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Apr 28

4 Facts You Didn’t Know About The Huge Financial Market

Reading Time: 4 mins

More and more people are putting in extra effort to become financially literate. This can be attributed to the fact that many now aim to attain financial freedom, making them less dependent on the amount of money they make through a corporate job. With financial freedom, people can rely on their money working for them. Because of this, many are now delving into various means to grow their money. However, you may be surprised by some interesting facts about the huge financial market that you may not have any idea about before.

 

Fact #1: September is not a good month to invest

One of the most interesting facts that you probably didn’t know about the huge financial market is that September is not the best month for you to invest. Historically, the three leading indices, which include the Dow Jones, the S&P 500, and the Nasdaq, all performed poorly during September. Some people believe that this can be attributed to the fact that during this time, most investors take the time to go on a vacation, holding back from selling their stocks during the summer. As soon as they return and exit the positions they held, the market then has an increased pressure to sell, resulting in a decline.

Nevertheless, you still have the option to trade during September because your success largely depends on the trading strategy that you came up with, as well as the platform that you are leveraging. In this case, you need to find a reliable platform that will be able to handle your investments and other financial needs. One of the possible platforms that you can explore is Twino, which is a peer-to-peer (P2P) platform that is focused on short-term consumer loans and investing. The expected returns that you can garner from these kinds of platforms are usually around 10% annually, which is a decent sum, even if you put your money in during September (although, of course, all investment is a risk and you need to be aware you could lose everything you put in.)

Some investors are even warier in October because some of the worst crashes in the financial market history happened during this month. However, there is no historical data backing this up, which is why it still holds that September is the month not ideal for investing.

 

Fact #2: There is no such thing as a sure thing when it comes to investing

When it comes to investing, there is no such thing as a sure thing, regardless of how many times you test your trading or investing strategy. Keep in mind that when you decide to grow your money through the stock market or other contemporary means, there is always a risk involved. So, even if you deem that you have a foolproof investing strategy, there is still a risk for you to lose your hard-earned money.

Some of the best investors of all time took a huge risk and they won. For instance, Warren Buffet or Carl Icahn placed a significant amount of money on companies out of favor or during times of market stress. It is through this that they were able to garner a huge profit because the risk they took proved to be successful.

You should also keep in mind that along with the risks involved in investing, there is also no such thing as a perfect metric. There is no single number that effectively categorizes a good stock from a bad one. For instance, a certain stock that may be quite inexpensive at ten times earnings can drop down to half in a heartbeat. In the same manner, a particular stock that seems to be lucrative at a couple of times earnings can double in a flash.

 

Fact #3: Taxes can eat up your profits

Another fact that you probably didn’t know until you had the chance to invest is that the taxes can end up eating up your profits. When you sell stocks that you’ve held for less than a year, then you will garner a short-term capital gain, which is taxed as an ordinary income. This means that around 25% or more will be deducted from any profit you earn. On the other hand, should you hold the same stocks a bit longer, or at least a full year, then the tax rate that will be deducted from your profit can drop in half.

On the contrary, you need to treat dividends as your friend. For instance, even if the share price of the stock you own declines, but the company paid out dividends over the year, then your losses may not be that substantial. While dividend-paying stocks are not immune to decline, they do offer a certain degree of protection from losses that other stocks don’t. However, you need to keep in mind that those giving out rich dividends often don’t last that long, which is why you should also be wary of investing in these stocks for the long term.

 

Fact #4: NYSE is the largest stock exchange in the world

Perhaps you are still not aware that the New York Stock Exchange is the largest one in the world by market cap. With more than 2400 companies trading on it, around 1.6 billion shares are traded every day. The second position goes to Shanghai, with around 1.2 billion shares traded daily. The London Stock Exchange Group only places third. Regardless of the exchange though, you still need to consider that the key is in knowing what you need, as well as what you are paying for when it comes to investing in the huge financial market.

When it comes to the huge financial market, there are some interesting facts that you need to know such as those listed above. There are various other fun facts that you may want to explore, particularly about the big names in the financial realm such as Warren Buffet. After getting to know these facts, the key is in defining what you want to achieve when it comes to your financial goals to ensure that. eventually, you will be able to attain them.

 

*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.

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