The stocks and shares market is one of the biggest market in the world. Everyone wants to invest their money in the stock market and get profit. Unfortunately, most people enter the stock market without proper knowledge and end up losing money from it. But if you want to save your stock and shares you need to know some pros and cons of investing in stock market. In this article, we will differentiate between stock and shares. After it, we will take a look at the pros and cons of investing in stock and share markets. In the end, we will provide you some useful tips to help you invest better in the stock market .
1. What is the difference between “Stock” and “Shares” terms?
Term “Stock” is generally used to describe the ownership certificates of any company (one or more than one) and the term “Shares” is generally used to the ownership certificates of a particular company. Let us find what is stock in stock market. When an investor uses the word stock it means that he/she wants ownership in one or more companies. Share means to invest your amount along with other people into a particular company.
Suppose if total ownership of the company is 10 million dollars and you invest 1 million dollars then you will get ownership certificate of that company for 10%. An interesting tid bit, mostly British use the word share and Americans use word stock. Shareholders are the owner of the company, the total number of your shares is based on the number of stocks you hold for the company. When you invest in share you get an ownership certificate.
1.1 Deep study of a particular company
Currently, according to stock analytics some of the best shares in the market include Amazon, Facebook, Microsoft, Ford Motor etc. If someone buys shares in Facebook and Amazon he can say that he has 2 stocks in the stock market. He will be an actual business partner of those companies with some percentage according to his investment in the stocks of the company. When usually peoples want to buy shares, they go based on their desires or opinions of other but infect, a good stock market investor needs to have deep study of a particular company which they want to invest in before making any big conditions.
Big companies tell their business condition on their official websites or in big news media i.e Bloomberg, CNN, etc. Investors should visit these websites and estimates the stock situation in the stock market. There are some pros and some cons in investing in the stock market. Before going in details about investing in the stock market we take a brief look at the pros and cons of stocks and shares.
2. Is It Worth Investing in Stocks and Shares? Pros and Cons
Investing is risky and dangerous; chances of you losing your money are very high as well so make sure to do your proper research and invest only what you can afford to lose. Every company wants you to invest into their business using stocks, it gives them capital to grow their company and get a higher evaluation. So sometimes its easy to see only pros and enter the stock market, but you need to analyze the company with its pro and cons.
is the pros of investing in stock and shares market. You can invest your money from Monday to Friday, Therefore people want to invest their amount and want to get a profit. The stock market is very liquid; In this environment, you can invest a huge amount and get huge profit. The stock market profit depends on time, amount and the condition of the business. A liquid market, we can see how easily price change in a different period. It allows a better price analyzes and also prevents you from losing all your money extremely fast.
2.1.2 High transparency
is another pro of stock and shares market. Many companies tell their revenue, expenses, profitability and all last three months’ data that how a company performs. Many companies tell their revenue, expenses, profitability and last three months’ data about its performance. Through this data, we are able to buy or sell at a particular time in the company and understand if our investment will lead to a profit or loss. Also, due to strict regulations in many markets, businesses have to be very transparent. You can visit the company website for getting info about its business report and have a detailed look at their earning report to fully understand the business and its operation before investing your money into it.
2.1.3 Globally high profitable business
Is another pro of stock and shares market. We will be able to invest in top profitable companies like Facebook, Microsoft, Coca-cola and more and get huge profits with our best shares. One can buy stocks according to some share tips and increase our profits. They take a look at best globally high profitable businesses and companies.
How to invest in stock? You have to consider all the cons and be ready to tackle them.
2.2.1 Lack of control
Is the biggest cons of investment in stock and share market as we cannot make a decision for the company based on most of the shares we purchase. We will only invest our share in a particular company and after it, we will be on the trust of its management. What they are thinking we cannot see. When we invest we agreed to accept company rules and regulations, we cannot change it, we can only take our profit or loss according to the company managements decisions and choices. We cannot force company management for changing the policies of the company.
2.2.2 Daily changing of the Stock Market
Is another cons of investment in stock and share market. Sometimes stock changing rates go up and sometimes go down. It is very difficult to know the trend of the market. We need to analyze old changing data and estimate the next trend. We look at the morning time stock situation and buy stocks from the best shares but in the evening the situation is totally changed. At that time market situation can be in our expectation or may not. At that time we need to remain patient because the market can be reversed the next morning. This volatility in the market is not for everyone, and for some people it is too much to handle, making them lose their mind and sleep over small profits and loses.
