Watch Out! Here are 7 Risks & Advantages of Stock Investing

 Watch Out! Here are 7 Risks & Advantages of Stock Investing - In the current pandemic era, the popularity of stock investing among millennials has skyrocketed. A number of advantages of investing in stocks continue to loom, prompting a number of people to invest. Yes! among other types of investment instruments, stocks offer the highest returns. So don't be surprised if many people are tempted to invest in stocks. If you are one of the people, try to consider the full advantages and disadvantages of investing in stocks below.

Advantages of Stock Investing

Offering many advantages is definitely the reason why this investment instrument is popular with many people, even by beginners today. Then, what are the benefits of investing in stocks that you can get? Following are the discussion points.

1. Getting Potential Capital Gain

In the world of stocks, there are several potential benefits that can be obtained by investors. One of them is the capital gain, aka the difference between the purchase price and the selling price of shares.

Capital gains generally occur due to trading activity on the stock exchange, which triggers fluctuations between the supply and demand of these shares. Therefore, researching the issuer before buying shares is an important thing that must be done so that you can get this potential capital gain.

Oh, yes, you will get a capital gain if you sell shares whose price goes up, yes. If the price starts to fall, you should sell the stock so that the loss is not big. Meanwhile, for those of you who invest in equity funds, being selective in choosing the best investment manager is also not to be missed, huh!

2. Receiving Dividends

Another stock advantage that investors are eagerly awaiting is dividends. Dividend is a distribution of profit for shareholders, which is given by the company according to the number of shares owned by investors. That way, the more stock lots you have in an issuer, the greater the dividend value that can be obtained. Some companies usually pay dividends once or even twice a year in a predetermined month.

This dividend distribution policy varies from company to company. There are companies that are mature and diligent in distributing dividends every year. However, because dividends come from the profits that the company gets, shareholders can potentially not receive them if the company does not have a profit.

There are also companies that rarely distribute dividends because the profits are used to finance expansion aimed at making the company's financial performance even more shining in the future.

So, buy stocks from companies that have good performance and prospects in the future so that dividends are not just a fantasy, gang!

3. Great Return

Large returns seem to have become one of the characteristics of stock investing activities. So it's no wonder, if many people are looking for a way to start investing in stocks, including the millennial generation. However, remember! The profit in shares per month or per day that you get is not always the same, because everything returns to the economic and political changes that have occurred in Indonesia.

So, don't let it because this month you get a big profit on a certain issuer, then move all your investments in other instruments to that issuer. Remember, diversification is important, gang! Diversification itself means not placing all your investment in just one instrument, with the aim of minimizing the risk of loss.

4. Have the right to participate in the GMS

As a shareholder of a company, you have the right to participate in the General Meeting of Shareholders (GMS). In GMS activities, you can find out the company's plans or strategies going forward, receive dividends, and find out information on financial reports and company annual reports.

Even so, the GMS itself is not a mandatory activity that investors must participate in because it is only an invitation. Quiet! You will still get dividends distributed, really.

Loss of Investment in Shares

There are advantages, of course there are also losses or risks that may be caused. This also applies to stock investing, whether it's long-term or short-term.

And here are some of the disadvantages of stock investing that you need to pay attention to.

1. Potential Capital Loss

The potential for capital loss or the difference in loss between the buying and selling prices is also a difficult moment for investors to avoid. The possibility of a decline in share prices is generally caused by several factors. For example, the company's performance has decreased, to changes in the country's economic conditions.

However, to reduce the risk of capital loss which is getting worse, investors usually have set a stop loss limit, aka a tolerable loss limit. For example, ApkVenue has set a maximum stop loss limit for an issuer of 10%.

So, if the loss experienced has exceeded this percentage, ApkVenue will immediately sell the issuer's shares to avoid the risk of greater losses. In this case, the stock that was sold at a price lower than the purchase price is known as a cut loss.

2. The risk of the company going bankrupt

Behind the lucrative sound of investing in stocks, there is one risk that investors fear the most, namely company bankruptcy. The reason is, if a company is declared bankrupt by a court or dissolved, then the claim rights of the shareholders will have the last priority after all of the company's obligations have been paid off.

This means that if the proceeds from the sale of the company's assets used to pay off these obligations are not left over, the shareholders will not get the results from the liquidation. Now do you understand why doing company performance research is so important before buying shares? And why are bluechip shares a mainstay of many people?

That is the explanation of the risks and benefits of investing in stocks that need to be considered, especially by potential novice investors. Because behind the benefits that sound promising, there is also the risk of loss that not everyone is able to accept gracefully.

Therefore, it is not advisable to invest in stocks using "hot" money or loan proceeds because it is not certain that you will get quick cash, gang.

Hopefully Helpful | Thank you