My uncle wants me to invest money in buying shares. I would like to ask these questions to my fellow users:
- Is it wise to invest money in the stock market?
- Is there any age limit to start into stock market?
- Pros and cons when choosing to do so?
It's wise to invest in the stock market if it's the best alternative. What are the alternatives?
You probably should be over 18 to invest in the stock market on your own, and you shouldn't expect to take the money out for a decade or more (so ask for detailed advice on your own situation if you're over 50 or so.) But generally the sooner you start investing, the better. You cannot earn any returns on your money if it's not invested.
Assuming you your "Share Market" is the same as a "Stock Market":
Yes and no. Stock investing involves risk, including risk of losing all your money/principal. However, over a long period of time the US stock market has a strong growth trend. In general, it is a good idea to invest in a well diversified portfolio (meaning many many different kinds and risks of stocks) when you are looking to invest for a long period of time. I suggest using a Mutual Fund, which is a system where you give your money to a professional to be invested in stock. They make the decisions and take a small portion of the earnings.
Stocks are pieces of companies. They represent a part of a company. If you were to buy up all the shares of a stock, then you should be the new owner of the company (I realize there are different ways to structure stocks and their relationship to companies, but lets stick with the simple case.)
Wisdom is defined as : having or prompted by wisdom or discernment; "a wise leader"; "a wise and perceptive comment"
So buying stock is wise if your goal is partial ownership of a company.
Why might you want to own a company? There are multiple reasons.
Those are the only 2 reasons of which I can think. There may be more.
There is no age limit.
Pros and Cons as to when are entirely up to the above. Do you want to own a company?
It depends on your time horizon and personal risk profile. The stock market is a great tool to diversify your assets. Depending on the size of your asset base and your risk tolerance, you should consider diversifying your assets over real estate, stocks, bonds, gold, and other retirement tools. If you are using the stock market to speculate and make a quick buck, then you should limit the size of your allocation to this strategy. Right now the market is hot and has gone up for 4 months in a row, but that can quickly change. Investing in AAPL right now may seem easy, but that can quickly change. Determine how much risk you are willing to take, diversify, and then make your investment.
Investing in individual stocks is probably not a good idea unless you have a LOT of time to spend learning about stocks in general and specific companies in particular. It is a good way to lose money. If you don't have the knowledge or the time to educate yourself, I would recommend sticking to mutual funds. I would recommend splitting your money evenly into four categories: Growth, Growth & Income,Aggressive Growth, and International. Look for funds from a good company that have a load, or expense ratio, that is low. In general <1% is good, higher than that is too high.
Just don't do it now, especially in western nations including US. They're all in downturn for a decade or so to come, Maybe some chinese/indian, but little sums. US stock market booms every 30 ys, then collapses thx to Federal Reserve (e.g. 1929, 1999). Then be careful and watch out Greenspans hovering around Wall St. Take your time, diversify, DO NOT invest big cash. Best to you, GT.