Question

disadvantages of investing in jse

Answer 1

Disadvantages of investing in JSE -

1. Sometimes, share prices fall very drastically. If the market does not perform well, then investors stand to lose out their money.

2. A mental game - Investors go through a lot of mental ups and downs along with rise and fall in share prices. Due to these weird sentiments, they usually take wrong decisions, which are generally short term in nature.

3. Opportunity cost - The money lost due to fall in share prices, could have been invested in some risk free securities which would have yielded risk free return. So, there is always some opportunity cost involved.

4. High brokerage- Sometimes, brokerage fees exceeds the return on stock. So, it eats all the profit.

5. Fraud - Though fraud happens very less, but still there are some instances, such as insider trading.