The stock market is one of the most beneficial places for an investor to put their money in but by far one of the most complicated investments. When you purchase a stock, you own a small percentage of the company hence when the company profits, they pay you a portion of the profits in dividends depending on the number of shares you own. On paper, this may sound like an easy task but in reality, it is quite the opposite.
The stock market is extremely volatile which means you can either gain tons of profits or you could lose a lot of it only in a matter of a few seconds. Short-term investing requires immense focus and is extremely time-consuming and risky. This method of investment might not be everyone’s cup of tea as timing your entry and exit is not easy at all.
However, short-term investments could also result in huge returns if you know what you are doing. Analyzing the market, checking the fundamentals (finances) of the company and looking at the earnings per share (EPS) are some of the factors involved when investing in the stock market.
The story changes when talking about long term investments. According to a Fidelity report, the best investors are dead or inactive. Long-term investments vary from 5-6 years all the way up to 20-30 years. The longer money is invested, the more potential it has to grow. While there’s too much uncertainty in the short-term market, over the long run, the stock market will most certainly rise.
Risk: Extremely high
Return on investment: Extremely high