Your Questions About Disadvantages Of Investing In Shares

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James asks…

Discuss the advantages and disadvantages of investing in shares compared to other popular forms of investment.?

I have to answer this question for a commerce assignment. It has to be 1000 words and at the moment i have no points for this. Could you guys please suggest some ideas for this question.

financi4 answers:

If you compare equity (stocks/shares) against debt (bonds) and cash,
shares have the advantage of historically larger returns over long time periods
but at the cost of greater volatility (meaning bigger gains and bigger losses)
over short time periods. Bonds usually do better in a slow growth environment
where interest rates are stable or falling, while stocks prefer faster growth.
Cash has historically gotten little respect, until last year where it was the only
corner that seemed to maintain its value. All three of these investments have
the advantages of high liquidity (under normal circumstances), relatively low
transaction costs, and require no effort to maintain (i.e. They are passive).

By contrast other investments are harder (i.e. Slower and more expensive) to
get into such as real estate or owning a small business, and they usually
require more direct involvement from the investor. Unlike running a paper portfolio,
scaling up this kind of activity probably means having to hire employees.
On the other hand, these have the advantage of direct control (I think it’s a
waste of time to return proxy forms on stocks unless you own a major chunk)
and there may be tax benefits as well. I suspect this form of investment has
created more personal wealth than the passive kind, but you would have to verify this.

You could probably make some common sense statements about other forms
of investment such as commodities, antiques/collectibles, life insurance,
or college education.

Charles asks…

advantages and disadvantages of investing in shares compared to other popular forms of investment?

financi4 answers:

One should expect returns from shares to beat the inflation with comfortable margin in the long term. Although it associated with market risk.


William asks…

What are the advantages and disadvantages of investing in share rather than other forms of investments?

Give me several reason

financi4 answers:

A few items to answer your question:

1. Buying and selling stock is nearly effortless and easily doable online cheaply.

2. You can track your stock picks’ progress daily and make adjustments as needed.

3. Stocks are generally liquid, meaning that there’s a ready market enabling buys and sales.

4. There are many opportunities for profits without waiting years for land or antiques to rise.

5. The Internet brings a huge wealth of information to your fingertips in an instant.

Frankly, if you do your homework and stay on top of your investment picks, you have a great chance of prospering. And when you do pick a bad stock, chances are that you’ll be able to recoup at least part of your investment capital.


Joseph asks…

wha tare the advntages and disadvantages in earning income of a rental property?

its for homework again lol but yeah are some advantages like a mostly stable way to earn income with not as much risk as investing shares?

need some disadvantages and more advantages thanks
what are* the advantages

financi4 answers:

It is a lot of work. Some people who are otherwise honest feel it’s ok to rip off the landlord. Some are filthy, some are just plain nasty and will damage your property because you expect them to pay rent on time. If you have the stomach for it and can put up with it for many years, the tenant will end up paying for your property and you will have a paid for house. The headaches still go on however. At this time there are still great tax advantages too.

Michael asks…

What is the difference between shares marked SA and SA(ADR)?

You see shares on different exchanges with SA and SA(ADR) attached and of course they are different prices and often move in different directions. What is this all about? What are the advantages / disadvantages of investing in these different shares in the same companies?

financi4 answers:

SA is an abbreviation in Spanish and French (maybe other languages as well) that means “anonymous company” but really means publicly traded share company. An ADR is a dollar denominated share of the company that represents a right to receive a share of the company which is held by the ADR sponsor.

Paul asks…

why invest in shares?

Should i put my $50,000 in the bank or buy shares?
What are the advantages and disadvantages of both?

financi4 answers:

That depends on the purpose of the money and the timeframe. If it will be needed in the next year or two, it need to gon in the bank (or perhaps a CD).

If you have a long timeframe and want it to grow, then I would invest in quality mutual funds with long-term proven track records. Banks are not even keeping up with inflation, so you will be LOSING buying power if you stick the money in the bank instead of stocks.

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