## Can Investing in Stocks Really Provide Stable Profits? Recognizing the Potential Risks of Stock Accumulation

Many novice investors are attracted by online narratives like "Monthly income of ten thousand yuan from stock accumulation, early retirement," viewing stock accumulation as a shortcut to financial freedom. In fact, while stock accumulation sounds simple—buy quality stocks and hold to receive dividends—this seemingly stable investment approach hides many issues that investors often overlook.

## The Essence of Stock Accumulation: Not Savings, but Investment

First, it’s important to clarify the concept. Stock accumulation involves holding stocks long-term to earn dividend income. This logic is similar to a bank fixed deposit, but the fundamental nature is entirely different. Bank deposits come with a capital guarantee, whereas stock accumulation does not. This is the most basic difference between stock accumulation and fixed deposits and is also the main reason many investors suffer losses.

A classic example is Hotshine (3373), which announced a dividend of 10 yuan in 2021, with a yield of over 15%, attracting many stock accumulation enthusiasts. However, the stock price subsequently declined from 70 yuan to 22 yuan. Investors earned dividends but lost principal during the price collapse, ultimately resulting in a loss. Such cases are not isolated but reflect the real risks of stock accumulation.

## Where Are the True Risks of Stock Accumulation?

### Market Fluctuations Causing Principal Loss

The primary risk faced by stock investors is the loss of principal. Stock prices are affected by market sentiment, company performance, industry prosperity, and other factors, with no guarantees. If you buy at a high point and the price drops later, even if the company continues to pay dividends, your total assets may still yield negative returns.

### Insufficient Liquidity

Stock accumulation requires idle funds because stocks cannot be accessed instantly. If you encounter urgent cash needs just before dividend payout and are forced to sell at a low price, you not only miss out on dividends but also suffer losses from the price difference. This is especially problematic for young investors with tight cash flow.

### Higher Than Expected Stock Selection Skills

Although stock accumulation is touted as "worry-free," the initial stock selection is crucial. The choice of a good or bad stock determines the success or failure of the entire investment. Investors need to analyze company fundamentals, industry outlook, and valuation, rather than relying solely on dividend yield. A high yield often implies market pessimism about the company's prospects, and rushing in could lead to pitfalls.

### Difficult to See Results in the Short Term

The advantages of stock accumulation are fully realized over the long term, but how long is "long term"? Five years, ten years, or twenty years? For young people eager to improve their quality of life, the returns from stock accumulation often fall short of expectations. In the short term, market volatility and investor sentiment have a much greater impact than company fundamentals, making short-term gains difficult to predict reliably.

## Who Is Suitable for the Stock Accumulation Strategy?

Stock accumulation is not a universal investment method; only investors meeting certain conditions are suitable:

**Investors with sufficient idle funds.** Stock accumulation requires funds that are not needed in the short term, so ensure your living expenses are covered and have an emergency reserve.

**Investors with enough patience.** Able to tolerate short-term market fluctuations, unaffected by news and others’ opinions, and committed to long-term holding. This tests one’s psychological resilience.

**Investors with low risk tolerance.** If you have limited risk appetite and prioritize stable dividends over price fluctuations, stock accumulation can be part of your portfolio.

**Investors with basic analysis skills.** At least capable of understanding financial statements and judging industry prospects, rather than relying solely on recommendations or dividend figures.

## How to Select Stocks for Accumulation?

If you decide to pursue stock accumulation, choosing the right stocks is paramount. The following three categories are relatively suitable for beginners:

**Financial stocks.** Banks, insurance companies, and other financial stocks tend to have stable dividends and solid industry positions, but timing is key—avoid buying when prices are already high.

**Leading stocks in various sectors.** These companies are stable in management and market position, capable of continuous dividends, and may also offer potential capital gains.

**ETFs.** Compared to individual stocks, ETFs allow you to hold a diversified basket of stocks, automatically spreading risk, making them the most suitable stock accumulation options for beginners. Examples include Yuanda High Dividend (0056) and Yuanda Taiwan 50 (0050), which are common choices among stock accumulation enthusiasts.

## How to Avoid Common Pitfalls in Stock Accumulation?

### Carefully Select Investment Targets

Choosing the right stocks is half the success. Beginners are advised to start with ETFs, gaining experience before considering individual stocks. Initially, focus on industries and companies you are familiar with, rather than blindly chasing high dividends.

### Reasonable Capital Allocation Planning

Separate short-term funds from long-term investments, and keep sufficient emergency funds. Never miss the best opportunity to access cash due to stock accumulation, which could force you to sell at a low price.

### Choose Legitimate Investment Channels

The choice of platform is equally important. Ensure the platform is compliant and licensed, compare transaction fees and service quality, and avoid unsafe channels just to save a little on fees.

## Stock accumulation is not the only path to wealth freedom

Young people aiming for financial freedom should not rely solely on stock accumulation. It is just one part of an investment portfolio; combining it with other investment methods can improve overall returns. More importantly, wealth accumulation fundamentally depends on increasing income, reducing expenses, and continuously learning investment knowledge.

While stock accumulation has advantages—being worry-free, low threshold, and enjoying compound interest—it is by no means "guaranteed profit without loss." Investors should choose methods that suit their financial situation, risk tolerance, and investment goals rationally, rather than blindly following online success stories. Only by recognizing risks and acting within one’s means can stock accumulation be approached correctly.