Blog Invest Is Trading Stocks Worth It in 2022?

Is Trading Stocks Worth It in 2022?

date March 9, 2022 time 6 min read 1608 views

The stock market has been a mainstay of the financial world for hundreds of years. It has become a byword for economics as markets move up and down with the wider economy. And in general, it has moved upwards with some significant bumps along the way. So is trading stocks worth it, or are there better alternatives? Is crypto better than stocks?

Stocks explained

Before pondering the question, “is trading stocks worth it?” let’s take a look at what stocks are, the types of stocks, the stock market, and how to invest in the stock market. This will give you a better foundation to make an informed decision.

What are stocks

A stock is a type of financial security representing the ownership of a fraction of a company. Companies issue stocks to raise money to finance the business’ growth and give investors a proportionate share of the company’s assets and future profits in relation to how much stock they own.

A stock is a share of a company, and its value goes up or down depending on a number of factors.
A stock is a share of a company, and its value goes up or down depending on a number of factors. (Source: Unsplash)

For instance, if you buy 200 stocks from a company that has a total of 2,000 shares of stock, you own 10% of the company’s assets and earnings. Units of stocks are called shares, and owning a particular company’s share makes you a shareholder. 

However, it’s worth noting that, while shareholders can trade their equity at will, owning shares in a company does not mean you own the company’s assets and can do as you please with them. What you own are shares issued by the corporation, and the corporation owns the assets held by a firm. This – somewhat confusing phenomenon for people new to investing – is known as the separation of ownership and control.

Types of stocks

The two types of stocks available are preferred stocks and common stocks.

  • Common stock: Common stock usually entitles the owner to vote at shareholder’s meetings and receive dividends.
  • Preferred stock: Shareholders of preferred stock have limited or no voting rights. The main benefit of owning preferred stock is that preferred shareholders receive higher dividends and are paid first in the event of a company’s liquidation. Think of it as cushioning against loss.

The stock market

The stock market broadly refers to secure and regulated public markets where stocks that trade on institutionalized stock exchanges or over-the-counter marketplaces are issued, bought, or sold.

The New York Stock Exchange, one of the biggest stock markets in the world - competing only with the City of London for the number one spot.
The New York Stock Exchange, one of the biggest stock markets in the world. It competes only with the City of London for the number one spot. (Source: Unsplash)

When most people think about investments, the stock market is the first thing that comes to mind. This is for good reasons too. Since the New York Stock Exchange began operations in 1792, it’s become the most well-known and accessible investment market for everyday individuals.

While the stock market has historically tended to trend uowards as the world’s population, productivity, and economy increases, it has also been through some worrisome lows throughout history. The great depression of the 1930s, the recession of 2008, and the 2020 COVID-19 downturn are some noteworthy lows that gave investors sleepless nights in recent times.

How to invest in the stock market

Your consumption and application of the plethora of information available at your disposal on the internet can either make or mar your investing journey. While you have more options than ever to dive straight into one of the many trading applications and start trading stocks for yourself, there are some rules of thumb that will help you make the right investing decisions. Before making your first investment and hope to turn $1,000 into $5,000 in a month, consider following these tips:

  • What are your financial goals?: It’s crucial you have a clear picture of your financial goal to guide your investing decisions. Is it to finance your first house, fund your child’s college tuition, or retire early? Your goal will significantly influence your attitude as an investor.
  • What is your risk tolerance level?: All investments involve some degree of risk. Once you are adequately informed on the types of investment risk involved, you must assess your risk tolerance level to make decisions within your limits. Aggressive investors are willing to take significant risks to get potentially higher returns, while conservative investors don’t mind lower returns on relatively safe investments.
  • Which investing platform is the right one for me?: Today, you can buy stocks from the comfort of your home using only your mobile phone. But before choosing an exchange to buy on, research the options available. Things to look out for include:
  • Fees 
  • Investment options
  • Support
  • Customer service
  • Features and user interface

With the proper knowledge, tools, and a bit of luck, the stock market has proven rewarding to those who diversify their portfolio and stay the course long term. 

