Hello there, readers.
I’m sure you’re doing fantastic!
I’m back with another blog post today, this time about how many people are wary of the stock market due to common misconceptions. I’m sure you’ve read or wondered about some of these.
I hope that after reading this post, you will feel more confident in starting your own stock market investments to build wealth.
Some of the common myths sound something like –
1. “But dear, trading and investing are nothing more than glorified gambling!”
These worries are understandable, but they are not based on facts.
Analysis is one factor that distinguishes gambling from investing and trading.
Unlike investors, gamblers make uneducated guesses.
The stock market does not move simply because it can. It moves because there is a valid reason for doing so.
Understanding and interpreting those causes is accomplished through two methods: technical and fundamental analysis.
So, no, the stock market is not a game of chance.
2. “In the stock market, everyone loses money!”
Um, not everyone.
There are no entry barriers to taking part in the market.
This means that anyone can invest or trade. There are no prerequisites such as degrees or certifications.
See, depending on where you fall on the spectrum, this is by far the best and worst thing about it.
Every day, many well-meaning but uninformed investors lose a lot of money because they are simply taking chances without taking the time to learn some basic fundamentals.
This reasoning is risky not only in the stock market, but probably in any other career field as well.
Is it possible to be successful in any profession without first learning about it? Exactly.
Those who took the time to learn some basic fundamentals, on the other hand, have been able to leverage the concept of “anyone can participate” to create wealth.
3. “I wish I had that kind of money that these guys on CNBC keep talking about when they talk about investing…”
Contrary to popular belief, you do not need to be flush with cash to be a successful investor.
The media portrays investing as a means of accumulating wealth that is only available to the ultra-wealthy.
No, it’s not true.
You can begin with a small amount of money and invest in companies with strong fundamentals.
You don’t even have to invest all of your money at once.
You have the option of investing monthly, quarterly, or yearly. Whichever time frame works best for you.
Because of compounding, your initial capital (principal amount) will yield good returns over time.
4. “Reading and comprehending the financial statements of the company gives me nightmares!”
What if I told you that you don’t need any more math skills than a fifth-grader to predict whether a company will succeed or fail before investing?
There are numerous resources on the internet that will help you interpret a company’s sales, revenue, and profit numbers in order to make an informed decision about the company’s fate.
When learning to interpret financial data, use Google and YouTube to your advantage.
The financial records of a company are easily accessible online.
Take some time to read up; you’ll soon realise that picking a great company to invest in isn’t rocket science.
I hope this blog post has dispelled some of your fears about the stock market and inspired you to take your first step toward accumulating wealth.
Until next time.
You can’t know if you don’t try – Ron Writings