My Opportunity Cost – Stock Market
My Opportunity Cost – Stock Market
I hate opportunity cost, I hate it! – and it’s now that I dabble on the stock market come to realise the trust cost that’s involved.
Definition
Opportunity cost looks at the cost of the opportunity foregone. In other words, you have limited income and when you choose to spend it on something (good A) you can’t spend it on (good B) because you’ve already spent it on Good A!
Stock Market
Now, I have been investing on the stock market, bare in mind I’m only a student and don’t have a lot to play with but I do have just enough to make a decent profit if invested correctly.
I started off being all cautious because I don’t want to lose what I have haha, but I do have the greed to make more money.
I’m starting to realise the opportunity cost for buying one share and not another.
I’d like to invest in say 7 companies, but because my funds are limited to make it worthwhile I can only invest in say 3 companies. This is because bigger money is made on the volume (quantity) of shares that you own.
Example:
10,000 shares see you earn £100 in profit for every 1p increase in share price
100,000 sees you earn £1000 for every penny!
Tempting to invest more for higher returns aye?
It’s annoying when you decide to not invest in one company over another and then watch the company that you didn’t invest in share’s price double!
I’d like to spread my funds over a variety of shares to minimise the risk. I cannot do this yet, may be one day!
