facebookWith Apple and Tesla having their stock split to “make stock ownership more accessible”, would you advise someone who is a beginner to investing to start investing in their stocks? Why or why not? - Seedly

Shania Loh

Seedly Student Ambassador 2020/21 at Seedly

20 Aug 2020

Stocks

With Apple and Tesla having their stock split to “make stock ownership more accessible”, would you advise someone who is a beginner to investing to start investing in their stocks? Why or why not?

Discussion (2)

What are your thoughts?

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There are really two default modes of investing.

  1. Passive

  2. Active

Passive is buying into an index fund. Active is buying into individual stocks.

I see more people retiring early from being active investors. But they take exponentially higher risk. And I have seen active investors who went from living in bungalows to selling every single asset they own because they took a wrong trade.

Passive investors often retire much later, but the proportion of success is exponentially higher.

I suggest both approaches. But keep in mind that the mindset for both approaches are extremely different.

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Aidan Neo

20 Aug 2020

Financial Services Consultant at Manulife Financial Advisers

Hi Shania!

Stock split reduces its price to make it accessible and affordable for retail investors. This is true for platform which does not allow fractional shares, hence people using IBKR see no use for this. But, I feel it's unique to each individual as everyone uses different platform at their comfort zone.

It really depends how you define beginner. Beginner who has not invest at all and finding avenue just to invest their money or a beginner who has done the research diligently and ready to invest? Whether for which kind of beginner, one should only invest in a specific stock/company when they have utmost belief in the company in various areas: moat, relevancy, sustainability, leadership. In summary, their business model.

For why not, I would say it's more geared towards their risk tolerance and investment methodology as these are growth stocks where volatility can be very harsh at bad times. However, if the investor is very clear with his approach/strategy and able to stand firm against his emotions, then I don't think it's much of a worry to proceed.

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