When investing, you can invest in many types of investment products, such as stocks, ETFs, real estate as well as bitcoin or gold. Within these products, again, you have subcategories. Such as dividend stocks and growth stocks. You can make investing very complicated and complex, but you don’t have to. Hip hi to the times we live in, where all sorts of products and parties have come to market that make investing accessible and easy for the individual. In this article, we take a closer look at stock investing.
What are shares?
Shares are very small pieces of a company. So when you buy shares, you own part of the company. If a company makes a profit, you often benefit from it in the form of dividends. And if the underlying stock price rises, you benefit from the price increase. The dividend is always positive, after all this is company profit, but a share price increase can also be a share price decrease, for example if the company or the economy is doing badly. If you bought a stock for €,-100 euros, and it is now worth €90 euros per share, you make a loss of €10 euros per share related to the decline in price.
You have different types of shares, such as:
Growth stocks, cyclical stocks, defensive stocks and dividend stocks. The difference is not that trading different types of stocks is different, they are just defined differently by the market. General Mills is a dividend stock, and Facebook is seen as a growth stock.
Which stocks should you choose?
Which stocks you should buy, we can’t tell you. We do not have a crystal ball and are not analysts who analyze stocks and markets on a daily basis. Never blindly take advice from people who aren’t either but want to tell you which stocks to buy.
Which stocks are a good investment is entirely personal. Moreover, you don’t have to invest in single stocks at all to successfully build long-term wealth. Would you still like to invest in stocks – which we understand, because it’s fun! – Then we recommend doing your own proper research. Think of investing in stocks as more risky.
Always remember that you want to minimize risk, and you do that by diversification. When you invest in an ETF, you automatically spread your money across many companies. With stock investing, you are betting on 1 horse.
When is stock investing for you?
Investing in stocks is fun, but is absolutely not a must for long-term successful investing.
The goal of investing is to turn your money into more money. Grow your ability. To do this successfully year after year, it is important to observe a few rules, such as spreading your portfolio (not putting all your eggs in 1 basket), paying attention to costs and taking the long view.
In addition, a number of other aspects are important, such as keeping your emotions in check (not letting FOMO or fear drive you), always making sure you minimize your risk and, above all, not losing money. Everyone wishes they had bought Tesla shares or some Bitcoins in March 2020, but stepping in for fear of missing the boat is not always a good choice as far as we are concerned. As stock market wisdom goes: let profits run, cut losses. The pain of losing money is greater than ‘if only I had…’. Therefore, we believe that investing in stocks is riskier, and moreover, not a MUST.
Some people are fans of investing and like having stocks in their portfolios, but if this makes you uncomfortable, doesn’t want to do all the research or makes you restless: no problem. Investing in stocks is not a MUST to build wealth.
Investing in stocks or ETFs?
Above all, do you want to not have to worry about your investments and be as unconcerned with them as possible? Perhaps an ETF is a finer product for you than stocks. Do you enjoy following news around the company you own shares in and do you dare to take a little more risk? Then maybe investing in stocks is for you!