2.2.3 Different media
Are other cons of investment in stock and shares market. We use different media for getting the correct situation in the stock market. One media says the market will go up and others say markets will go down, it is almost impossible to know who is speaking the true or providing good analysis. Same as on social media one person was saying that this is time for buying but others say this is time for selling. These things can be very confusing for some people and lead them to make terrible decisions.
We should ignore the noise and able to decide better by doing our own research and analyses the fundamentals and financial statements of the company before investing. Another media is also the political situations around the world; When the president of the United States of America is addressing the stock market value change very dramatically, causing some news channels to represent it as good while others as bad so for an Individual this can be very difficult to decide for them many times.
2.2.4 Risk is
Other cons of the stock market. The stock market presents an amazing opportunity to create a good result for us and our family, this opportunity comes with risk. As the stock market is huge, there are many businesses some good, while others not so great. Knowing your personal limits, and strategy can be very similar sometimes. Our personal opinion can really excite us and such decisions at times can hurt our investment made into the market. We should care about our investment and take risk that can be managed
2.2.5 The low price
Is the cons of investment and share. The investor thinks they can buy thousands of shares. We do not invest big money in a particular company. But if you think basic formation that when stock will go up and down then you will focus on a particular company. You should be a great buy, great investment, and great trade rather than cheaper rates. And never based your investment on others, use your mind in thinking and analyzing. Some stock change very slowly. We buy or sell stock on low value without getting a good profit. It is not good for our time. We need to invest our amount in the best shares.
Is another con in stock and share market investment. You invest too much money to rise up for a company in the stock market. Sometimes the company goes up and most of the Time Company goes down. Therefore you should care to invest. Invest only logic and limit the value of your amount and you should be able to face the fall time of the stock market. There are many investors all over the world they are investing their amount to buy stocks. Some people were buying stock and other selling stock. We should avoid manipulating because it can lead to a much greater trouble in the lost term.
2.2.7 Investment in delinted Companies
Is also the cons of the stock market. Big companies can get delinted or even worse go bankrupt. This can lead to you as an investor losing all your money, without much security; you can even lose your capitals gain if you did not sell your shares at the right time making all your profits turn to zero very fast.
3. Shares to buy now in bigger & profitable companies
Our best advice for new investors is to invest in stocks and shares of bigger companies and profitable companies, Stay away from the cheap stock. Big companies or the blue stock companies as they say have less of a chance of dropping in value very fast, allowing you to have a stable growth of your investment and learn the trick of the trades. There is no need to buy stocks with big amounts at once , best solution is to invested intermittently any amount on best shares. This amount could start with five dollars only.
Most people buy high and sell low and most people invest their amount on the basis of seeing headlines of the news. But the rule is that when everyone is investing then it’s a bad investment. Professionals invest their amount in specific and certain companies within a certain time. When a person sees a headline that price is going to increase he invest a huge amount and take a big risk. But after a while price starts to drop. The intelligent investor is patient. They know the price will rise again in the next few days or weeks.
4. Share tips
Remember the rule of investing “Never invest when everyone is investing”. If you see most of the people investing their money on basis of headline news then you need to never invest that time because they have more chance to lose their money but which is the right time to invest. You need to first invest your time to analyze the stock market. When you able to know trends then that time you need to invest your money. But if you have not gotten a trend then don’t invest your money you will lose your money. Everyone wants to buy low and sell high. Stock market values are changing every second. When you buy stocks and shares in improper time and sell it in improper time then you will lose your money.
4.1 Compare the Company with its Competitor
Before investing in the stock market it is important to know about the product or service offered by the company. When you invest your money in favor of that particular company what you think their product or service is up to date and it is according to the trend of the people. Do people like and use their products or service? Compare the company with its competitor and check the progress of both companies.
When a company recession is proved then you can decide for investment. Measure also consistent earnings growth. It must be 8%. The company payout ratio should be 75%. Company debt must be 70% or less. A company must have a minimum of S & P credit rating of “BBB”. You can also check which company mostly buy their own shares. P/E ratio should be 3 or less. And remember keep emotion out of the selection of process discipline and patient are key to success. There is some principle of investing we should follow also follow those principles to get the best result in our favor. Our best share experience makes us a good and best investor in the stock market.