There are people that seem to make money really easily by buying stocks. However, we also hear stories of those that have lost a lot of money and so it can be difficult to know whether it is worth buying them or not.

It is worth noting that investing in stocks and shares is risky. Essentially you are buying a share of a company and the value that those shares are worth depends on what people are prepared to pay for them. If a company is doing well their share price will normally be high and if it is not doing well its share price will be lower. However, general changes to the stock market could influence the share price as well if customers feel that there are threats to the productivity of the industry that company is in or to all industry in a country in general.

The trick of making money from buying stocks and shares is to buy them when they are cheap and then sell them when they are expensive. It sounds common sense but in reality many people do not do this. As a share price increases, people tend to buy them because they think they will continue to increase. As the price falls, they sell them because they think the price will continue to fall. This means that they may end up buying at a high price and selling at a lower one. This should be avoided unless you want to make a loss.

The stock market varies a lot. It goes up and down on a regularly basis, both during the course of a day as well as a week, month and year. This means that knowing exactly when to buy or sell can be difficult as the prices are so unpredictable. This is why it is often advised that stocks are shares are held for a long time, meaning at least five years. This would protect the shareholder against any of these small peaks and troughs in prices. Generally over time the stock market goes up and so you should be able to reduce your risk if you keep your money invested for a long time as the value is likely to go up.

There are risks to holding stocks though. There is no guarantee that the stock market will improve and so you could find that when you want to sell they are actually worth less than you bought them for. You may find that even if the stock market goes up, the items you hold shares in do not do so well and they do not follow the trend. You may even find that you need to cash them in because you need the money for an emergency and then could find that the value has gone down. It could be that the company you have bought shares in does particularly badly and perhaps even goes out of business so you lose all or most of the money that you have invested. Therefore you should only lose money to buy shares that you can afford to lose.