 TITLE: What to Consider Before Investing in Stocks CONTENT: What Are the Risks of Investing in Stocks?\n------------------------------------------\nInvesting in individual stocks can be exciting, but it's important to understand the risks associated with the practice:\n*   **Requires time and effort**: Unless you're using a buy-and-hold strategy, you may spend a lot of time monitoring your portfolio and trying to buy and sell at the right times.\n*   **Less diversity**: If you focus your investments on only one industry, your portfolio will take a big hit if that industry experiences a major downturn. Diversifying your portfolio helps mitigate some of this risk by including stocks from different sectors and potentially including other assets, such as bonds, that carry lower risk. Mutual funds are often considered the gold standard of diversification.\n*   **Difficult to keep emotions at bay**: Watching a stock's price fluctuate can cause you to feel excited and scared. These emotions can trigger impulsive investment decisions, such as selling when the price goes down to avoid losses or buying when it's on the rise trying to capitalize on an upswing. Successful investors have strategies in place to avoid making emotional decisions, but it can be difficult to do that when you're just starting out.\nInvesting in stocks is best for people who have a high risk tolerance—this means you're not bothered by short-term volatility. Make sure you understand how you view risk before you start investing.\nAlso, consider your timeline. The stock market is best for people who don't need the money they're investing anytime soon. If you're looking for somewhere to stash your emergency fund or cash for a down payment on a home, keep it in a high-yield savings account or another type of account instead. END