Investing on the stock market comes with risks… Here’s how to handle them

Julie Brownlee, Fsp Invest, 23 Mar. 2015

Tags: investing, investing on the stock market, risks, investing risks, stock market,



The overriding motive for investing on the stock market is to make money.

Over the long-term, investing on the stock market offers inflation-beating returns. But over the shorter-term, there’s the chance of market crashes and share prices falling.

So how can you deal with the risks of investing in the stock market?

Read on to find out…



How to deal with the risks of stock market investing


Before you put a cent into the stock market, you first need to determine:

  • How risk averse you are;
  • What you want to achieve; and
  • If you’re looking to generate an income.

To decide how much of your money you’re willing to risk on the stock market think about:

  • How much you can afford to lose if the market crashed;
  • How long you’d wait for the market to recover; and
  • How you’d cope if the market crashed.

By giving honest answers to the above questions, you can see how much risk you’re prepared to take on.


The golden rule of investing


The one thing you must always remember with investing is never to risk money you can’t afford to lose.

Never borrow money to invest. And never invest money that you need for something else.

For investing, you should use disposable income. You can work on building your portfolio over the years with this cash.

And before you put your money to work on the market, ensure you have some risk management strategies in place that can help to limit your losses.

For example, you could use stop losses on all your investments. This means if a share price drops to a certain level, you sell. Doing this allows you to know how much you could potentially lose in monetary terms from one investment.

As time passes, you should reap the rewards of rising share prices and receiving dividends.

So there you have it. Here’s how to handle the risks of investing on the stock market.

*********** New release ************

Read this now, or miss out on THE buying opportunities of the year.

You could make a fortune with these 5 potentially explosive shares hand-picked by our market expert, Francois Joubert.

And we'll give you all the exciting details in this FREE Red Hot Report

**********************************


Related QA

Pic
d.c.heger asked:
MY QUESTION IS – I bought Bitcoin & Etherium some time ago – at first they grew nicely but now they are lower than what I paid for them. Should I [read more]
Published at 04 Apr. 2018 in: Investing 5 shares due to rocket 1 Answer
Pic
kavesh.maharaj.73 asked:
Hi Josh. I would like some advice on TFSA. I can get an interest rate of 7.8% nominal at a bank if I invest the R33k upfront in a fixed deposit [read more]
Published at 19 Mar. 2018 in: Investing Tax free savings vehicle 2 answers
Pic
kavesh.maharaj.73 asked:
Hi Josh Quantum wants to buy back shares from shall investors at what I think is a low price of around R3.86. You tipped the share in February [read more]
Published at 14 Mar. 2018 in: Investing Real wealth 5 answers
Pic
elizastrydom asked:
Hi Timon I am interested in registering for your Red Hot Storm Trader service. I am already a Red Hot Penny Shares investor. My question is [read more]
Published at 28 Feb. 2018 in: Investing Trading platform and broker 1 Answer
Pic
ManuE asked:
I have an interest in investing in Bitcoin, I just don't know how. If I buy Bitcoin with R15 000, how much can make (Return On Investment)? [read more]
Published at 25 Feb. 2018 in: Investing Investment 1 Answer

Related articles:


Latest:

Comments
0 comments



 
 


Youtube Twitter Facebook

Connect with us:    

POPULAR TOPICS
  • Accelerated Investor
  • Accessories