Beginning investors sometimes wonder, "If I put some money in stocks, can I lose more than I invest?" The answer is that, as long as you invest in common stock without borrowing any money, your maximum potential loss is no more than 100%. Once you get into borrowing money, playing options, or shorting stocks on margin, you could lose more than you "invest." Beginning investors shouldn't even think of investing on margin or shorting stocks -- and even advanced investors might consider steering clear of options. They should at least learn a lot about them first, before trying them.
Don't let the 100% loss possibility frighten you too much, though. If you're researching companies before investing, selecting financially healthy firms with track records and great growth prospects, and keeping up with their developments, you're unlikely to lose most of your investment. Remember also that losses occur only when you sell. Even good companies go through occasional slumps, so it can be best to patiently ride them out.
Focus on how much you can earn if you invest sensibly. Learn more in our 13 Steps to Investing Foolishly, and in our educational How-to Guides, which offer a money-back guarantee and have received rave reviews.
And by the way, if thinking about investing makes your head hurt and you'd like an actual person (a financial pro, no less) to talk to about your financial situation, look into our TMF Money Advisor. It's a valuable service we're offering, featuring customized independent advice from a variety of objective financial experts. You need to make sure you're saving enough and well enough to meet all your needs. If you need some help doing that, look into this offering. (To take savings matters into your own hands, visit our Savings Center.)
