Are stocks risky?

A lot of people think that investing is risky. So, they would rather put their hard earned money in the bank and not lose sleep by investing in the stock market. Warren Buffett has this to say about risk: “Risk comes from not knowing what you’re doing.” So, if you don’t know anything about the stock market and you are fearful about it, then of course investing is risky! But if you read books, go for courses and talk to people who have invested, then investing would become less risky.

Personally, I’m a very risk averse person. Thus, value investing suited me as value investors analyse a business thoroughly, make sure it can deliver in the long run and demand a margin of safety before investing in the company.

So, before you start investing, always know what you are getting into. Read up on stocks, how the stock market works, who are the players in the market, how do listed companies work, etc. Then, learn how to start investing proper by reading books or you can simply google it. I have learnt about investing mostly from books. A book that I would recommend for all beginners who want to start learning about investing will be “The Neatest Little Guide to Stock Market Investing” by Jason Kelly. Try out virtual portfolio under Reuters Finance. It has free portfolio service where you can manage your own stocks using virtual money. You can access the US market, SG market and HK market with Reuters Finance. Once you learn more and your knowledge increases, you can invest with lesser risk.

Even crossing the roads can be risky if you don’t look left and right and just cross when the red man is still being shown. But you can minimize the risk by waiting for the green man (that should be the way as I’m not encouraging jay-walking). It’s the same principle when investing in the stock market…

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