The Advantages and Disadvantages of Share Trading That You Need to Know

by Gilbert Watson
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The stock market is a vast network of investors and traders who are willing to buy and sell company shares. Companies who sell their stocks can be bought by these people and they can earn plenty of money by doing some trades, getting dividends, among others.

There are billions of shares being distributed within the network of traders and it can really become a lucrative business especially for the owner of the stock brokerage account in Malaysia. However, with just about anything in life, there are pros and cons to this and it is your job, as a would-be investor, to make sure that you weigh them so that you will have a sound decision if you want to pursue this for the long-term or not.

With that being said, here are the advantages and disadvantages about share trading that you need to know:

1.Company Dividends

When you buy some stocks from a company, you are entitled to receive a dividend payment that will be given to you once or twice a year. Depending on the country you’re from, you can enjoy a 0% tax payment on your dividend yields. So in other words, no matter how much money a company gives you, you will not need to pay the tax for receiving it. Do note that this does not apply to all countries, so be sure to refer to your internal revenue to see if there are any fees that you need to pay or not.

2.Share Returns

One of the main advantages of acquiring stocks is its rate of return. Depending on a number of factors such as interest, applicable taxes, and the impact of inflation, you’re going to receive a sizable amount of money just by buying or trading some shares.

As per calculation, it is safe to say that people can earn as much as 5% of their stock returns per day. But again, depending on a number of things, you can either earn less or more than that value.

3.Assets are Tangible

Whenever you acquire shares from a company, you’re going to be owning a portion of it. This means that you can hold on to it until its intrinsic value gets high for sale or you can buy more if you want.

Remember, these assets are tangible and you are really going to get some profits just by holding on to them. Unless there is going to be a disaster that strikes the company, you’re going to enjoy your investment due to the dividend payments and stock returns.

4.It Can Be Risky

The first three entries are all the advantages of getting into the stock market. I am now going to cover more about the disadvantages.

Although you can get plenty of cash by just investing your assets in the share market, there is a high risk involved. You could potentially lose all of your money if you’re not careful with trading your shares.

Having a good plan or strategy will help you. Therefore, you have to come up with it way before you start buying or selling stocks.

5.Knowledge is Power

Take note that the stock market is filled with people who are not only knowledgeable but have also been in the field for quite some time.

Knowledge is power in this case. You have to study the industry you’re going to invest in as well as doing your research about some stocks that are going to be profitable. It is basically a fight between the knowledge and intuition of you and all of the traders present in the market.

6.It is Impossible to Predict

If the stock market were easy to predict, almost anyone would do it. However, it is just far from the truth.

Trading in the share market is scary in the sense that its movement is unpredictable. You could invest in a company that you thought was promising, only to find out that it had collapsed a few months after.

That is how volatile the share market is. Are you willing to take the risk or not? If you do take the risks involved, you can become a millionaire, provided that you do a lot of things well.