Don’t Risk More Than You Can Afford to Lose

Advice is not always heeded

Investing in the stock market can be a good thing

Investing is something that makes the rich get richer. The middle class and even the poor want some of that action. Investing is open to anyone, and there are possibilities to make money through the stock market. It can be very good, but it could turn out to be very bad. People need to study things out for themselves and not blindly follow someone else’s advice. Most people who are giving advice always say: “Don’t risk more than you can afford to lose.” Unfortunately, everyone does not always heed that advice.

There are hundreds of so-called stock gurus out there touting their programs. They want you to pay good money for their advice on stock investments. They generally charge high prices for their service although there are some very inexpensive programs as well. It is difficult to tell if anything is going to pay unless you give it a try. If you do, be sure that there is a money back guarantee. Often the programs do not work as they claim. If they have a guarantee and will honor it, you may be making a wise decision to take a trial run at it.

Stock investing can be done by people who are willing to put in the work and study to gain knowledge for themselves. It is not a good idea to follow someone without knowing a lot about the trades yourself.

There are a lot of stock brokerage firms available where people can make trades on their own without having a full-service brokerage doing the trades for them. Some are reputable, and some are questionable. Everyone is trying to make money by getting other people involved.

Robinhood is a relative new company. They have stock trading with no commissions for the trades. They allow users to apply in their app to trade options contracts. Options are considered to be risky investments that give the buyers the right but not the obligation to buy or sell a stock during a certain period at a certain price. Robinhood gives access to young, first time investors as well as others.

A tragic event happened a couple of months ago when a young user of the Robinhood service apparently committed suicide. The 20 year old university student was found dead. Although it is not known for sure, it is thought that he saw what he thought was a negative balance of $730,000 in his Robinhood account and that he killed himself over it. Robinhood later indicated that the extremely high negative balance was not the true amount of his account. It seems that seeing that negative balance was enough to push the young investor over the edge.

The young victim left a note asking why someone so young was able to receive so much margin. That means a loan against which he was able to purchase stocks and options when he did not have that much money in his account.

Too many people, young and old, are getting into financial trouble because they fall for the advice of others without really checking it out themselves.

They fail to heed the advice to never risk more than they can afford to lose.

[Source: CNN News]