You might be debating whether to invest your money for a long term period into a stock or a mutual fund or to start growing your capital by trading either stocks or commodities such as Forex currencies.
Both have advantages and disadvantages. You should make your decision based on a few factors.
Consistency will depend on 2 things: 1) perseverance to hone your skill if you trade your self, or 2) having a good consistent trader to do it for you if you’re an investor.
When investing in stocks, you should be prepared to be in the red for periods of time. There is no guarantee that a very good stock will start going up after you buy it. You might buy at the same time as when there is a normal retracement, and it might be in your best interest to hold your shares until the stock goes back up.
When trading commodities or stocks, your results are statistically previsible. You should be able to determine how much money, on average, each trade is going to bring in (if you are profitable, that is). You should expect drawdowns even when trading, but they will be proportional to your win rate, the number of trades you take, and your risk/reward ratio.
If you are looking for a consistent and statistically calculable source of income, and you’re confident on your trading skill, then trading commodities or stocks is the most logical choice. Otherwise, just leave it to the professional to do it for you.
You may be looking to invest the capital you earn from a full time job. Full time jobs usually mean less time to dedicate to trading. Even if you have plenty of free time, you may not be available when the market opens, which is majoritarily the best time to trade.
If you are looking for a time efficient way of investing your money by yourself, buying stock is most likely the solution for you. Of course, you have to take the time to study companies and do your due diligence. After you’ve done your research and are ready to pull the trigger, all you need is a few minutes to complete the transaction, and then you just wait.
The time invested/returns ratio can be quite incredible. Imagine studying a company for 10 hours in total; you have a look at its balance sheet, the company’s business plan, the board of direction, and you decide to buy 10000$ worth of shares. Congratulations, you were right about this company being a good investment; it brought 100% returns in the first year (which is far from impossible). The 10 hours you spent studying this company brought you 10000$; an hourly rate of 1000$. Pretty hard to beat, right?
You might not be up for the challenge of a lifetime when you decide to invest your money. Day trading can be quite the trip if you’re starting from scratch. You’re gonna have to find good sources of information, practice for countless hours, and learn to manage your emotions to avoid costly mistakes.
If you are passionate about trading, then difficulty shouldn’t be a variable that weighs into your decision making process.
If all you want is to make your money work for you, and don’t really care about the behind the scenes or don’t care about having control of everything, then the stock market could be your best bet.
Investing in an ETF (exchange-traded fund) can be a great way to bring in interesting returns without a whole lot of risk and without having to pay management fees. Many ETFs are composed of high quality companies, and are a great way of diversifying your portfolio without much capital (it can be costly to invest into companies such as Amazon if you are directly buying shares).
Investing in companies also remains a game of logic and simple analysis, which can be done without much prior knowledge and without endless hours of research.