Many people shun the stock market due to fear and ignorance, fear of losing their hard-earned money because of hearing all the horror stories of people losing all their money in the stock market. Ignorance occurs when people have limited knowledge of how investing works and thus think that it is too difficult for them. In this article, I will discuss the 4 reasons why people give for not investing.
Reason 1: Share Price Is Too High, I Can’t Afford To Buy A Share
You may be wondering, “If only I have $100 to invest each month, I can’t possibly buy stocks of Big Tech companies such as Apple, Microsoft, Alphabet (Google) or Facebook”. But actually, you can. If you use the Interactive Brokers trading platform, you can purchase fractional shares of great companies on a budget you are comfortable with. See the below table for illustration.
If you have invested in Alphabet, Microsoft, AMD or Nvidia at the start of 2021, your $100 would have become $150 or more by now.
More about Interactive Broker (ibkr):
Which Platform Do I Use For Options Trading?
Reason 2: I Have Missed The Boat To Pick Up Good Stocks When Market Crash In 2020
If you think that you have missed the perfect opportunity to pick up fundamentally good companies in mid-2020 when the pandemic caused a market crash and share prices bottomed, then you would have missed out on the gains in 2021 as the stock market continues to rally to newer record highs. Over the past 100 years, the stock prices of fundamentally good companies have generally increased over time.
Reason 3: The Stock Market Is Too Risky
The stock market is made up of many stocks. There are risky stocks, penny stocks, meme stocks and there are stable stocks tech companies such as Apple, Alphabet or defensive stocks such MacDonald, Coca-cola, Johnson & Johnson. Some people have a bigger risk appetite and also lose big on speculative stocks. However, it does not mean everyone gets their fingers burnt in the stock market. If you do your due diligence and lower your risk by investing in fundamentally good companies with a healthy balance sheet, you often make more money than you lose in the stock market.
Reason 4: Options Trading Is Too Difficult To Understand
That is the exact purpose of starting this blog, to explain and educate you on the basics of options trading so that you can overcome the fears and inertia to start on options. Some concepts may seem like rocket science but I assure you that if you put in the effort to learn, you will soon master them and get rewarded for your hard work.
I hope this article is useful in some ways and gives you the confidence to start your investing journey. You can try out the paper account on ibkr platform to start investing/ trading to familiarise yourself before investing with your money.