Even if it doesn't go bust, it might do badly and the share price goes down. Do you sell and take the hit, or sit tight and hope the price goes up again? It's best to see shares as a long-term investment and not worry too much about the little daily ups and downs. And only put spare money you can afford to lose into them.
Another reason to see it as a long-term investment and not buy and sell too often is stockbrokers' fees. You need a broker to buy and sell on the stock market for you and they will charge every time you buy or sell. So to make it worth doing, the bigger the trade you can make at one time, the better.
Then there is the usual advice to spread your risk - spread your money around between several companies so if one goes belly-up you haven't lost the lot. But the more companies you buy, the more the fees will be.
And so unit trusts were invented for those of us who aren't rolling in spare cash. What a unit trust does is pool your money with other investors. That makes a fund, divided into units, and you're buying units in the fund. The price of units goes up and down along with the shares that the fund owns, and instead of dividends, you get distributions - same thing really under a different name. The manager of this fund can then do really big trades so the fees for YOU are peanuts. You ARE putting your money into the hands of the manager but there are numerous funds so you can pick the general area you want to invest in. Say you want to invest in Japanese companies. There are funds for that. Here's a typical list from one unit trust provider http://www.mandg.co.uk/investor/funds/fu... (actually this is the company that invented unit trusts!)
If you just want to put money in and forget about it rather than spending time actively managing your investments, you could do a lot worse than putting it into an index-tracker fund. A FTSE index-tracker buys shares in all the companies on the FTSE index, so there is no thought involved and the fees are really cheap. It also does better than 75% of other funds (which makes me start to ask why anyone should look further!) I've done very nicely out of this. You can also save regularly into one of these by direct debit and then you've got "pound-cost averaging" - if the price goes down, this month's direct debit buys more units so on average you're getting them for a good price.
Unless you're swimming in money to invest, don't bother with a stocks and shares ISA. Since Gordon Brown changed the taxation of share dividends, so that tax deducted from them is no longer reclaimable, it only makes any difference if you pay capital gains tax, and you won't unless you make over ￡11,000 profit on selling shares in a year (that's the current annual exemption). If you're doing that well, I suspect you can afford to pay for some investment advice!
You can potentially lose all the money you invest into the stock market, and any additional capital you decide to put in.
As for investing in the stock market, yes, it's a great idea, if you do your research and be patient. If you rush and day trade without knowing what you're doing, you will lose all of your capital in a matter of days.
The average investor takes years to develop a well-rounded system to trade. If you have dedication, you can do it in a few years or even months, but that needs you to study and analyze the stock market as if it's an all-day, all-week program in school.
i dont know whether you are in india but if you are an Indian it is a good option.
bank deposits interest attract income tax after a level of 10000
the growth rate of income may be more than that of banks if invested wisely
but you should also take care of attending risks particularly in india with a vilatile sahare market.
Is buying stocks and shares a good idea? I have tried to read up on it but the things i have read all seem to say about the pros. What are the cons? One website said you could lose all of your money, is that all the money you have invested into the stock or will it leave you bankrupt?