Alternatives to stock markets

As any investor worth their salt will tell you, diversification is essential when it comes to an investment portfolio. So even if you were still focused on the stock market, it’s still worth taking a look at alternatives.

Peer-to-peer (p2p) lending 

Peer-to-peer lending is a process of lending and borrowing that takes place without the involvement of traditional banks. Borrowers and lenders converge and transact directly on various peer-to-peer lending platforms, effectively cutting out the middleman.

MyConstant is one of the leading crypto-backed lending platforms on the market.
MyConstant is one of the leading crypto-backed lending platforms on the market.

MyConstant is one of the best peer-to-peer lending platforms that significantly highlight the benefits of P2P lending. With its crypto-backed investments, you can earn up to 7% of your investment between one and six months, and you can rest assured knowing that your funds are fully protected. The barrier of entry is low, and you can start investing with as little as $10.

Real Estate Investment Trusts (REITS)

Real estate is considered a safe bet because it’s historically appreciative. But more people are wary of the downsides of becoming landlords and dealing with tenants, repairs, and the hassles it involves. This is where real estate investment trusts are beneficial.

Real Estate Investment Trusts (REITs) are investment trusts that invest in income-producing commercial real estate, like multi-family rental apartment buildings, shopping malls, and office buildings. There are different types of REITs, like retail, residential, healthcare, office, and mortgage REITs.

REITs are great investments because they provide greater diversification and potentially higher returns of 10% thereabouts. The best thing about REITs is that you don’t have to deal with the downsides of being a landlord.

Cryptocurrency

Cryptocurrency is a controversial asset with its high volatility. Critics talk down on it, while enthusiasts swear by it. Its high volatility makes it more suited for aggressive investors willing to take significant risks to get potentially higher returns.

Ensure you get as much knowledge as possible and adequately assess your risk tolerance before investing in cryptocurrency. The tide can turn either way. 

Are stocks worth it?

So, is trading stocks worth it?

With billionaires like Warren Buffet strongly advocating for it, and the rise of thriving tech companies growing at a tremendous rate and raking in high dividends for shareholders, the stock market is not losing its relevance anytime soon.

Stocks might be one of the oldest forms of investments, but the stock market is regarded as a relatively strong investment, generating good returns in the long run.

Remember, when it comes to investing, the importance of diversification as a safety net to mitigate risk cannot be overemphasized – especially for beginner investors. Ensure your portfolio contains a mix of conventional investments and alternative investments.

Get into crypto with MyConstant

With platforms like MyConstant, you can invest your idle coins and earn interest on crypto up to 7% APR compounded and paid out every second through our Crypto-Lend feature. This can apply when you own some cryptos and haven’t planned to buy more yet.

Unless you own any cryptos and planned to buy some, our MCT tokens might be a good choice. We’re giving you an opportunity to earn free MCT on the MyConstant Airdrop prize wheel by completing tasks. When you invest in our platform using MCT token, you will earn 20% more interest.

Right now, the best way to get your hands on our token is to complete the tasks on MyConstant Airdrop you’d probably do anyway. Once you complete the tasks, you will get rewarded with a Prize Wheel ticket and have chances to win up to 2,000 MCT tokens. 

Other benefits include:

  • Cut the cost of borrowing: MCT token holders will enjoy a 20% reduction in borrowing fees on MyConstant.
  • Payless for NFTs and enjoy a 50% discount on fees.
  • Reduced fees with 50% discount on Crypto Swaps.
  • Manage all your digital assets in one place: you will be able to fully utilize our platform for borrowing, investing, and even spending – with our MyConstant debit card.

Joining our Telegram channel or just sign up to the platform to spin the Prize Wheel and earn MCT now.

And don’t forget, you can also lend your crypto to earn up to 12% APY.

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George Schooling

George Schooling

Borrow against your multi-crypto portfolio in minutes from just 6% APR

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