5 Reasons You Shouldn’t Be Scared to Invest in the Stock Market
Posted on March 6th, 2008 by Jim under Investing TipsAre you scared away from reading this article? Don’t be. Everyone (18 and over mind you 
) can invest in the stock market, regardless of 
job, education and location… and its easy! Whether you are a work at home mom, a blogger, entrepreneur, student or what have you, investing in the stock market is as simple as finding a product you use and predicting the company will turn out something newer and better.
I am 18 years old and I hold $1,500 worth of stocks in a brokerage account. I’m sure you are considering all of the bad economic news that is out, and really the height of the crash came in early January. I started my trading account on January 1st, and I have positive gains thus far. If you haven’t put serious thought into buying stocks, now is the time.
Here are five clear-cut reasons you shouldn’t be scared to invest in stocks:
1. The “Big Dogs” Don’t Want You To
Its a fact. Plain and simple, the big market players (mutual funds, investment banks, stock advisers, etc.) don’t want you messing around in their rich-man’s game because it is a market that they used to control. Slowly, but steadily, more and more people are owning stocks… and for good reasons! The stock market is the best way to make money ever created, and it is totally open to the public. If you think you are too inexperienced to own stocks, think again! One thing that really benefits small investors is that they don’t move the market. When you trade, nobody is going to see that impact… so you can basically sneak in and out of companies taking profits off the table left and right.
I want to see the age when everyone plays the stock market. I think that it is coming sooner than we expect. Not only is it a fun, gambling experience, owning stock will educate you in the ways businesses work! If an 18 year old student can figure this game out, you can too!
2. The Stock Market Typically Goes Up
Don’t always believe the recession-doomsday hype. It is a fact, in fact, that throughout the history of the stock market, the average recession has seen S&P Index returns of +3.14% during the actual recession, and of +28.20% three years forward from the first warning signs of recession. The stock market has the ability to weather a storm, and it seems like the most brutal hit has already been served up…although we could fall a bit further. The point of the matter is that as long as you are investing in the right areas, you should be recession-proofed enough to make money regardless of the macroeconomic conditions at play.
3. It’s Cheap and Affordable to Invest Now!
Over the past decade, tons of discount brokers have been cutting their rates to encourage you to use their services and invest. Equity trading has gotten faster, cheaper and easier than ever in the 21st century! There are services like Zecco.com that offer $0 commission fees, and more 
reputable and established brokers that charge a meager $7.99/trade. When considering you are probably going to be buying stocks that cost a total of $250-1000 per purchase, the commission fees are a blip on the radar.
These discount brokers (or premium if you are interested) offer fast, reliable services that basically do it all for you. I am with Scottrade currently, and they have programs they give you for free to research stocks, see what experts are saying, and they even track all of your taxable gains for you. It is easier than ever to sign up for an account and deposit as little as $500 to get on your way! Check out my “getting started” post for more information.
4. Potential Upside Outweighs Downside Risk
A lot of my friends at Penn State are hesitant to get into the stock market game. They claim they are “just not ready” or “too scared to make a first move”… I call this a load of garbage. Investing is not about letting it all ride on lucky seven. When you buy a stock, you own a piece of that company, if the stock price goes down, it goes down… but you shouldn’t be losing any more than 20% of your initial investment at any rate. Your money is generally safe in stocks, so stop worrying and focus on the upside!
At this point, I want to bring up my portfolio’s performance in 2008. At first, I was off to a horrendous start with everything trading down on poor news. As of late, everything has just about balanced out and I am actually sitting on a gain! I have stocks like Yamana Gold I have profited more than 26% on in a month, and stocks like NVidia where I am down 15.5%. The point is, you have your winners and your losers. Take the bad with the good and you have a favorable amount of upside compared to downside. If you play your cards right, you will see more money than surfing the internet could ever bring you.
5. It’s Easy and People Want to Help You
I’ve mentioned just how easy it is to get started in the stock market. Stock brokers like TD Ameritrade, Scottrade and Charles Schwaub are practically throwing themselves at your feet. People want to help you nowadays, and it is so easy to get started you won’t believe your eyes. If you don’t know where to invest, turn on CNBC for an hour. Seriously. Jim Cramer? Fast Money? These programs are chock-full of investment ideas that are well researched. It simply becomes your job to look into these stocks a bit more to make sure they are right for you.
