Disadvantages Of Investing In The Stock Market
There are many disadvantage & demerits of the Share Market but we had researched & Show to you Top 5 Disadvantages Of Investing In The Share Market are below:
- Risk Of Loosing Investment!
- High Brokerage & Low Margin!
- Loss Of Time!
- Impulsive Behavior!
- Lack Of Knowledge!
Full Explanation Of Stock Market In This Video
First See the Full Video & Then you can go forward for the Demerits of Equity Market Below:
Risk Of Loosing Investment
Stock markets are highly volatile and dynamic, there are lots of risks involved in investing in the stock market, as share prices may fall multiple times in a single day and can break its own record low price, there is a high chance of loosing your money.
You may loose all your capital if you are not well educated enough and mentally prepared about the stock you are investing in.
If a company performs poorly in its annual financial statements and having any management issue within the company then people start selling their shares because of fear and resulting in crashing down of stock price.
However, there is a very low chance of happening this all sudden but it takes several years for the market to recover from the impact of the crash. So, if you invest in the stock market blindly the there is a chance of losing your capital.
High Brokerage & Low Margin
The investor has to pay a certain amount of brokerage fees to the brokers whenever he buys or sells the shares irrespective of his profit or loss.
All the trading or investing platforms charge a certain amount of money for the services they provide which are already fixed or depends upon a margin of your transactions. This can seriously affect your profits.
There are many brokers who charge more than the usual amount. If you are not familiar with brokerage charges then you may select the wrong broker where you would end up to pay higher brokerage charges.
But some brokers exist in the markets who charge less amount of brokerage charges and they are known as discount brokers.
Loss Of Time
If an investor is investing on his own then he must do research on each company and analyze both the company’s fundamentals as well as management. This analysis is a must-see of how profitable he could be before investing in a stock.
You must grasp to read financial statements and annual reports and watch your company’s growth in financial news. You also need to keep a track of the stock market and the stock price on your own which requires a lot of time in the beginning stage of learning.
Even after you gain an understanding of stocks you have to devote time every day or week to do research about your investments and businesses you are invested in, for future investment, and not everyone can afford to devote that much time unless if you are going to do it for full time which is quite rare.
The price of the stock market varies every second, investors/traders may wish to buy it out of greediness and exit the position at a lower price out of panic. It means you must know the time to enter and exit a certain trade without panicking.
Trading in the stock market is all about controlling your emotions. You must exit a trade if you have hit your target or your stop loss. There is no need to be greed or to speculate. A good trader always has discipline.
If you don’t have the discipline or you cannot control your emotions during a trade then it might cause your money to loose. Many amateur investors hold their stocks more than the time they should which eventually results in a loss or a lower profit.
There are investors who wait for a share price to fall more before purchasing the stock and they miss the right opportunity to invest and regret it later. Investors have to keep a close eye on the fluctuations of stocks. These fluctuations can create an immense emotional strain on investors.
Lack Of Knowledge
Investors who don’t have enough knowledge of the stock market and they are just trying their luck can suffer huge losses. As they Don’t know to shortlist the stocks which they have to buy or sell and even not aware of the entry and exit points of trade should stay away from the stock market.
Many new investors lack the sincerity, commitment, will to devote their time learning about the stock market first before diving into it. They just try to go with their luck and think they can earn easy money without any sweat but that’s not the case.
The market will thrash you away if you go against it. So people with just money without any knowledge, practice, and experience have higher chances to loose their money, so it is better to first learn and understand the stock market and do paper trading before investing real money directly into stocks.
Now from the above-mentioned points, we understand that the stock market is not just a gamble or a speculation game where luck will help you.
A stock market is like a strategical game where only those people win who have the proper research, analysis, learning, controlled emotions, and above all that discipline.
So, I would like to conclude that, don’t give up on the stock market, you just have to study the pattern and do research about the company in which you are going to invest. If done properly the stock market can make you more money than your actual job. (yes, not kidding).
So I hope you understand about Disadvantages of Stock Market & Disadvantages of Investing In The Stock Market!
See Full Video Of Share Market: Dr. Vivek Bindra Click Here!
If you have any doubts regarding the Stock Market, you can comment in the comment section!