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Five Reasons Why You Should NOT Invest in the Stock Market

Investing is an essential part of saving for your future. Here are the top five reasons why I see that you shouldn't be invested in the stock market:
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1. If you’re not financially ready to invest.

2. There could be too much risk investing.

3. If you need the money for other life events.

4. Lack of knowledge on the stock market.

5. Lack of strategy in the Stock Market.

The Stock Market is Not the Best Option for Everyone

Undoubtedly, investing is an essential part of saving for your future. The problem is, it’s not for everybody at all points or times in their life. Here are the top five reasons why I see that you shouldn’t be invested in the stock market at this time;

1. You’re Not Financially Ready to Invest.

That is one of the biggest reasons why you shouldn’t be investing right now. All, well almost all, investing involves some risk. The stock market is known to be a little bit higher risk than many other types of Investments as you are investing in businesses. If you have debt, especially credit card debt, or really any other personal debt that has a higher interest rate. You should not invest, because you will get a better return by merely paying debt down due to the amount of interest that you’re paying. If you are paying more than 10% interest on a loan or credit card, the likelihood of you making more than that on a consistent basis in the stock market is highly improbable. So the better financial decision, instead of trying to grow the money that you have, would be to pay off the debt that you’ve accumulated. Due to the amount of savings of interest on that debt, you would have otherwise paid, paying down debt actually would be a higher return than the return that you would likely get by investing in stocks.

 

2. Too Much Risk Investing

I’ve been in the financial industry long enough to know that everyone’s risk appetite will differ slightly. Some people can withstand losses and others have a tough time even when they lose a relatively small amount of money. When you’re investing in the stock market, essentially what you are doing is investing in public companies. If you’ve been in business, you understand that business does not always go as planned. Many times there are surprises, even with the bigger companies; this is found to be true. Even though you believe you are investing, possibly in a great company, there is always something that can come up. The question you should be asking yourself is; am I okay if this investment goes south?3. You need the money for other life events

 

3. You need the money for other life events

If you need the money or you can foresee that you’ll need this money within the next few years, it doesn’t make any sense to put it somewhere where you were going to be risking loss. It’s widely known the benefits of long-term investing in the stock market. There are several reasons why it works well over a long-term. There are several other options available for money that needs a little bit better protection from a loss than the general stock market for money that you may need in the shorter term.

4. Lack of Knowledge on the Stock Market

If you have a lack of understanding of what the stock market is and/or how the stock market works, then I would recommend staying away from investing your money in this way. At the very least I would suggest you go out and learn how the market works. Even if it’s an excellent investment for you, if you don’t understand what it is you’re investing in, then I recommend you stay away. It’s easy to get caught up in the great returns that the Market’s been giving over the last ten years, but I’m always going to default to recommending you put your money in Investments that you understand.

 

5. Lack of strategy in the Stock Market. 

Lack of strategy goes closely along with number four, due to the fact that you are going to want to have a knowledge but, also a plan with that knowledge of what you’re going to be investing in within the stock market. 

The stock market as a whole has a vast array of different companies and businesses with different goals, objectives, and plans for their future. What sort of company or business would you want to be investing in and for what reasons would you want to be investing in those companies? Are you going to take a more passive approach and just buy a little bit of everything with index investing or whole stock market investing using mutual funds or ETFs? Having some strategy or plan in mind is essential before I would recommend anybody start putting money in the stock market. I would go as far as having a plan and strategy for what you’re going to buy and have a reason why you’re going to buy it. Have a purpose or plan for when or why you would sell that same investment.

When you have an idea in place before things start going wrong, it’s much easier to decide to sell out of logic rather than emotion when you have already thought beforehand what you were going to do if this we’re going to happen.Having some strategy or plan in mind is essential before I would recommend anybody start putting money in the stock market. I would go as far as having a plan and strategy for what you’re going to buy and have a reason why you’re going to buy it. Have a purpose or plan for when or why you would sell that same investment. When you have an idea in place before things start going wrong, it’s much easier to decide to sell out of logic rather than emotion when you have already thought beforehand what you were going to do if this we’re going to happen.

 I recommend a buy and a sell strategy, a strategy to get in and a strategy to get out of the stock market. It doesn’t have to be complicated, but it should be thought of beforehand.

In summary, I am a big advocate for investing inequities of public companies within the US and abroad. I highly recommend getting some education of how the market works and an understanding of how you can get involved in investing even on a small level to familiarize yourself for when you are ready to start putting money in the stock market. 

Ready to invest in the stock market!

If you are ready lets go!

Obviously, no investment, tax or legal advice is given in this content.  Investment, tax, and legal advice is personal and private.  Investment advice offered through Versaille Capital Advisors, LLC, a Michigan Registered Investment Advisory Firm.

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