Shares/Stock 5 Disadvantages of Stock Investment

[Suba]

When we have bought shares, it means we have become part of the issuer. My current observation is that many stock investments are made by students, especially from the economics faculty, besides they can directly practice how to invest in stocks they will also benefit from the difference between the purchase price and the selling price (capital gain). will also benefit from sharing company profits (dividends).

Not unlike other investment instruments, stocks also have advantages and disadvantages, so we don't only study the advantages but also need to study the disadvantages so that our mentality will be stronger to face market situations that will always be different and fluctuate.

There are several dis-advantages of investing in stocks as follows:

1. Capital Losses
Capital loss occurs if the purchase price of shares is higher than the selling price. In fact, stock investment is for the long term, so when a crash occurs, there's no need to panic and don't rush to sell shares.

2. No Dividend Distribution
Dividends are company profits that are distributed to shareholders, so if the company loses, no profits are shared.

3. Suspend
Suspend is an act of stopping the trading of certain shares by the stock exchange authority, so investors cannot sell their shares on the stock exchange until the suspension is removed.

4. Stock Delisting
Stock delisting is the removal of certain shares from the stock exchange, because the shares have not been traded for a long time, or sleeping shares.

5. Company Liquidation
Company liquidation or dissolution of the company will cause the shares that have been issued to fall in price, so that it will be detrimental to investors.

 

[cmoneyspinner]

When my late husband started looking into stock investing, the major disadvantage was NO MONEY! That's why we were glad to find mutual funds. You could invest in mutual funds for a small amount. These days, thanks to platforms like STASH and Robinhood, people with hardly any money can get started investing in stocks by buying fractional shares. You can start with as little as $5.

 

[kayode10]

Stock trading can offer significant benefits, such as the potential for high returns and the ability to build a diversified portfolio. However, there are also several significant disadvantages that investors should be aware of before engaging in stock trading.

One of the biggest disadvantages of stock trading is its inherent risk. The stock market is highly volatile, and stock prices can fluctuate significantly in response to a wide range of factors, including economic news, political events, and company-specific news. This can lead to significant losses, especially for inexperienced investors who may make impulsive decisions based on emotion rather than sound investment principles.

Another disadvantage of stock trading is the potential for fraud and market manipulation. Unscrupulous companies or individuals may engage in insider trading or other forms of market manipulation, leading to artificially inflated stock prices or losses for individual investors.

Stock trading can also be time-consuming and require a significant amount of research and analysis to make informed investment decisions. Many investors rely on professional financial advisors or analysts to help them make informed investment decisions, which can add additional costs and fees.

Finally, stock trading can also be expensive, with transaction fees, brokerage commissions, and other expenses eating into investors' profits. This can be especially problematic for small investors, who may find it difficult to earn a significant return on their investment after factoring in these expenses