The Importance Of Stocks In The Stock Market

755 Words 4 Pages
Stocks are a type of security that signifies ownership in a corporation and represents a claim on part of the corporation 's assets and earnings. Over the years, the stock market has dramatically shown a decrease in the economy market. The reasons why I refrain from investing stocks because The Knowledge I have about stocks are limited, Financial Difficulties and stock market crashed. Investing in stocks sounds corresponding idea to earn money over a time period however, the possibly of making that money is very narrow and uncertain.

First, the stock market is the market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets. On the other hand, many people like me never took the
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As a college student, the financial aspect of my life is basically to pay for classes and book and any necessary item to get me through the season. Investing is not really an option because the living to paycheck to paycheck with paying the necessary bill included. Obviously, when you don’t have a financial foundation, you can’t think about long-term investments in your future. Also, as an individual investor, you’re going to get charged high rates for trading stocks and manage. Even institutional investors who have access to much lower rates have a hard time beating the market after including such fees. According to Money to Poem “Suppose you need a minimum of 20 stocks for proper diversification and you trade each just once a year. A typical trade costs $10. That means you’d need at least $100,000 invested, and trading disciple, just to match a relatively expensive index fund. Trading leads to higher trading fees and lower returns.” Likewise when you’re investing stocks, you’re taking a big risk which can have the potential to negatively affect your financial welfare. Most people are unable to provide extra money to invest in stock because of their conditions such as: employment, living situation and …show more content…
In previous years, the stock market has crash which lead the Great Depression. All the money that people invest in stock was lower or never existed anymore. Also, the crash makes people less confident in investing stock which can discourage people from spending. Furthermore, many companies took a big hit and lower their chances of maintaining a stable flow of business, which lead to start borrowing more money to lower their value. According to highland explanations, “The panic that ensued after this dramatic drop in the stock market caused many people to lose confidence in the financial system. Everyday workers who had no actual investments affected by the crash became skeptical and lost confidence in the banking system 's ability to safely store their money. This resulted in a massive "run on banks" to withdraw cash. Many banks did not have the cash to satisfy client accounts, and thus failed when they ran out. When the banks closed, people no longer had access to the money they had

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