The following are common known disadvantages to owning stocks:

Risk:

If your stocks did not perform well, you could lose your full investment as an investor. You have the option to sell-off with the stock as the price goes down. And you too, will lose your initial investment. If you can’t bear the shock of losing your investment, then go for bonds. If you lose money on stock, you get an income tax break while you have to pay capital gains taxes if you make money on stocks.

Stockholders paid last:

If you invest in a company and it goes bankrupt, all creditors and preferred stockholders are paid first. This is why diversifying your portfolio may keep you safe.

Time:

It is important to do some form of research on any company you intend to buy for stock options. Learn and understand how to read financial statements, annual reports and follow-up the company’s news. You can also monitor the stock market with the company’s price as it falls in a market correction, market crash or bear market.

Emotional roller roaster:

As stock prices rise and fall, investors tend to buy high, out of greed and sell, out of fear. The best thing is to check in on a regular basis and understand the investment you have made.

Professional competition:

Professional traders and institutional investors usually have more time and knowledge to put into the stock market. With sophisticated trading tools, models at their disposal, they know how to navigate the stock market. Find out how to be an individual investor.

Time consuming investment:

Investing in the stock market requires research, checks and analysis to find a profitable stock. It is a time consuming often complex task for individual investors. It is imperative to monitor stocks after buying. Though many investors prefer a long-term buy and hold strategy, you need to know when to exit a stock position before it turns out bad.

Limited control:

As a small investor, imparting decisions using voting rights are very limited as stockholders do not own the corporations issuing the stocks rather, they own outstanding stock issued by the corporation. Both corporations are treated as legal persons meaning, they can file, borrow, own property and can be sued. A corporation has its own assets as a corporate office belongs to the corporation not the shareholders.

What to do from here?

You may be scared by the above not knowing where to go. For new entrants in the stock market, they should be aware that there are no guaranteed returns on investment. By using your personal funds in the stock market, you will get potential returns and ownership stake in the company. A due diligent study on stock market trading is therefore important.