When it comes to investing in stock market, you will always come across people who are constantly looking for the best stock tips or what is known as “insider information”. They could be your close friends or even your love ones. Because they have great ambitions to fulfil, but most of the time, what’s stopping them is money.
Money is the problem.
Since most of the people are not financially savvy let alone understanding the fundamentals of the stocks, therefore they are constantly looking for the fastest, safest and easiest way to make some quick bucks, which is to look for stock tips.
Well, looking for the best stock tips doesn’t make you wrong. If you want to make some quick bucks, stock tip will indeed help you. But if you want to rich and wealthy sustainably, stock tip will not help you. Here’s why:
1. You are letting someone to take care of your wealth
If you invest based on stock tips, basically you are relying on the person to grow your wealth. It is very dangerous because you wouldn’t know what is the true intention for the person to present to you such stock tips. Most of the time, it is based on their self-interest. The person could be possibly looking for a buyer to buy over his or her shares or rather somehow, he or she would benefit from your transaction.
Of course, there are definitely times where stock tips are shared based on goodwill, but you will never know. Remember, the person who work the hardest for your money is yourself, are you okay to let somebody responsible to take care of your “heart” earned savings?
2. You are taking up unlimited risks
By investing based on stock tips, your risks are unlimited. You are basically letting the stock market controls you. Since the stock market fluctuates every single day, you will definitely go through rough emotional ride constantly. With such turbulence in your emotions, you will not be able to make smart decision.
Most of the time, the story goes like this:
“Hey, I have made a 100% return by investing in this stock in just a short period of time. I think you should join and make money together.”
Trust me, it is always enticing when someone approaches you and says this.
At first, you may be very sceptical about it and decide not to. However, when people around you start to convince you to participate, telling you they have joined and made certain amount of money, greed and envy will kick in. At this moment, you will tell yourself since most of the people make this same decision, it should be the right decision. Most likely, you will then invest a small portion of your wealth in it to “test water”.
If the result turns out to be sour, it is of course unfortunate. But, it is even much more dangerous when you make money. Subconsciously, you will be thinking that the decision you made was the right one, false confidence will start to build up and eventually, more wealth will be betted on.
Most of the time however, it turns out to be a tragedy.
If you think this only happens to the unintelligent, then you are wrong. Even one of the brightest man in history, Sir Isaac Newton had experienced such tragedy by listening to stock tips during the South Sea Bubble back in the year 1720. Therefore he quoted, “I can calculate the motions of the heavenly bodies, but not the madness of people.”
Successful investing requires much more Emotional Quotient (EQ) than Intelligence Quotient (IQ). It requires tremendous amount of conviction. When you invest solely based on stock tips, you would not know exactly why the stock is worth investing and most importantly, you would not know what are the risks involved. All you know is that someone says the share price will go up.
I believe that there is no right or wrong in how you invest. You just need to ask yourself is exactly what are you looking for. If you are looking for making just pocket money in the short term while taking it easy, probably relying on stock tips is better for you.
However, if you are looking for building massive sustainable amount of wealth over the long term, you must have the skillset to do your own investing. Of course, this skillset is not born naturally. You have to spend resources like time and money to learn and master it. Only this way, you are able to control and grow your wealth, not needing to rely on others nor taking up unlimited risks.
Disclaimer: All facts and opinions presented are for educational purposes only. This is not a recommendation to buy or to sell. The author involved in the writing of this message has no vested interest in the companies. Please consult a professional for expert financial or other assistance or legal advice.