The internet can be your best investment friend. I suggest the Motley Fool for reading up on terrific stock opportunities. There are even bloggers looking to help you like the Intelligent Speculator and some guy named the Net Fool 
.
The Bottom Line: There is NO better way to get high returns on your investment than with the stock market. Whether it is high-growth risky plays you are gunning for, or established conglomerate powerhouses… almost any sound trading should make you money. Consider an initial $100 deposit gaining just 10% (you can do better ) for five years… BAM! That’s about $1,650. What if you added $100 every year to that one grand deposit? SHAZAM! That’s a whopping $2,300. The magic is in the fact that when your stock value increases, you basically own more of that company, nominally speaking. Instead of making money on your $1000, you are making money on your $2,300! The possibilities are endless, and it is easier than ever to get in on the action.
-The Net Fool
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That gives me confidence to invest in stocks which is something I have always wanted to do but have not felt comfortable with doing. Thanks for the great information.
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You are very welcome Karen. I know the stock market seems intimidating, but you need to understand that it is geared for the American public to invest. The rules and regulations are all in favor of the little guys, like us. There is a time when we all need to take that dive, and once you do… I promise that it will be a walk in the park. Most importantly, don’t let people hold you down by throwing out these confusing terms
Hello Jim. First of all, let me tell you that you have a great blog! I’ve just read some of your articles and I must say I like them, are very informative. Good work! Number 2: Few days ago, you’ve requested me to stumble some of the articles you’ve written..job done! Sorry for the delay, but I was a bit busy. If you’d like to return favor, please feel free to drop by my blog and stumble my articles too:)
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So far I have yet to invest in the stock exchange. There are some stocks that I’d be interested in investing in, but what if I were to happen to make a bad investment decision? A few years down the road I could definitely see myself making some investments, but probably not right now.
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“but what if I were to happen to make a bad investment decision?”
Take that logic and throw it away. I’d love to see you in stocks right now. Living in the fear of making a bad decision is no way to go. Consider owning multiple stocks to cut down on risk. For example, I own NVidia, a tech stock, and Yamana Gold, a commodities hedge stock. I’d start paper trading (trade without money and keep track of loses) and then about 3 months from now get in
Well that’s also a great point Jim. One thing about stocks is that if you’re going to invest, you shouldn’t invest all your money into one company. Just like Jim said, you need to divide it up a bit that way in case there is a bad stock that you invested in, you’ll have other ones that will be profiting.
Jim, do you know what the minimal amount of money is to open an account with certain stock brokers online such as e*Trade, Charles Schwaub, Scottstrade, etc?
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I know that Scottrade is just $500. Charles Schwaub is a bit pricey… that’s one of those mid-range brokers (not discount, not premium). E-Trade is around $1000 if I remember correctly.
Check out my post for more information
http://www.thenetfool.com/how-to-buy-a-stock-the-basics-of-investing/
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I think Jim makes several excellent points. I do have something to add, though. I think you should be afraid. You should realize that there is risk in the market and that risk is what makes you money. You should be afraid so that you do your research. You should be afraid that CNBC gave you the wrong symbol. (This happens a lot. For example, they talk about BJ’s, the wholesale club, and they post the chart and symbol of BJ Services, the oil field services company.) As Benjamin Graham says, an investor’s first goal is to preserve their capital. Everything else is secondary.
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Good point there Options Strategery,
I am really encouraging readers to set up accounts and put some money down. Buying the stock altogether is a decision that should not be made in haste. I think it is a good idea to track 10-15 stocks for about a month before you even buy one, making sure you are getting the best value possible
Very good tips. I have invested in the stock market and also lost money, but i kept on and recovered my losses and made some gains. It’s important not to panic and quit when you make losses, but work according to a plan.
Yes you need to be brave.Intelligent moves to be done.Good article for me.I was thinking of investing on stocks.
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I think now is a great time to invest in commodities or commodity stocks. Supply of oil in limited, demand will continue to rise as china and india keep growing. Oil ETFs are my tip for the top.