When you are thinking about starting your trading journey in the stock market and doing the required research, you will come across a number of misconceptions about equity investments. Yes, it is necessary for you to know the pros and cons of moving into the stock market, but it doesn’t necessarily mean that everything you find is true. Shay Benhamou has highlighted some of the misconceptions to make it easier for you to make investment decisions:
You need to be rich to invest in the stock market
No, you don’t have to be rich to invest in the stock market. Shay Benhamou suggests that you start investing from a young age and steadily build your wealth. This means buying a good stock at the lowest possible price. There are a number of such stocks that you can find and you don’t need copious amounts of money to invest in them. If you want to make it big in the stock market, then the key is to remain consistent and start as early as possible.
You have to be an expert to choose the best stock
Everyone doesn’t need to be Warren Buffet to select the best stock for investment. According to Shay Benhamou, you don’t have to be a market expert or have a great deal of experience; as long as you have the right knowledge, you can get started easily. Basic knowledge can assist you in starting your journey and you can learn your lessons along the way.
You have to be young to invest in the stock market
Another popular misconception about equity investment that Shay Benhamou warns about is believing that only the young are eligible for it. Age doesn’t matter when it comes to investing in the stock market. It is up to you to decide if you want to be an active or a passive investor. Of course, younger investors are more open to taking risks and may increase their exposure, but this doesn’t mean that older investors cannot explore the opportunities.
Returns are more important than risks
It is essential to remember that you cannot just trust a single company and invest in it. Shay Benhamou says that it is possible for an established company to go bankrupt due to unforeseen circumstances. You have to be able to identify risks and minimize them in order to build your wealth. This means that you have to focus on the risks and not just think about the returns. Once you begin investing and start handling the risks, you will be able to learn more about trading and this will help you make better returns.
You can buy a great stock at any price
Another major misconception that people have regarding equity investment is believing that just because a stock is great, you can buy it at any price. As per Shay Benhamou, it is not necessary for the stock price of a good company to be on the high side. Every stock has its ups and downs and you can wait it out and buy a stock at a good price that reflects its value, instead of paying a higher price for it. Always keep an eye out for bargain sales when you are investing in the stock market.
Equity markets are like gambling
There are a lot of people who believe that trading in the equity markets is like gambling and this is not true at all. As Shay Benhamou highlights, speculating and investing are two different concepts. Sure, short-term investments could be similar to gambling, but you cannot say the same for long-term investments. If you are able to identify some good quality stocks and choose to invest in them for the long-run, you will be able to generate solid returns. Equity investments turn into gambling when you start playing with leveraged trading, penny stocks and volatile stocks that are high risk.