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5 Interesting Facts You Should Know about Financial Markets

January 04, 20242 min read

Understanding financial markets is critical if you're planning to buy and sell stocks. For a lot of people, the idea of day trading is about as risque as playing Russian Roulette. However, the more you learn about the financial market, the easier it'll be to make confident trades.

So before you begin purchasing your first round of stocks, you should educate yourself as much as possible. To help you along, we put together this list of 5 facts everyone should know about the markets.

Let's review.

1. Lower Fees Aren't Necessarily Better

When it comes to making purchases, we're taught that cheaper is better. However, we know this isn't always true, especially when it comes to quality. In the financial market, lower fees don't equate to lower costs.

If you're using a poor quality service or professional, you'll likely end up paying more than you bargained for. This will translate to more mistakes being made, which means more money out of your pocket.

2. It's Not All About Money

This is interesting because most people who get into stocks are concerned with making more money. However, you'll quickly learn that in order to grow your wealth, you have to focus on relationships as well. This includes business and personal.

With the right connections, you can gain insights that help you make the right decisions. And having a healthy family life will also reduce stress and keep your mind clear for making sound trading decisions.

3. Cash Isn't a Safe Investment

When you start learning the ins and outs of financial markets, you'll quickly learn that cash isn't your safest bet. Using cash as an investment isn't the smartest thing to do. Why? Because every year, cash loses 2.7% of its value.

So if you were to invest $100K, it would lose $225 value the following year. The biggest lesson you can learn here is that while cash is predictable, it doesn't do much for building or maintaining wealth.

4. Gold Isn't a Good Long-Term Investment

You hear all the time that investing in gold and silver is the key to future wealth. However, you'll find that inflation has caused gold to lose its value since 1981. It's also a very volatile market, which means it has extreme highs and lows that occur on a whim.

5. There's No Stock That's a "Sure Thing"

Although there are some investors who will try to tell you otherwise, there's no such thing as a sure thing in the financial market. There's no telling if the prices of stocks like oil and gold will remain the same or plummet tremendously before you have time to sell.

All stocks are susceptible to volatile moments, especially when something happens in the news or on the other side of the world.

David

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