When it comes to choosing the right type of investment vehicle for you, it’s important to be thoroughly educated on the pros and cons of each.
When people consider investing in the stock market, they typically think of long-term retirement accounts or other buy-and-hold scenarios. Rarely do they think of the stock market as a source of ongoing cash flow. Yet that’s exactly what it can do for an educated investor.
Start small. Perhaps the most attractive aspect of stock market investing is that it allows anyone to start small and scale up when you’re ready. Plus, you can get up and running in a short period of time. Starting a business or becoming a real estate investor are also great ways to help you escape the Rat Race. But they usually require a large amount of money to get started. And they also require you to invest a big chunk of time before they begin paying you back. With stocks, you have very little overhead and can start with very little money. Then you can scale it up as you grow.
Flexible. When you invest in stocks, however, you can still get started while working a regular job and learning to invest by practicing in your spare time, because I’m NOT talking about day trading or those other risky types of stock investing that force you to be glued to your computer screen. My style of stock investing allows someone to get up early and put in a bit of time before they head out to work. Others prefer doing it after they get home in the evening. Since you don’t have to interact with people as you do with a business or real estate, it’s easy to fit it to your own schedule.
No people skills required. With other types of business and investing, some people get nervous because they don’t have the sales skills necessary to succeed. You don’t need that as a stock market investor. Anyone with average intelligence and a desire to learn can gain the right skills and strategies used by successful investors.
Liquidity. The liquidity of the stock market means that there are always buyers and sellers ready to act. You only need to learn how to set up your investments to benefit no matter if the market moves up, down, or sideways like top investors you hear about in the news all the time.
Leverage. To gain leverage in business or real estate, an investor needs to take on debt. This isn’t a bad thing, but it can sometimes limit your ability to play in those arenas. In the stock market, you can have tremendous leverage through the use of option contracts. These types of option contracts allow you to control large amounts of stock positions for pennies on the dollar. It can be a huge advantage for the educated investor who knows how to safely use options for steady cash flow.
Agility. If the real estate market plunges or the economy goes into recession, there is instantly a lack of buyers and your cash flow can dry up instantly. With stocks, however, there is always opportunity – no matter if the market plunges like it has recently, or if it spikes higher, or even goes in a boring sideways direction. That’s what I mean by agility: the ability to profit in any situation you face.
Free practice. One of my favorite aspects of stock investing is that you can learn how to do it without risking a single penny in a bad trade. Virtually all brokerage firms offer anyone a free account to sign up and learn to trade. It works just as if you had real money in your account—but it’s basically ‘pretend’ money. This is an ideal way to practice the strategies and skills you learn through a proper training program. No other type of investment I know of gives you this type of sandbox to play in and hone your skills.
When it comes to choosing the right type of investment vehicle for you, it’s important to be thoroughly educated on the pros and cons of each. Stock investing offers you many of the advantages shown above. But both real estate and business can offer bigger paydays than stocks – especially if you’re starting with a small stock account. And while there is also more competition in the stock market, that competition also gives you the advantage of always having a buyer or seller in any situation.