The Pros and Cons of Investing in Stocks

When people think about investing in stocks, they think of all the folks who seemed to have made millions of dollars on the stock market. As one of the oldest forms of raising capital for a business, stocks certain offers the opportunity to make a lot of money if you invest wisely. Picking the right stocks at the right time can result in huge gains as the stock increases in value. The challenge, though, is to pick those good stocks when they are at their lowest price and then turning around and selling them when they are at their highest value. This takes a lot of knowledge and experience to do.

However, investing in stocks is also a high risk venture that is capable of flushing every penny you invested down the drain. The value of the stock is tied directly to how the company manages itself and its finances. When the company does well, the value of its stock goes up. When they do poorly then the value of the stock goes down taking your money with it. And anything can affect a company's  performance including poor management as well as the general state of the economy.

Other advantages of investing in stocks include the fact that it is accessible, it can be easily converted into cash, and you can save money on your taxes. The accessibility part is what attracts many people to the stock market. This is pretty much what day trading is all about. Anyone with enough knowledge about share tips or how the system works can buy and sell stocks. The liquid factor of stocks is also attractive. If you need cash fast, then it is easy enough to sell stocks and get the money you need. If you lose money in the stock market, you can use those losses to offset the amount of capital gain taxes
you will pay.