Don’t Risk More Than You Can Afford to Lose

Good investing advice

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Investing may be good or bad

It is well known that many people have made a lot of money and even become millionaires through investing in stocks. While it is a good way to earn money in some cases, it also carries with it a fair amount of risk. Most stock investing sites or gurus will say that you may lose money. In fact, it is something they need to warn about because it is the law.

One of the pieces of advice to which everyone interested in investing should follow is to not risk more than you can afford to lose. People can invest freely if they have plenty of extra money. It is not wise to invest money that you might need for housing, food, and bills. The essential needs of living should be taken care of first before someone uses money for speculation. Everyone should have an emergency fund of savings before risking money on investing.

With the coronavirus pandemic having been a problem for almost a year, it has become very evident that financial difficulties can strike anyone and can come without much warning. Those who have enough money and savings have not been adversely affected by the pandemic. Others who live paycheck to paycheck and did not have savings have suffered greatly. Some have found that they need to go to food banks for food and possibly ask family members for assitance. There may be some who became homeless because of the COVID problems.

If money is readily available and plentiful, investing is not a bad thing. There are many financial people who have knowingly or unwittingly gotten clients (often family and friends) to invest in projects or programs which turned out to be total losses. Some of those who cheated others through their own fault are now serving time in prison or have done so.

People who spend their hard earned money on investing need to be aware of what is happening with their money. Too many people have lost a lot because they trusted someone else who did not deserve the trust.

A young trader with Robinhood died by suicide in early 2020. Robinhood is a company with commission-free stock trading available. Users can trade options contracts through the service. This trader apparently saw a huge negative cash balance in his account. He did not fully understand trading and margins. He was a twenty year old student at the University of Nebraska. After being overwhelmed by the prospect of that massive deficit in his account, he took his own life after leaving a note asking why this could have happened to his account.

The people at Robinhood said that they were saddened about the news of this young man’s suicide. They said they are improving their platform and determining if changes need to be made.

Finances are a big part of life. Investing in stocks or other programs may be beneficial. It is necessary to do your homework and make sure that you do not risk money you cannot afford to lose.

[Source: CNN Business]