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Is Buying Stocks Only For Winners?

Aug 17, 2007
When you tell people that you're about to start buying stocks, you're likely to encounter some latent hostility.

Most people wish that they too were buying stocks, but they're afraid to get started or ashamed that they don't understand the markets.

Therefore, they try to discourage others from purchasing stocks - it's the crabs in a bucket parable come to life. Often, these naysayers will dispense popular (but untrue) myths about buying stocks. In this article, those myths are dispelled, one-by-one.

#1 - Buying Stocks is Only for Rich People

Sadly, there was a time when this was mostly true. Way back when, the commission charged for purchasing stocks was more than $100. Thanks to discount stock brokers like Charles Schwab and the advent of the internet, buying stocks has never been less expensive.

For one, technology has reduced the spread between the bid and ask prices. This means that the prices you see scrolling across the TV screen are very close to the prices you will pay when purchasing stocks - off by only a few cents or so.

Secondly, commissions are way down. Buying stocks now costs as little as $7 per trade through online brokers like FirstTrade and ScottTrade. Purchasing stocks through E-Trade and Ameritrade costs less than $10.

But if you're really on a budget, you should be buying stocks through Sharebuilder, which allows you to pool your money with other investors, and add fractional shares to your account for as little as $1 per investment!

#2 - You Need a Broker to Begin Buying Stocks

For this myth, the naysayers exploit the popular understanding of what a "broker" is. Yes, you do need a broker in order to begin purchasing stocks.

But if you think a stock broker is a grey-bearded know-it-all that you pay to make you feel bad about yourself , then you're in for good news, because you don't need one! The type of broker that you need isn't a human being at all - Ameritrade is a broker, for example.

All you need to begin buying stocks is an account with an online broker. Don't listen to the naysayers or the Edward Jones commercials - you can do this on your own!

#3 - Buying Stocks is for Suckers

This is one of the pettiest, most inaccurate myths of all, but in the wake of Enron and other Wall Street scandals, it's also one of the most pervasive. It's based on the absurd notion that stocks are nothing more than pieces of paper.

Stocks are not just pieces of paper. They represent actual ownership in a real, live business. When you own stock, you own a fractional share of every penny that the company earns and every dollar that's in its bank account.

You even own its property, plant, and equipment! Of course, you are just one of many owners, and your share is undoubtedly very small - but you are an owner, and this does matter.

Even if the stock falls on hard times, a bigger company might come in and buy the company in full - usually at a healthy premium. When they buy the company, who do they buy it from? From you, and all the other shareholders like you.

The Truth - Purchasing Stocks is Inexpensive, Easy, and It's for Winners

Don't listen to the naysayers. You know that buying stocks is in your best interests, and you've probably been putting it off for far too long already. Give yourself a basic education by reviewing articles at informative websites like this one, and then get out there and start purchasing stocks.

After all, there's no better education than the one you'll receive when your real money is on the line.
About the Author
William Smith the author provides additional financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at Stocks (All is Free)
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