» Stock Trading Strategies and Systems » The Long-Term Scope of Stocks

The Long-Term Scope of Stocks

Stocks are extremely sensitive to the different ups and downs of the market over the short-term. Since market conditions are changed with respect to any change in inflation or interest rates, this may have an impact on the value of the stocks you hold. Other factors that influence the performance of the market are different events happening both on domestic and foreign arenas.

All of these factors are out of the scope of control of both investors and companies. Thus even the well-performing companies can be helpless in the conditions of a falling market which depreciates the value of their stocks.

As a result many financial experts don't recommend stock investing to individuals that foresee the need of money in the short-term. This is so, since the dynamics of the market conditions may end you up with less money exactly at the time you need to retrieve them.

In order to become an educated stock investor you should always keep in mind that stocks are an investment tool that gives the best results over the long-term. Only then their positive rewards can be felt.

It is advisable to move your assets to more secure investments when you foresee that you will need some cash out of your stock investments. Some potential parking places include fixed income investments (e.g. bonds, bank CDs) or other products that are characterized by substantial stability.

A planning of three to five years ahead of the time you will need the money is recommended. Reasonable judgment is required in order to make a good prediction on when exactly you will need the money so that you can plan ahead the reallocation of assets. After you have determined that you should select the stable products to which you can transfer your assets.

Additionally, the transference of assets from stocks to another asset class can be done in phases.

The reliance on high returns on your stock investment may have a reverse effect on your money. This can happen due to the dynamics of the market. The market can go against you and ruin the success of your financial goal.

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