Can you lose your money investing?

You can lose all your money on stocks or any other investment that has some degree of risk. Even if you only have one stock that is doing very poorly, you will normally keep some of the residual value. Because of the way stocks are traded, investors can lose quite a bit of money if they don't understand how fluctuations in stock prices affect their equity. In the simplest sense, investors buy shares at a certain price and can then sell them for capital gains.

However, if the decline in investor interest and the fall in the perceived value of the shares result in a drastic fall in the stock price, the investor will not make any profit. Fortunately, the market does most of the time for you. Market corrections (peak-to-low declines of more than 10% but less than 20%) occur approximately once or twice a year. As you can see, people are afraid of losing money investing.

And that's valid: you CAN lose money investing. But losing all your money? That's quite rare and difficult to do, especially if you're focusing on investing rather than trading. The bottom line is that all investments carry a certain degree of risk. By better understanding the nature of risk and taking steps to manage them, you are better placed to meet your financial objectives.

For the vast majority of those who are starting to learn how to invest money, a cash account is probably their best option. If you buy stocks with borrowed money, you'll owe money no matter what direction the stock price goes because you have to repay the loan. The investment products and services provided by Stash Investments LLC, not by Stride Bank, are not insured by the FDIC, are not guaranteed by the bank, and may lose value. My biggest fear right now that prevents me from investing is the possibility of losing what little money I have.

Investors who use cash accounts cannot lose more than they invest in stocks, although they can lose their entire investment. If your shares lose value and cause your shares to fall below this requirement, you may receive a margin adjustment, which requires you to deposit cash or sell securities to increase your capital. And while you can build wealth by investing in stocks, you may never make money and you may also lose money. Remember that, while stock markets have historically risen over time, they also suffer from bear markets and declines in which investors can and have lost money.

I know it's frustrating to have a lot of money there and not earn anything but interest, but think of it as an insurance policy that doesn't cost you anything. By taking a long-term view when the market realizes a loss and thinking carefully before buying on margin, an investor can minimize the amount of money they lose in a stock market crash. Despite the research, some people believe they have the recipe for winning in the stock market and making money quickly. Ultimately, commodity trading is speculative and losing money on this asset class is very easy to do.

Despite that, it can be argued that in the end they will end up with more profits if they just focus on not losing money. Your broker will also charge you interest for borrowing money, which will affect the total return on your investment. Because credit institutions could not obtain any reimbursement from investors, many banks had to file for bankruptcy.

Aurélie Van De Segers
Aurélie Van De Segers

Lifelong baconaholic. Lifelong travelaholic. Lifelong internetaholic. Incurable bacon geek. Evil bacon specialist. Infuriatingly humble pop culture fanatic.