Is stock trading worth it?
Stock trading can be an appealing career for money-motivated and high-achieving individuals. Indeed, it can be a financially rewarding side hustle or even day job, if you have the right skills, experience and commitment to learn the strategies.
You may be wondering if stock trading is for you and if it is really ‘worth it’. Here, it largely depends on what you are looking for. Do you want a career change? Are you already an investor looking to diversify your financial portfolio? Or do you simply want a side hobby to make some extra cash?
Either way, whether you’re brand new to the financial sector or you’re simply curious about ways you can accumulate wealth passively, or actively, learning all about the stock market and what it can offer you is crucial before you make any big decisions.
In this blog, we’ll wall through the positives of stock trading, the risks involved and ultimately how you can learn to trade them.
What is stock trading?
Stock trading comes in all different shapes and sizes. There are various methods, theories and strategies involved, and niches and specialities within each type.
However, generally speaking, stock trading is a modern approach to investing. You can accumulate profits by trading in the stock market, whether you are an individual looking for passive income or the breadwinner of your family looking to expand your personal wealth.
Although stock trading is accessible for people of all ages, the dangers in stock trading come to the fore when people attempt to trade without first understanding the practice – and skills – involved. Indeed, you must already have a high disposable income (that is, money that you won’t immediately need now or sometime in the foreseeable future) and a high-risk tolerance. You also need some degree of patience: long-term investments rarely come to fruition in just a handful of months. You’ll need to trust yourself and the process that eventually your stocks will deliver returns in a decade or so.
What are the benefits of stock trading?
Aside from generating personal wealth, stock trading is enormously beneficial to the economy – boosting jobs, customer demands and companies’ revenue.
In addition, stock trading is easy to buy. A broker, financial planner or guidance online means you can set up a trading account in a matter of minutes. Though just because you can doesn’t mean you should straightaway.
Stocks are also easy to sell. The stock market permits you the opportunity to sell a stock at any time.
Long term investment
The key to remember when asking yourself if trading in the stock market is worth it is if you are willing and prepared to commit to a long-term investment. Waiting for months, if not years, to see a decent profit can be boring and burdensome. But in order for it to be successful, you must make sure you only use money that you can afford to lose and that you won’t need in the immediate future for your bills, general expenses or livelihood.
Indeed, it may take ten to twenty years before you expect to see a positive outcome on your investment. And there is still no guarantee that your journey to accumulate wealth be plain sailing.
The good news is that you can put an investment down on almost anything: real estate, bonds, precious metals, foreign currency, gold, property, bonds, fixed deposits, mutual funds and more can all be invested in the stock market.
To beat returns on savings account
To put it simply, there is no other financial instrument that can give you better returns than investment in the stock market in the long run. You can make a generous fortune for yourself, if you plan accordingly and adhere to the right strategy.
Indeed, trading in the stock market is worth it if you’re hoping to beat the returns on your savings account.
If you plan to keep an eye on your investment
The stock market is worth it if you plan on watching your investment and stocks over time.
Despite popular belief, investing is not the same as gambling. Betting is considered a zero-sum game as players either win or lose at the detriment or benefit of others. Basically, to win, someone else must lose.
Meanwhile, investing doesn’t involve players, chance or the prospect of someone losing. It is a much slower process to build wealth.
Again, while no investment is considered risk-free, the stock market tends to net an average return of 7% each year – so at the end of the tunnel, you can expect to return a handsome profit.
You don’t need access to that money in the short term
Engaging in the stock market can only be worth it if you submit a substantial sum of money which you do not need in the short-term.
Life can throw unexpected obstacles our way. Take the pandemic as a prime example. But even before Covid-19, there is no guarantee that you will stay in the same employment or benefit from a generous salary for the foreseeable future.
That’s why it’s wise that you only invest what you can afford to lose. The money you set aside into your investment should make little difference on your everyday life – and you shouldn’t wish to seek it back again should you happen to fall on hard times. You run the risk of turning your trading into a form of gambling if you use your personal savings and rainy-day fund – and that’s an inordinately stressful experience.
Instead, accumulate the money that you wish to invest over time first so that you still have your personal savings to fall back on in case of an emergency. This way, you can protect your investment funds so that you never need to withdraw them back.
Then, put your faith in the process that you can net a huge sum of money by being patient and sticking it out in the long term. You could be someone who goes on to make millions by investing this way.
How to learn to trade stocks
The best way to learn how to trade stocks is by committing to a financial online course. With diplomas, certificates and financial trading available at the touch of a button, you’ll be able to master the industry by dedicating a few months to studying the market.
Of the utmost importance, you need to know all about market risk, economic risk and inflationary risk. While some aspects can be self-taught, a financial course will enhance your understanding and provide an in-depth insight into the sector. A diploma or certificate also bolsters your chances at establishing a financial career.
Is it worth it?
Thus, stock trading is only worth it if you commit to learning the trade and investing in the long term. If you follow your moral compass and ensure that you’re not greedy or driven by fear in your financial decision-making, you can also have a lot of fun watching your wealth gradually grow over time.