When investing into stocks will I lose money in terms of paying more if the stock lowers or crashes?
I am a beginner in investing and my question might sound stupid. I would like to know if I purchased shares in the stock market and the value of it drops or even goes to worthless, would I lose any more money than what I invested? Meaning would I lose money that I did not put into that stock, or would I just have a worthless stock? Please explain in detail because I am a newbie when it comes to investing. Thank you and God bless!
If you’re just buying stock then your loss is limited to what you paid for that stock. If you shorted a stock or a call option then you could lose an unlimited amount of money if the stock went up. If you shorted a put option, you could be forced into buying stock at a given price even if it’s higher than the market price. If you bought a call option, you could wind up having to pay more money to cash in on what you’ve made when the stock goes up if you’ve waited too long.
In general, as long as you do nothing fancy, you won’t lose any more money than what you paid for the stock. But there are a lot of variations that could expose you to more risk, limit your risk or remove risk altogether. For example if you bought a put option and your stock then you’re guaranteeing a minimum sell price for your stock and hence limiting how much you can lose if the stock goes down
Filed under: Stock Investing
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No, you can’t lose anymore than what you put in unless you make some bone-head arrangement with a broker to buy now and pay later. Once in a while you’ll hear of some character on tv doing that, I think it’s called buying on margin, but I don’t even think they do it for normal people. I used to use e-trade because they were pretty cheap on trades. I did ok. Didn’t quit my job or anything but didn’t take a bath either.
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When you buy a share of a company you pay "X". Whatever "X" is or becomes is all you’ll ever have to gain or lose. (Unless you involve yourself in some oddball "Buy stock without me approving it" kind of thing.
You put your money on the line, you’re betting on the stock to gain in value. It’s like buying a car and waiting for the price to go up. It may, or may not, but you still have the car.
References :
If you’re just buying stock then your loss is limited to what you paid for that stock. If you shorted a stock or a call option then you could lose an unlimited amount of money if the stock went up. If you shorted a put option, you could be forced into buying stock at a given price even if it’s higher than the market price. If you bought a call option, you could wind up having to pay more money to cash in on what you’ve made when the stock goes up if you’ve waited too long.
In general, as long as you do nothing fancy, you won’t lose any more money than what you paid for the stock. But there are a lot of variations that could expose you to more risk, limit your risk or remove risk altogether. For example if you bought a put option and your stock then you’re guaranteeing a minimum sell price for your stock and hence limiting how much you can lose if the stock goes down
References :