What is holding you from investing?
—->What are your Fears?
I listen regularly to friends and colleagues at the workplace. It is amazing to see that even when parents are saving for their children, where the investment horizon is about 10 – 20 years, most prefer to do so in a cash savings account.
This is a situation where the risks inherent in the stock market can be mitigated by the time in the market.
WHY do we not invest in the stock market?
There are two common MYTHS?
- The first is the widespread belief that investing in the stock market is a gamble and a very risky venture.
- The second is that you have to be fabulously wealthy to invest in stocks and shares.
Let me address the first……
…………Yes stocks and shares are risky and you may not get back the amount you invested. However this risk is heightened if you do not understand the principles of investment. If you invest randomly and short term, buying shares on a tip or because the stock market is rising, without any research or knowledge of company fundamentals and valuation, you may strike it lucky but the odds of losing significant capital are very high.
You are likely to buy during periods of great optimism when prices are riding high. You then sell out when the inevitable correction occurs,incurring capital losses. YES this is gambling or speculating, and not investing.
The smart long term investor will choose shares after diligent study, invests regularly in a diversified portfolio and is not panicked by market setbacks which in fact present opportunities to buy more of quality companies.