When people hear the phrase “stock market,” many things come
into mind. They think about companies,
money, rich guys in elegant suits, and lengthy closed-door meetings with
shareholders. While many people have a
good idea of what the stock market really is, misconceptions are still quite
very common.
In this article, we’ll talk about such misconceptions and
why they are wrong. So, if you’re a
newbie to the market and you’re still learning the ropes, you should read this
article.
Misconception 1: Only the rich can invest in the stock market
This has been proven wrong through the years, but somehow there
are still people who think the stock market is out of their reach. The reason behind this misconception is
largely because in the past, brokerage fees were quite high.
With the boom in technology, especially the internet, even
ordinary people can start investing on the stock market. You don’t have to whip out huge amounts of
money to get started.
In addition, financial information about the companies,
stocks, and real-time market conditions are now available to everyone, thanks
again to the rise of the World Wide Web.
Misconception 2: Investing is Gambling
This is another misconception that makes people refuse to
invest in the stock market. For some,
investing and gambling are two different terms for the same activity.
What they miss is the inherent difference between the two
activities. When one buys stock, he buys
an ownership in a company. It gives them
rights or claims on the company’s assets as well as a slice of the profits that
the company has.
Most of the time, people think of the stock as only an
investment vehicle, and forget the fact that a stock represents an ownership of
a company.
In the stock market, investors always try to assess the profit
that will be left over for the shareholders.
This is the reason why stock prices are volatile. Business outlook constantly changes, as well
as the future earnings of the company.
Gambling is a zero-sum game, meanwhile. This means that it merely takes money from a
loser and hands it to a winner. There’s
no value created.
Misconception 3: You must be a genius
People shy away from the stock market thinking that it’s only
for those who are well-endowed with financial and mathematical knowledge. However, it doesn’t really work that.
The fact is that even those who have nothing to do with
finance can start investing in the stock market, without having to present
certificates or degrees.
All you have to have is a good grasp of how the economy and
the market work. You don’t even have to
dig deep right away. You just have to
remember some rules of thumb, maybe read some tips and advice.
You can find a good broker to help you out as you start, and
that’s all you really have to do. That doesn’t
require you to be rocket-scientist-level genius.
Conclusion
The stock market isn’t as out of reach as many have been
thinking. Even the most ordinary people
in can enter into the market and become a profitable investor. If you’re planning to invest in the stock
market, try to avoid the misconceptions listed above.
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