What would you say to a new investor to calm their fears of investing in stocks?
I would say, don't start off shooting for the stars; start small. It's much easier to lose a $100, as opposed to $5,000. As for the fear factor, it would be a good idea to stay away from stock options and anything else high risk. This way if the investor gets scared they can take out their money with only a small loss.
In a short sentence, don't risk more than you can afford to lose. If you buy £1000 worth of shares, even if you (obviously) think it's going to go up, consider it £1000 lost.
I would say, stay away from the stock market entirely, unless you have money you can afford to lose. That is especially true in the current economy. While some may advise investing small sums, that is not always possible, for there may be large minimum investments required, depending on the stock.
As for so-called "penny stocks" ... you reap what you sow.
If you insist on playing the market, do nothing at all until you make a thorough study of the entire system, and understand it fully. Know that if you do not, you open yourself up to the potential to lose a lot of money.
This is the advice I follow--I know that I know little enough about it to stay far, far away.
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