How to make money from stock market? You would find the answer once you understand and remove the myths about stock market investing. Like most different companies or industries, the stock market too has its share of legends and myths. These myths are responsible for some people maintaining a safe distance from the markets. By doing so they are losing the chance to get involved with shares and experience the industry. Here we try to dispel several of the myths about stock market investing.
Shares are dangerous : While shares tend to be risky if active trading is done, but if investing is done over the long-term they perform well. So if you‘re in the market for the long haul, don’t worry about short-term ups and downs. In addition keep away from purchasing shares on borrowed funds. Don’t take loans for investment and invest only the amount that is available to you.
Stock market is gambling : This myth is potentially the most damaging one. It is the cause of a lot of investors keeping afar from the market. There‘s a major discrepancy between the two. While gambling is a game of fortune, the market investing has a natural scientific base. There are different scientific techniques accessible to define if the stock is worth investing or not and there are no such things when it comes to gambling.
Only the rich can invest in stocks : Not really ! A lot of investors like Warren Buffet have become wealthy by investing in shares. Over a longer period, stocks have managed to beat inflation and make investors pretty wealthy. Make small investments by selecting fine companies with great basics and hold them for a long period to watch them grow.
Low-priced or Penny shares are safe : That is strictly not true, as the low price of a stock might mean that the company does not have a great fundamentals. The market reasons the basics over the long-term. So even if you may see such shares shooting up pretty fast in the short-term, over the long-term they are bound to settle lower. Use the fundamental analysis to decide whether to buy the stock or not.
Tips and calls are a sure shot way to earn money in the markets : No, that isn‘t true. Most tipsters tend to give tips meant for traders and not for investors. These tips don‘t work well for the investors. As an alternative, do your own research and then select the shares to invest.
The market analysts are always right : Not really ! It is not much of a use to sit and watch market analysts make their predictions about the stock price and make a decision based on these predictions. A lot of people tend to take these predictions pretty plainly. Well, if these analysts are right, then all of them would be wealthy, right? So take these analysts with a pinch of salt.
To conclude, don’t let these myths to deter you when you’re planning to invest in shares. Invest in shares with a long term view to make money and to accumulate wealth.