Are you really suited for stock investing? First, check out these pitfalls in investing

Understanding the “Meaning of Saving Stocks”: This is Not Putting Money in the Bank

Many people have misconceptions about the concept of “saving stocks.” What is the essence of saving stocks? Simply put, it involves selecting high-quality company stocks, buying and holding them long-term, and generating returns through regular dividends and stock price appreciation. It sounds like depositing money in a bank to earn interest, but the differences are huge—bank deposits are guaranteed principal, while saving stocks are entirely different.

This is where the problem lies: many are attracted by online investment strategies like “monthly income of XX thousand” or “steady retirement,” thinking that saving stocks is a straightforward path to financial freedom, but they fail to realize the hidden traps.

Four Major Risks That Saving Stock Investors Must Face

The first pitfall: earning dividends but losing principal

The story of 2021’s hit stock (3373) is the best warning. That year, it announced a dividend of 10 yuan, with a yield exceeding 15%. Such high returns attracted many saving stock investors. What was the result? The stock price kept falling, from 70 yuan down to 22 yuan.

Do the math: buying at 70 yuan, receiving annual dividends was satisfying, but overall, it was a loss. This is a true reflection of “earning dividends but losing on price difference.” Saving stocks are far from a risk-free investment; market risks always exist.

The second pitfall: funds are locked up, and urgent needs can’t be met

The liquidity of saving stocks is extremely poor. Imagine this scenario: a few days before dividends are paid, you suddenly have an urgent need and must sell stocks. But at that moment, the stock price is at a low point, resulting not only in missing out on dividends but also suffering from price difference losses. That’s why saving stocks must use idle funds—money that won’t be needed in the short term.

If your financial situation is unstable or you might have short-term cash needs, saving stocks could become a burden.

The third pitfall: underestimating the difficulty of stock selection in the early stage

One of the advertised advantages of saving stocks is “saving time and effort, no need to watch the market.” But there’s a huge logical flaw: the “saving effort” refers to holding period, while the critical part is the initial stock selection.

Choosing the right stock is essential for saving stocks to succeed. This requires basic analysis skills—looking beyond dividend yield, assessing industry prospects, company competitiveness, and valuation fairness. Many beginners skip this step, ending up buying stocks in declining industries or overvalued targets, with predictable consequences.

The fourth pitfall: minimal short-term gains

The real advantage of saving stocks is in the long term. If you expect significant returns within one or two years, you’re mistaken. Short-term market fluctuations and investor sentiment can obscure the benefits of saving stocks, often leading to disappointing returns.

For young people with limited idle funds who hope to get rich quickly, relying solely on saving stocks to achieve financial freedom is unrealistic.

Does saving stocks really have advantages? Of course, but conditions must be understood

It’s not that saving stocks are useless. For those who meet the following conditions, saving stocks can indeed be a good choice:

Stable psychological resilience: able to endure market volatility and short-term losses without being affected by market sentiment.

Ability to invest small amounts continuously: regularly allocating some idle funds each month or quarter, rather than one-time large investments that can’t be sustained.

Patience: willing to wait 5, 10 years or even longer to see long-term returns.

Basic analysis skills: capable of judging a company’s long-term growth potential, not just chasing trends.

Low risk tolerance: valuing stable appreciation and dividend income over short-term high profits.

How to avoid pitfalls in saving stocks: selecting the right targets

If saving stocks suits you, then choosing the right stocks is crucial.

Start with ETFs: For beginners, Yuanda High Dividend (0056) and Yuanda Taiwan 50 (0050) are the most suitable entry points. An ETF is like buying a basket of stocks, naturally diversifying risk.

Focus on leading stocks: top companies in various sectors with stable operations and strong dividend-paying ability. Besides earning dividends, investors seeking capital gains can consider leading stocks.

Financial stocks can also be considered: high dividends and stable companies are traditional advantages, but be cautious of valuation risks—avoid blindly buying at high prices.

Three ways to make pitfalls even shallower

First, layered management of funds: separate long-term funds from short-term funds; reserve emergency cash, and only lock in funds designated for saving stocks.

Second, start with familiar stocks: avoid blindly expanding investment scope early on. Choose industries and companies you understand first, then explore new targets after gaining experience.

Third, choose reputable low-cost platforms: trading fees and platform compliance affect long-term returns. Compare options carefully to avoid unnecessary losses.

One sentence conclusion

Saving stocks is not the only path to wealth freedom, nor is it a risk-free investment. It is just one of many strategies, suitable for certain people, certain funds, and certain timeframes. Young people’s wealth-building should be diversified; saving stocks is just one piece of the puzzle. The key is to understand your actual situation and choose the investment method that truly fits you, rather than blindly following online “wealth secrets.”