Recently, I've been pondering a question: can young people truly achieve financial freedom by just saving and investing in stocks? There are indeed many articles online about this, but I’ve noticed most of them don’t clarify a key point—saving in stocks also carries risks.

First, let’s talk about what stock saving is. Simply put, it means buying stocks and holding them long-term, gradually accumulating returns through the dividends paid out by the company. It sounds a lot like depositing money in a bank and earning interest, hence the term "saving stocks." It’s quite popular in Taiwan, and online stories like "saving stocks to receive dividends, earning hundreds of thousands a month" are everywhere.

But here’s a very easy-to-miss downside of stock saving—it's not capital guaranteed at all. I’ve seen many people earn dividends but lose their principal. For example, in 2021, when a stock paid out a dividend of 10 yuan, with a yield over 15%, many rushed in. The stock price then dropped from 70 yuan to 22 yuan. That’s a classic case of "earning dividends but losing on price difference." So, claiming it’s a guaranteed profit without risk? That’s just a lie.

Another often-overlooked disadvantage of stock saving is that stock selection really tests your skill. Not all high-yield stocks are worth buying. You need to consider industry prospects, company fundamentals, valuation levels, and more. This requires some analytical ability—buying randomly won’t cut it.

A third downside is liquidity issues. The money invested in stocks isn’t easily accessible, because selling at the wrong time could result in a loss. If you need cash urgently before a dividend payout, and the stock price happens to be low, selling might not only mean missing out on dividends but also incurring a loss. So, it’s best to use idle funds that you won’t need in the short term.

There’s also another rarely discussed downside—short-term returns are really limited. Stock saving relies on long-term growth. Market fluctuations can be huge in the short term, making returns unpredictable. If you’re looking to make quick money, stock saving isn’t suitable at all.

So why do so many people still save in stocks? Because there are real advantages too. First, passive income combined with compound interest. Holding quality companies long-term, regularly receiving dividends, and reinvesting them—over time, this snowball effect can grow significantly. After twenty or thirty years, the total returns can be quite substantial.

Second, it requires no daily market monitoring. This is a big advantage for working people. You don’t need to guess whether stock prices will go up or down tomorrow. As long as the company’s fundamentals are solid, even if the stock price dips, it can be seen as a buying opportunity at a discount. The mindset is much more stable than short-term trading.

Next is inflation resistance. Cash is eroded by inflation, but the profitability of quality companies usually adjusts with rising prices. Over the long term, stock prices and dividends tend to trend upward.

Taiwan’s tax system is also relatively friendly. Dividend income can be combined with comprehensive income tax and enjoy an 8.5% tax credit, or be taxed separately at 28%. Most stock savers benefit from lower tax burdens. However, if a single dividend exceeds NT$20k, a 2.11% supplemental health insurance fee (second-generation health insurance) will be deducted.

So, how can you do stock saving well? First, choose the right targets. Many people only look at high dividend yields, but it’s more important to consider payout sustainability and long-term growth potential. In Taiwan, common stock-saving targets fall into three categories: ETFs, financial stocks, and telecom stocks. ETFs have the most diversified risk and are suitable for beginners—popular choices include 0056, 0050, and 00878. Financial stocks offer stable dividends, like Mega Financial or CTBC Financial. Telecom stocks like Chunghwa Telecom are also good; even in tough economic times, everyone needs internet, so their stock prices tend to be stable.

Ultimately, suitable stock savers should have several qualities: a long-term investment mindset, idle funds, patience, a conservative investment style, and fundamental analysis skills.

Finally, I want to say that stock saving is not a guaranteed path to wealth for young people. Relying solely on stock saving to turn things around is unrealistic, especially since young people usually don’t have much idle capital. Diversification is fundamental, and choosing investment methods that match your financial situation is equally important. All investments carry risks—never follow the crowd blindly.