Some investors are still mistakenly thinking that stocks are an "easy-to-eat" piece of cake. In fact, there are still many players empty-handed, falling into default because of securities. So, what is the cause?
Securities, with "delicious" offers of high returns and low risks, have quickly become the hottest investment channel today. However, since then, many people have fallen into empty-handed, defaulted because of securities.
For connoisseurs of investment, the stock market is no longer a strange topic. But the stock market has never been mentioned as much as this year. Everywhere on social networks, you can also come across stories about buying this stock, selling that code. And there have begun to be misconceptions about the "easiness" of securities, where just investing is profitable.
However, there is no piece of cake that is easy to eat, when too many people have fallen into bankruptcy , from millions to billions of dong. So what is the cause of this situation in investors? For the market or for themselves? Find the answer right here in this article!
What are securities?
Unlike other real assets, securities are an asset that exists only in the form of paper certificates, computer data, and books. They are both priced and transferable like a legal commodity, which can be bought and sold (or held like money) traded on the stock market.
Investors pour their money to buy securities. The issuers of securities (government, companies, ...) use the money raised to invest in buying real assets such as factories, production machinery and equipment, etc. From there, the value of the issuer on The market is increased, so investors in securities also benefit.
Securities typically include the following categories:
- Stocks, bonds, fund certificates.
- Warrants, covered warrants, right to buy shares, depository certificates.
- Derivative securities.
- Other types of securities prescribed by the Government.
Why are more and more people investing in stocks?
Securities is no longer a strange concept to many people. However, in recent years, the trend of "stock trading" has become really widespread, especially among young people.
Compared with other investment channels such as savings, buying bonds, gold, real estate, etc., securities are attractive for three reasons:
High profits in the long run
Try to make a comparison between the return on savings deposit is only about 6-7% per year and the average growth rate of companies in the stock market is 20%/year, and you will understand immediately.
It becomes "easier" for investors to just choose the right companies with high growth potential to buy shares in those companies. Wait for the company to make a profit, you will first receive a profit, or when the stock price increases, you will sell it for the difference.
Securities are the most liquid asset, after cash
The participation of many investors and issuers has facilitated buying or selling needs to be met in a short time. The securities you invest in can be converted to cash immediately without having to wait too long.
Securities is a flexible investment channel
You don't need to accumulate a lot of money to be able to invest in stocks, you only need a few million dong to participate in the transaction. And the profit-making period is not too long (minimum 2 days), which means that whenever the stock increases in price as expected, you can sell it at any time.
Waiting for the risk of default because of securities investment
Although the stock market is a highly profitable investment, it is not always favorable to the player. Once you have accepted to step into this path, you must always be ready to "lose everything" that investment, or worse, to lose a lot because of playing securities , leading to default.
Because securities are assets whose value is heavily influenced by risks, including systematic risk and unsystematic risk:
- One, systematic risk, also known as market risk. The ups and downs of securities depend a lot on the political situation in the world and general economic conditions such as: inflation, changes in exchange rates, interest rates, etc. Since then, the market price will increase or decrease. abnormal decrease. Therefore, the bigger the players, the more they have to prepare mentally to be able to default at any time.
- Two, the unsystematic risk related to the issuer's condition. So it only affects one asset or a small group of assets. Investors decide to sell or hold back securities based on their personal assessment of the risks involved. This type of risk is very elusive and often begins with the subjective opinion of investors.
In addition, there are risks from low liquidity from buying or selling securities to investors. Or some people choose to buy through brokerage companies, they have to face the quality of the introduced securities, even in cases of fraud.
Causes of default because of securities
Stock investment is very easy to join, no matter how much capital, it gives bigger profits than other channels. But don't think it's simple, think that stock prices go up and down with rules. If that was the case, there wouldn't be a scene of people empty-handed and insolvent because of securities .
There are many reasons why you are in a bad situation because the stock price has plummeted. It can come from the market and partly because of you:
- Speculation is rampant, causing the market to sink into a series of plummeting days and many people suffer the same end: losing all their accumulated money for life.
- Financial leverage is too large, causing high margin borrowing in the whole market. This is considered a path to a debt spiral with no way out, leaving many investors exhausted and insolvent.
- Inflation causes interest rates to increase, which means that borrowing costs increase and economic activities slow down, causing the stock market to decline.
- Geopolitical risks, from the tensions of the opposing sides in the political arena or the scale of war, have caused the phosphorus market to drop sharply in many sessions.
- Subjective reasons: because you do not do thorough market research, buy according to your feelings and movements without consulting experts and experienced people. Always think that your judgment is correct without cutting losses at the right time, letting losses pile up. At some point, you bitterly realize you've defaulted on stocks .
To invest in stocks with high profits, in addition to constantly accumulating knowledge and updating market news continuously, you should also learn more from the experiences of previous investors, for example:
- Always have a clear investment strategy from the beginning to serve as the basis for determining the type of securities to buy, financial allocation, time to buy and sell, etc.
- Diversify investment portfolio, never putting all your eggs in one basket to avoid risks when the market fluctuates.
- When starting out, should choose to invest in securities of companies with good financial statements such as low debt, high profit margin, good leadership, large market share.
- Always review the investment portfolio and adjust it to match the trend of the market.
- Control risk by the command Stop buying , stop selling and Stop Limit to protect assets and avoid the impact of market reversal.
- Choose when to buy and sell securities according to two indicators: Relative Strength Index and Random Oscillator Index.
- Patience, discipline, keep a stable mentality. Do not analyze too much, follow too many reports at a time as it will negatively affect psychology and lead to making wrong investment decisions.
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