A fact is that no stock can be termed as 100% risk free. A legitimate trustworthy broker would always alarm you about the risks of investing in a particular stock. For instance, some stocks have high returns but their prices drop by large margins as well. Before you put in your hard earned money, you need to be sure that you are well aware of the attached risks.
- Fluctuating market prices
The stock market is something that does not stay stagnant or unchanged for a long time span. At times, the overall market goes up or down. This is when most stocks have price changes and these changes can be both positive and negative. Only experienced brokers have the skill to predict such changes to a certain extent in advance. To have effective risk mitigation plans, you need to hire an experienced and dedicated stock broker.
- Investing with the wrong company
If one company has a good stock price, it doesn’t mean that the price would remain healthy forever. Some companies have a very slow rate for business growth. This eventually effects the stock prices in an adverse manner. Before you purchase any stocks, you need to have a proper discussion with your broker regarding the reputation and performance of the company.
- Ending up with the wrong broker
Surviving in the stock market and earning profits without having a dependable broker by your side is simply impossible. The most important thing is to have a trustworthy relationship with the broker. Ensure that you have smooth communication with him. Along with that, he should not use your finances for investment purposes without your consent. Proper efficient customer support is a very important parameter. A dedicated representative of the brokerage firm should always be there to help you when you have queries.