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What Makes You Shy Away from Stock Trading?

The stock market is rallying.  This has happened due to a variety of reasons.  For instance, the technology sector has been bustling with a lot of commercial activities that resulted in huge earnings for the technology firms.  Moreover, the rate of employment in the US has shown signs of improvement that contributed to this rally in the stock market.

Though the stock market now spells good prospects for the companies as well as for the investors, yet most people prefer to stay away from it, especially when it comes to stock trading.

A Peep Into the Investor’s Mind

Different people have voiced different reasons for opting out of stock trading.  However, one of the prominent reasons amongst them is the fear of incurring a loss.  Apart from that, many investors have also cited the lack of knowledge to get started with such a mode of trading in the equities market.

In addition, others have reasoned that either they don’t have sufficient funds to invest in the stocks or that they don’t prefer to do it at all.  There is no doubt that these people have shied away from stock trading just to protect their finances and financial stability.  Still, the reason to justify their abstinence isn’t at all that serious.

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“Shying away from a smooch and not from stock trading”She’s shying away from a smooch by harttmlp, on Flickr.  This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

Why People Steer Clear of Spending Their Money in Stock Trading

Here are some of the reasons that compel people to avoid stock trading:

Lack of Necessary Funds

A lot of people stay away from the stock market due to shortage of fund.  People say that they don’t have sufficient amount of cash at their disposal to invest in the stocks.  However, one of the crucial factors to make it big in the world of investments, be it stocks or any other asset class, is to devote ample amount of time towards them.  This is because experts have opined that stock markets have a tendency to provide around 10% return on investments when they are dealt with for an extended period of time.

As a general rule of any investment, investors must build up a reliable amount of nest egg before foraying into the financial markets.  So, what every individual must do is to stack up around 3-6 months worth of monthly household costs as savings to mitigate total financial loss in case of a turbulent stock market.

Use of Professional Help

In many instances, people have said that they participate in the financial markets (here, the stock market) but with the help of investment professionals like financial advisers or stock brokers.  Though taking advantage of their expertise is definitely one of the ways to make investment decisions, yet they aren’t always the best substitute.

This is because these professionals levy service fee for doing what a layman can do all by himself and that, too without investing a dime.  On top of that, online stock trading, for example, isn’t that much of a complex task to do.  Then why pay a financial adviser to learn doing it?

Unawareness of Investment Knowledge

It is very likely for a person to be ignorant about the basics of stock trading.  It’s a fact and it’s accepted.  However, for those who consider it to be a reason for their apathy towards such an investment option, then it is for them to know that there are lots of excellent do-it-yourself websites such as E*TRADE Australia, who can help them with stock trading through the E*TRADE online trading, from where they can get a solid foothold about stocks and learn other investment-related technicalities.  Additionally, there are endless resources available on the Internet that teaches people, how to invest in stocks at no cost at all.

Finally, there are some who consider it to be wastage of time or rather meaningless to put their hard-earned money into something as risky and volatile as stocks.  On the contrary to this belief, one can create a simple online brokerage account and purchase some single index funds that follow companies listed in the S&P 500 and keep them lying till the time he/she needs it.  There is no bar in the amount of time that is devoted in the stocks but then it isn’t compulsory at all.

Jesse Fin
 

Jesse worked as a journalist for a large tv station in Korea in her past life. She now works full time at home as a blogger and loves to help her friends manage their personal budgets.

Click Here to Leave a Comment Below 11 comments
Brick By Brick Investing | Marvin - May 8, 2013

I have noticed that individuals who are scared to invest typically decide to make the plunge right at the top of the market when they see all their peers making money.

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    Arnel Ariate - May 8, 2013

    Hi, Marvin. That’s people needing social proof. People tend to do things if they see others already doing them. It’s a lot like joining the band wagon. Although, I think those people plunging right at the top of the market might be a little too late. For all we know, the market might be on its way down.

    Reply
Carnival of Retirement at Money Life and More — Money Life and More - May 13, 2013

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Carnival of Retirement – 70th Edition - Carnival of Retirement - May 16, 2013

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IRA vs 401k Central - May 21, 2013

I can agree with your reasons. The big factor here is that investing is a risk. Even something as simple as buying the same stocks that make up an Index Fund are too much for some people, but they have no trouble investing in mutual funds with the same makeup within their 401k plans. It’s simply a fear of the unknown and lack of confidence that keep people out of the markets. The only cure is to try it a few times and find out what works. Once the capital gains come in, that usually peeks more curiousness.

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    Arnel Ariate - May 25, 2013

    That’s a good insight. It’s wise to start with small investment amounts to minimize the risk, especially when you are a newbie.

    Reply
online share brokers India - July 11, 2013

Thanks for sharing the info here. Keep up the good work. All the best.

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Nick | Millionaires Giving Money - November 19, 2014

What really scared me at the beginning was the fact that 10% of traders were making 90% of the profits. I knew trading would be hard at the beginning and immersed myself in knowledge, experience and mentorship. All this along with strict money management helped me to get into the 10% and I am now making profits consistently.

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Sage @ The Dream Team - March 10, 2015

The main thing that has caused me to shy away from investing from time to time, has been the realization that so many companies out there, are heavily manipulated, so it can be tough to get a true grasp of what may be going on with them. I have to admit though, that after seeing this, you have once again sparked my interest in trading, so I may have to reexamine how involved I may want to become in trading myself.

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