Wealth Creation as a Stock Market Investor - Is it Risky?


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When creating wealth in the stock market, you need to build a certain understanding of the risks involved. How do you assess the risk? When do you listen to other people’s opinion and when do you make up your own mind based on training and research?

Well, for starters, don’t listen too much to others. Who is going to look after your money best? You, of course! Then why not learn for yourself how to be a stock market investor instead of listening to advice from possibly unreliable sources.

To start with, learn basic strategies. If you understand how the stock market works to a certain degree, then maybe you should look at derivatives. These are highly leveraged investment instruments and need to be understood properly to be used to their full advantage.

Once you understand stock market derivatives (and you will if you apply yourself), you can move on to more advanced strategies and this will open up some interesting possibilities for you.

For instance: I invest with returns around 15 – 20% per month. I learnt this with very little knowledge of how to be a stock market investor. I achieved this in less than 2 years. I know several investors who learnt this in 3 to 6 months.

There are also bad months. This is where money management comes in. Learning to manage your investments with a proper strategy and money management is vital to your success in the stock market.

You have plenty to gain by learning from other enthusiastic traders. Visit stock market or wealth creation forums. Learn from other like minded people. A little bit of effort, fuelled by dreams will get you a lot further than little effort with no dreams.

Remember this is all about leverage. Learn to leverage yourself and the income potential rises with it.

Many will say that the risk rises with the income potential. If you agree with that, then read this quote by a very seasoned stock market investor and think again:

“Risk is NOT understanding what you are doing” - Warren Buffet

Think about it. If you didn't think – “YES, that's true!”, then read it again and again until you really get the point.

What some people perceive as risky, others do as an everyday task, as if it is second nature. It’s just like having a casual walk to the local shop.

Driving a car is risky. Especially if you haven't driven before, or have little experience. Maybe you haven't bothered learning the basic traffic rules.

How risky is it for you to drive a car when you know the traffic rules, have made the effort to practise and stay aware of any changes that may affect you in that environment?

Not very risky at all!

Same task. Very risky for some. Hardly any risk at all for others.

Compare this to being a stock market investor. If you enter a trade with little or no knowledge, it would be fair to say it is very risky. Do it with base knowledge, research and networking, then it would be fair to say that you have reduced your risk dramatically.

The very same trade will have different outcomes depending on how you react to the market place. Hence, the different risk levels in the very same situation.

So hang in there. Utilise resources like stock market forums. Do a course or attend a seminar to fast track your learning. Educate yourself with things that WILL make a difference to your future. Believe me, whoever said money doesn’t buy happiness, either didn’t have any money at all or never went without.

Of course, money doesn’t buy happiness. But it sure does help. I know which option I prefer.

Let me think. Here are my financial options:

Option number 1 – Little or no wealth.

  • Work until I’m 65.
  • Put my kids through average under funded schools because I have no choice.
  • Having to budget most or all of the time.
  • Trying to make ends meet.
  • Keep a relationship and a happy family while always struggling to pay the bills.
  • Have very few holidays.
  • Constantly worrying about fuel prices.
  • Have little or no money for charities.
  • Etc, etc.

    Option number 2 – Plenty of wealth.

  • Enough money.
  • Comfortable living. Stress-less lifestyle.
  • Work until I want to. NOT until I have to.
  • Work as a hobby. Do what I want to do. With a passion!
  • Put my kids in the schools I want to. It’s my choice.
  • Support as many charities as I like. Make other peoples life easier.
  • Support my local community financially, because I can.
  • Holiday as much as I like.
  • Make ends meet ALL of the time. Who cares how much the grocery bill is?
  • What fuel prices? What’s the issue? When fuel prices go up, so do my shares.
  • Etc, etc.

    If I cannot be happy using Option number 2, then I’ve got some serious problems!

    You choose your own destiny. Don’t let others make up your mind for you. Make wealth creation a part of your financial education.

    Happy researching, and good luck to you in your quest for financial independence.

    Sean Rasmussen is a Property & Stock Market Investor as well as a Life Coach. You can download his stock market investing ebook on his website http://www.universalwealthcreation.com

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