Investing in the stock market: first steps

Investing in the stock market is a seemingly simple task. All you have to do is open a securities account, which is obtained from a current account at a bank, or a broker, and start buying. However, to make these investments it is necessary to study, understand the market and do it with your head, because it is just as simple to invest as it is to lose everything in just a few seconds.

If we want to get started in the world of the stock market, we need to start training ourselves. There are many books on this subject that will give us a global vision of what investing means. We can also go to the press and read the technical analyses that analysts carry out on all securities and their characteristics. Before doing anything, without touching our money, we have to lay our own foundations and know what kind of investors we want to be (find out here ). To do this, we will study our purchasing power, assess how much we can risk and what losses are within our possibilities, because whenever one invests, one must know that there is a 50% chance of winning, but also of losing.

Studying ourselves

If we have money saved up and we want to make it profitable, investing is a good option. Unlike what is usually heard, you do not need a large amount of money to do so. However, the more capital we have, the more we will be able to undertake, the more we will diversify and, therefore, the more benefits we will have. However, at the beginning we should start by risking little money until we control the market and the actions we take, ideally by doing a study of our own accounts. Let us assume that we have EUR 1 000 saved up and that we want to invest it. With that amount we can already acquire a package of shares. To do this, we must have clear parameters such as the market situation in general, how the companies are doing, what the price of the shares of each company is, its share price and its monthly and annual progressions.

Investing is a long-distance race, it is a mistake to think that investing in the stock market is a matter of buying and selling in a short period of time and making a profit, intraday investments are for experts. You have to be realistic. A novice investor should buy, and when he makes a profit save one part and reinvest the other.

If we believe that we cannot do it alone, there is the possibility of hiring a stockbroker, who will be our advisor and will help us move our money from his knowledge of the market. A broker can be a person, an entity or our own bank, which will act as an intermediary for us to enter the stock market.

Study the market

The time has come to decide which shares to buy. We can buy many stocks from a single company or diversify. Doing the latter will increase our focus and decrease our risk, because if we have all our capital in shares of a single company and they lose their value, we will be left with nothing. Stocks are shares that companies sell to finance themselves, after passing the relevant quality controls. To decide on one company or another we must look at the price, that is, the share price, in addition to technical and fundamental analyses that refer to studies of the shares through patterns or trends and external factors.

The stock market is very sensitive, it is susceptible to many changes and it lives conditioned by current events. Any political, economic and social manifestation makes it wobble, so it is very difficult to predict what will happen. A company may close as the best market value one day, and end up in the last positions the next day. That does not mean we have to withdraw the shares, we have to wait and find a balance. To invest we have to look at the profit of the listed companies and decide, although there are always exceptions.

Dividends and profits

Dividends are the corporate profits that companies allocate to their shareholders, and each company decides how to distribute them. Usually corporations reinvest a percentage of the profits and another part is distributed to the owners of the securities, in physical money or in more shares. All the shares of the companies have the same value, are equal and their profits are equal. Therefore, when we buy securities we become partners in that company, we have the same rights, and we get the same dividends, in the proportion that we have.

Trading or short-term investment

Another way to invest is through trading, which consists of buying listed assets and selling them very quickly on a regulated online market. A trader is a speculator who is based on probabilities and who acts according to a series of specific parameters, different from those used by investors. For them it does not matter the quality of the company, since their purchase and sale is executed in a short or very short term. In trading, we look for specific movements, something that stands out at a certain moment and that can generate benefits. It is possible to say that the trader is the opposite of the investor since as we have commented, in the stock market it is advisable to invest in the long term. In recent years this type of investment has become very popular despite the risks involved. Its practice, although it may seem complementary, is the opposite of classic investments that require careful study and a lot of patience.

To invest in the stock market we do not need much money, we can buy shares of a company, or diversify our portfolio in case things do not turn out as we expect. If we do not have enough knowledge we can hire a broker, which can be a person, a company or our own bank. These types of investments are long term operations so we must be patient, otherwise we could endanger our capital.

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