Some people are afraid to invest because they believe that investing is gambling – that you’re betting on whether a company is going to go up or down in value.
While this is true if you’re a day-trader (buying stocks to hold for a few days), the same doesn’t apply if you’re holding stocks for the long term.
When you’re gambling, the odds are intentionally stacked against you. The house doesn’t want you to win. With investing, the companies you’re investing in want to succeed, and their success is your success.
While the value of a stock can go up or down in the short term, the stock market has historically risen over the years. (Keep in mind that past performance doesn’t guarantee future success).
Of course, not all companies will succeed. However, if your portfolio is diversified, you’re likely to come out on top – even if one stock fails, your other stocks will most likely balance out losses leading to an overall profit.
There are steps you can take to reduce risks, such as investing in ETFs, and diversifying your portfolio.
Check out the WomBites Articles on “What is an ETF?”, “What is diversification?” and “How can I reduce my risk?” to learn more!