Why Should Shares Be a Daunting Investment Option?

Daunting Investment Option

Almost a hundred per cent of people all over the world think about investing; however, less than half of them invest. Out of the investors, two-thirds opt for the safer options of the investment world. The third that are left try their hand at the risky side of the spectrum.

I believe this lot is the real player of the investment game. Until you don’t invest in the money market stocks or mutual funds, are you even investing? 

Shares are in the big league, much like a casino floor, where slots is the natural choice, and your probability of losing too much is as low as it is of winning. And the blackjack table is where you can make a fortune or lose a fortune. And that is the world of shares for you.

Let us dig dipper into this world.

THE CLASSIFICATION OF SHARES

A share the unit value of a company’s total capital, inclusive of all cash reserve and assets. The higher the capital is, the higher the share value is going to be. Simple, right?

Shares are divided into two categories;

  • THE RISKY KIND

These are commonly known as the equity stock. By equity, it is meant that the shareholder would have a right of ownership that would equal to the number of shares he has. A shareholder with 51% or more shares is an owner. 

The income from these shares is earned two ways;

  • Through dividends that are decided by the profits of that year or quarter.
  • Through capital growth, the company can increase the value of your share.

So far, they seem very appealing. However, when a company winds up, the equity shareholder is the last person to be paid. So there is a possibility that these shareholders may not be paid at all.

  • THE SAFER ALTERNATIVE

The safe option is that of preferred shares. Unlike equity stocks, these do not get any kind of voting rights. But they do get preferential treatment.

  • The preferred shareholder is always paid a dividend before the equity stocks. 
  • Even at the time of winding up, the company pays its liability first. 

Therefore, the chances of losses are meagre in these shares.

HOW DOES ONE LESSEN THE RISK?

People often ask how to buy in shares in Ireland with minimal risk. Some form of risk is going to accompany shares; this is inevitable. The reason for the same is the continually fluctuating money markets. However, if you are ready to invest in this domain, you need to do so wisely.

You can try to make use of these three techniques to earn more than you lose.

  • START SLOWLY AND STEADILY

This one is for all the beginners in this game. Think of this investment, as the gambling world. You never put out all your cards in the beginning. You wait, test the waters and then make the winning move.

The same is the case with shares. You cannot invest all your savings at one go. You need to start slow. 

I initially invested in just 20 shares of Grafton Group. Then once I had received my first dividend cheque, I was somewhat placated and start investing more.

This is something you need to do, as well.

  • RESEARCH AND THEN SOME MORE RESEARCH

Next is research. You need to be aware of every market trend and every prediction that can help you to avoid losses. It is not just the market trends that you need to study, but also the companies that you are going to be investing in.

  • An already established company would have a past, research it. You need to know the profitability of the company for the past five years because it is the company’s profits that will make you get the dividend.
  • If you are investing in a start-up, you have to have the knowledge of the industry it is in, whether that sector is flourishing or not, whether the future holds prosperity or not.

Going into the share markets blind is the colossal mistake you can make. 

  • DIVERSIFICATION

The next way to ensure that the risk is not on the higher side is to diversify your investment. Even by just investing in shares, you can take advantage of the thousands of companies listed on the stock exchange.

A perfect portfolio would look a little like this. You have a total of 100 Euros to invest in shares, so you will;

  • First, divide them in half; the first 50 would go in equity and the next in preferred stock.
  • Then you would invest half in the up-and-coming companies because these companies that have the most growth prospects. Remember you need not invest in just one or too many. 
  • The remaining can be invested in companies like Ryanair Holdings and CRH. These boast the title of best Irish shares and the chances of them failing are quite slim.

This way, even if one investment fails, you will not lose all your money. The income from others can easily cover the loss of that fail.

WINDING UP

In the end, all I want to say is that the share markets are terrifying and to say or think that they aren’t is just being naïve. In times of crisis, we always put our best foot forward. Similarly, the world of shares needs your best all the time, only then will it allow you to reap its benefits.

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Daunting Investment

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Hi! AJ is the founder and editor of GPF, He is passionate about marketing, trends and business things. Guest Post Feed is an online news, trends and information website that provides meaningful knowledge about business, finance, marketing, lifestyle, and much more.

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