Should investing be scary?
Investing. The thought of it chills me to my bones. My good friend and fellow Sterling Effort compadré Ash has a very diverse portfolio of stock and is currently trying to convince me to follow suit. My reservations regarding stocks and shares started around 4 years ago at my old job. To explain let me take you back to 2007…
It is 2007. (-.-)
I am working as a peasant at a local software and printing company in Northampton when a colleague tells me about a particular oil company in which he invested. Having no real knowledge about stocks I listened with baited breath and learnt that the stock (currently at around £0.12) was massively undervalued and that very soon two drilling rigs being set up in Paraguay where due to hit several million barrels of oil, resulting in a share price increase to around 1 pound per share. With £ signs flashing before my eyes it wasn’t long before I had bought £400 worth of shares.
To cut a long and hugely dull story short, it was a little too good to be true. Unfortunately the companies drilling rigs were behind schedule and hadn’t arrived at the oil fields, resulting in a lot of investors pulling out their cash, thus reducing the share price. Eventually the shares had crashed to around £0.04 (if memory serves) and by that time I had simply written the money I had invested off as investment fail (feeling a lot worse for my work collegue who had all his savings, around £50K in the company at the time.
Fast forward now to 2010. Three years have gone by and the stock has recovered to about the price I bought it for and breathing a sigh of relief I pull the cash out and make my £400 back.
Today my knowledge of stocks and shares is still very limited but I am beginning to understand the importance of knowing how stocks work and also evaluating a company before investing. This is the advice I would give anyone looking at investing in the stock market; Don’t rush into anything, and don’t be a sheep and do what everyone else is doing. That is where mistakes can easily be made.
So am I right in being scared to invest? Well as far as im concerned the answer to that question is yes. I do not mean that investing is a bad idea, quite the contrary, but being apprehensive and wanting to understand something before you get into the middle of it in my opinion cannot be a bad thing.
Have you had similar frights with Investments? How did you overcome them? Let me know your thoughts.