The Advantages and Risks of Stock Investment You Need to Know

 

The Advantages and Risks of Stock Investment You Need to Know

 

One of the investment instruments that has been (and is increasingly) popular lately is stock investment, as people are becoming more aware of the importance of having clear financial goals in life. In line with this, more and more people want to know how to better manage their personal finances.

 

Yes, investing in stocks is usually taken as a solution to achieving financial goals for some people – yes, especially those who are experienced enough in investing. If not? The tendency will definitely choose other investment instruments that are more beginner-friendly, such as deposits or precious metals.

 

Benefits of Stock Investment

The benefits you can get from investing in stocks can come in 2 forms:

1#. Capital gain

Or the profit you can get from the difference between the purchase price and the selling price of the shares you own. This is usually the target of stock businessmen. For example like this. We buy rice for IDR 15,000 per kilo. Then we sell them at the basic food stalls that we have at a price of IDR 20,000 per kilo. Then we will get a profit of IDR 5,000 per kilo. That's the capital gain we get.

 

2#. Dividend

According to the Big Indonesian Dictionary, dividend means an amount of money derived from the profits paid to the shareholders of a company. For example, we buy a car. Then the car is rented out as an online taxi. Every day you can pick up passengers, which then adds to your income. So, let's share the results with the online taxi driver, for example. For the results we get it can be called a dividend.

 

 

Stock Investment Risks

Along with high returns, stock investments also come with high risks as well. Some of the risks are:

 

1#. Stock prices fluctuate greatly, depending on money market and capital market conditions which can be influenced by many external factors. For example, such as the economic and political conditions of a country.

 

2#. The risk of the company going bankrupt. Shareholders will be the last priority to be paid back for their investment after the company's obligations to other stakeholders are fulfilled.

 

3#. Capital loss. When an investor sells his shares at a lower selling price than the purchase price.

 

4#. The company's shares are removed from the buying and selling list on the Stock Exchange. There are many reasons for a company's shares to be delisted, and of course this will be detrimental to the company itself as well as its shareholders.