ATFXWhat are the advantages and disadvantages of stock investment, and the most important thing is to avoid fraud

Stocks are also one of many wealth management products, and as a high-risk and high-yield investment project, more and more people are choosing to invest in stocks. So, what are the advantages of stock investment?What are the drawbacks?Let's take a closer look with the editor below!

What are the advantages of stock investment?

【1】High investment returns

Although the price of common stocks fluctuates frequently, the price of high-quality stocks always shows an upward trend. As the company develops, the dividends received by shareholders will continue to increase. When the investment decision is correct, the return on stock investment is relatively high.

【2】Can reduce the loss of purchasing power

The stock profit of ordinary shares is not fixed and will increase with the growth of the company's revenue. During periods of inflation, the income growth rate of a joint-stock company is greater than the inflation rate, and the dividends received can offset the purchasing power loss caused by inflation.

【3】Strong liquidity

The liquidity of listed stocks is strong, and investors can buy them with idle funds at any time and sell them when they need funds.

【4】Can achieve the goal of controlling a joint-stock company

Investors have the right to participate in or supervise the production and operation activities of the company. When the investor's investment reaches a certain proportion, the goal of controlling the company can be achieved.

What are the drawbacks of stock investment?

1The volatility of stocks is high, and any fluctuations in the capital market can lead to fluctuations in stock prices. For example, positive or negative news, capital inflows and outflows, changes in national policies, and the performance of listed companies can all lead to fluctuations in stock prices, making it difficult for retail investors to make money.

2The high risk of stocks is because there are many factors that affect stock volatility, which increases the risk of stocks.

3For retail investors, the operability of stocks is difficult, and many investors always "sell up and buy down", resulting in them not earning money at all.

4The professionalism of stocks is strong, and if investors who don't understand anything buy stocks, it is easy to lose money in the stock market.