If you are new to investing, or are seasoned in what you do, there are plenty of options available to you. You can invest in stocks and shares, which are representations of shares or ownership in companies. But you could also look into options, where you can bet on which way you think something will go.
There are some important differences between stocks and options, and some are going to be more suited to certain types of people. They can both work well together and build up a portfolio, if that is what you are looking to do.
If you are keen to dive into the market, whether that is with stocks or with options, then it helps to know what could be the best option for you. Here are some guidelines to help you make the right choice for you and your needs.
Options: Better for Those With Experience and Those Looking for Flexibility
If you are looking to have quite a tactical approach to investing, where there is a smaller initial investment that is actually needed, and some flexibility with timings, then options trading could be the one for you. With options trading, the timeline of investing is something that is much shorter, which can really appeal to those of you that are experienced and are regularly buying and selling. The contracts with options trading will have dates of expiry, which could be days away, to years away.
While there are a lot of people that like the flexibility that comes with options trading, it can add a certain level of complexity to the whole process of investing because there are a few more things to think about. You need to take into account where the stock is heading, and in which direction. You will need to think about how low the stock will move from the current price, as well as how high, and the time that this will all happen in.
Stocks: Better for Beginners or Those Looking to Invest Long-Term
If you want to get started out in investing, and want a fairly simple way of doing just that, then, then stocks could be the choice for you. Of course, there is never a guarantee that you’ll make money, because certain stocks can be volatile, time has proven that investing in stocks as a long-term investment can be a worthwhile thing. Stocks can be relatively simple, because you buy stock at a certain price, with the hope (or knowledge) that it will rise. Then as it does so, you can sell it down the line at a higher price, and then you have your profit. So you can look to do this long-term, and ride out the peaks and troughs of your chosen stock, or you can look to ‘day trade’ which is based on a much smaller timeline.
Deciding what is going to be best for you, is something that is personal and will depend on what you are looking for, short-term or long-term. So think about your goals and what you are looking to do with your finances.