Share Investing: The Good, Bad & Ugly by The Horizon Institute

Introduction To Share Investing

*THIS ARTICLE CONTAINS PAID PROMOTION*

The world of finance and financial markets is commonly ignored by those who work outside of the industry. However, due to excessive management and performance fees, as well as the increasingly low cost of executing trades has led to a change. Furthermore, there is an increasing interest by those outside the industry in share investing.

For those interested, the Horizon Institute is here to help guide you through the financial markets.

Check out the key reasons for getting into share investing below!

Key reasons for owning Shares:

  • To beat inflation – with interest on savings at an all-time low the stock market is one of the few markets left that offer inflation-beating returns.
  • Low maintenance – it is crucial to monitor your portfolio at regular intervals. In contrast to other types of investment, such property, the amount of on-going effort is less significant.
  • Globalised world – in the past share ownership was firmly rooted in investing in well-known UK companies. However,  this is now a thing of the past. Today you can access and purchase shares in over 100 countries as a UK citizen. This opens up new markets and opportunities irrespective of geographical location.
  • Limited liability – the financial innovation of separating liability risk from ownership revolutionized the financial system. Today there is no risk of being held personally responsible for a public companies debts. As a result, this gives investors confidence in that they understand only the value of the shares can be lost.
  • Very good liquidity – Due to the supply and demand of the market, it’s extremely easy to turn your position into cash.

Key reasons for avoiding Shares:

  • Level of risk – In contrast to other safe assets, such as government bonds, the level of risk is substantially greater. This is compensated by the increased rewards or profits to shareholders.
  • Market volatility – The financial markets move in broad cycles, and crashes are semi-frequent events. This can pose a large risk to those who invest at the wrong time. As a result,  it can take decades for a portfolio bought at a peak before a crash to recover.
  • Lack of Control – as a small shareholder in a public company, your individual influence on the management or running of the company is going to be non-existent.
  • Knowledge – the financial markets are watched and analyzed by some of the brightest minds in the country. As a result, the competition for making a profit is often very high.
  • Fraudulent Stock Brokers and Educators – Furthermore, an entire market of fraudulent brokers and educators has emerged. As a consequence, beginners often fall into the traps set out by brokers who have the “perfect profit-making system”. Some educators even have the nerve to tell you that “it’s easy to make $10,000 a month trading the live forex markets”.

In conclusion, to learn more on how to trade shares and stocks, check out Investing in Shares 101.  Also available in both paperback and digital formats!

Guest Post – Horizon Institute 

SJB & GQ

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