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How to Keep Money Safe in the Stock Market

By Edited Oct 28, 2015 0 0

The stock market is a great place to make money, but it can come with a great risk. Since stocks change daily, so will the amount of money that has been invested. It is up to you to find a good investment to stash your money and secure its value.

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Look at a stock for the long term.

If you want to find a safe place for an investment in the stock market, then you should look at a stock over a great deal of time. This way you will have much more to compare. By just looking at a stock over the past few weeks, or even months, you can't tell how secure it is. But if you find a stock that has been striving for decades, it could be a very safe investment for your money. While the dividends might not be extremely high, you will not have to run the risk of waking up morning to find half of your money gone. Riskier stocks have to sometimes pay a larger dividend to compensate for the risk factor. Besides looking at charts, find out what the company is doing. Are they growing? Are they slowing down? What is next for them? These are things that must be found out to see what type of future they are heading towards.

Stay away from trading stock options for a profit.

While trading stock options are a risky investor's best friend, they are not for an investor that wants to secure their money. Stock options can give back the investor an incredible return, but run the risk of losing everything they put in. This is because stock options expire and owning a stock outright will not. That is how the high risk and high reward begins to come into play. If you do decide to invest in stock options, make sure you get some that do not expire too quickly. The further away from its expiration, the safer your money will be. But be aware that longer expirations do cost more money for the investor.

Use stock options as a form of insurance.

An investor that is using the stock options as a type of insurance might have to pay a little bit more but will have peace of mind. There are many different ways to play with stock options and one of them is by purchasing puts for a stock that you own. A put has a strike price and will allow the investor to sell back 100 of their shares at that price, not matter what the stock is listed at. So if an investor feels that a stock is about to take a turn for the worse, it would be a good idea to buy puts. That way, if the stock does tank, they will have a certain price that they know they won't fall below. People who have unprotected shares will have to sell at whatever price that the stock continues to drop to. Even if the put has a low strike price, at least having one will guarantee a certain amount of money.



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