We must remember one rule that the higher the potential profit generated by an investment product, the higher the potential risk faced. High Return, High Risk. Shares can be said to be a popular investment product at this time along with the increasing public awareness that saving money in savings does not bring more value to the money you have. This awareness has also triggered a shift in people’s lifestyles in financial management from ” Saving Society ” to ” Investment Society “.
Indeed, stocks are the most profitable investment products compared to other financial products such as deposits, mutual funds, and bonds, or commodity products such as gold, land, and even forex. Imagine that within 10 years our JCI yielded a yield of 398%, the highest in the world. However, when it comes to investment products, whatever it is, then we must remember one rule that the higher the potential profit generated by an investment product, the higher the potential risk faced. High Return, High Risk .
If there is an investment product that offers high returns without having risk, then it is certain that it is a fraudulent investment. Stock investing is not a stupid investment. Stock transactions are carried out on the Indonesia Stock Exchange (IDX) and are directly supervised by the Financial Services Authority (OJK). Even in stock trading, there are actually various risks (potential losses) that we should know. What are the pros and cons of stock trading?
Stock Trading Advantages:
1. Has the right to participate in the GMS and is recognized as the owner of the company.
Owning shares means that we have a company where as owners we have an obligation to participate in determining the company’s leadership and company strategy which is carried out at the General Meeting of Shareholders (GMS), also entitled to profits generated by the company, this profit is called dividend.
2. Has the right to receive dividends from each share owned.
Dividends are distributed equally to all shareholders according to the number of shares owned. The more shares you own, the greater the total dividend you will get. However, dividends will only be distributed when the company whose shares we own benefit and at the GMS the majority of shareholders agree on the distribution of dividends.
3. Potential gain from the difference in profit between the selling and buying prices.
The more profitable the company from time to time, the stock price tends to rise. The price increase is often used by t rade to sell these shares at a higher price than the previous purchase price, so the t rade benefit from the difference between buying and selling price, this is called the g ain .
Stock Trading Risks:
1. Do not get dividends.
But what if the company loses? This is one of the risks of owning shares, namely the company does not distribute dividends due to losses. Losses will not be distributed to shareholders like dividends, but losses will erode capital which ultimately has a negative impact on the company’s financial condition.
2. Potential loss from the difference between the selling and buying prices.
If so, what happens to the stock price? There is a possibility that the stock price will decrease because the company’s business performance is not good. The decline in stock prices will be the second risk in stock trading, namely when we sell a stock because of poor business performance at a price lower than the previous purchase price of the stock. This is called l oss .
3. The company went bankrupt and received the results of the last liquidation distribution.
What happens if one company incurs losses over time? There is a possibility that the company will go bankrupt. Bankruptcy is the worst risk for shareholders, because as owners, shareholders have the ultimate right after the company is liquidated and the proceeds are used to pay taxes, employee salary rights and debts.
So , by knowing the risks and benefits of trading stocks, traders must be wise in choosing the stocks that must be purchased, not to buy a stock that actually provides continuous losses. Now, for the convenience of your stock investment, stay loyal to the IPOTSTOCK platform which comes with modern technology tools to manage the best return on your shares. With the support of reliable analytical tools and features plus the distribution of comprehensive news and research information on a regular basis, the potential for cash is maximized.