virtually any media or device. Information is power and helps us make the best decisions.
Last but not least, contrary to what you might think, you don’t need to make a huge investment to start in this business. At the same time, if everything goes well, you could make regular profits in the short term without any additional effort. Are you seduced by passive income? Investing in stocks can be a good way to get it.
Disadvantages of trading stocks
So far so good, but it’s good for you to know that not everything is rosy. There is no such thing as paradise when it comes to financial investments.
We have all dreamed of investing in those companies that seem to be always growing. But the profession of investing in stocks requires people who look to the future, and not everyone is right when it comes to imagining the future.
It is important that you know and do not forget that the value of stocks fluctuates. These fluctuations depend not only on the work of the company but also on the economy and politics in general. As in cryptocurrency trading, trading in the stock market involves taking risks in the face of extreme volatility of these securities.
Sharp stock fluctuations could generate short-term gains, but also losses.
If you intend to invest in stocks you should consider a regular expense. Financial institutions charge for the maintenance or custody of shares in the long term. This should be taken into account.
