On... a Risky Business
I told a good friend of mine that I was going to start investing in the stock market and his response was far from unexpected. "You're either going to make a lot of money or lose a lot of money. The stock market is risky". Is it truly though? Generally, risk can be defined as a permanent loss of capital . That also usually happens when you don't know what you're doing. So, is investing in the stock market a risky business? Based on the two criteria I mentioned, I would say it depends ( meaning it can be risky or not risky ). Confused? First criteria - permanent loss of capital . Sure, you can lose money investing in the market but..... how much you lose depends on you. Say you invest in a property which costs 500,000$ and the price of the property drops by 10%, you would have lost 50,000$ when you sell it. On the other hand, you invest 1,000$ in the market and you lost 100% of it. You would have only lost 1,000$ ( yes, you can invest as little as 1,000$ and...