Investing in Equities – Pros & Cons

From my personal analysis on Investing in Equities, I came up with the Pros & Cons as follow:

Pros

1. Low initial principal. You can start with only couple thousands bucks.
2. Ease and time efficient on operation. Nowadays, you can setup an online account with bank or broker easily. You can also submit trade orders, perform stock screening, review financial statements, charting, research reports from professional analysts, etc. in the same online trading account with couple clicks.
3. Medium risk activity. If you invest in equities with your own savings and without getting involved in any derivative financial products, you will only lose 100% maximum of your principal. You will not get bankruptcy or afraid if the bank is going to chase you down for the loan. Furthermore, if you find a good company, purchase its stock with acceptable price and own its stock for long term, the risk will become minimal. As Warren Buffett said, “Risk comes from not knowing what you’re doing”.
4. Liquidity is high. The stock market has a high liquidity trading. If you require your money soon, you are able to sell your stocks almost instantly.
5. Compounding effect. If the stock pays dividend, you can reinvest the dividend and enjoy the magic of compounding.
6. Low cost. You can easily find a bank or broker costing less than $10 Cad per trade.

Cons

1. Require lots of reading and research before making decision. There are too many methods on investing in equities, such as fundamental analysis, technical analysis, chasing institutional and insider holdings, etc. And each major methods include multiple sub-methods. In order to become a successful investor, you will have to read lots of investment books, website, blogs, etc. to determine which the best suitable method for you.
2. Have to become discipline to be superior. You have to control yourself minimizing the influence mentally from the daily price fluctuation. For fundamental analysis investor, you will have to focus on the company’s performance rather than the market price by trying not to check out the price frequently. For technical analysis investor, you will have to setup the buy and sell strategy and obey the rule.
3. There are too many professional analyses around. You will be struggle if your analysis is totally opposite than the professional analysis. Also, there are too many analyses with different directions which you do not know which one to be trusted.

After reviewing the Pros & Cons, I decided Investing in Equities is the best method for a family like us to increase our household income. This is the method that requires the least resources, and provide the highest possible return compared to the other methods.

Continue to – First Attempt – Aurora Cannabis Inc. (ACB).