Investing in the stock market is an alternative that many savers do not take into account due to ignorance. It is a market in which companies seek financing and investors seek where to invest their savings to make them profitable. It is an open market for everyone and you only need to resort to an authorized financial intermediary through which to operate on the stock market.
Investors will be defined as shareholders, that is, owners of a percentage of the business, in the proportional part of their shares. The shares have a price in the market -the name quote- that varies according to supply and demand. In turn, supply and demand will vary depending on different factors.
With this operation, profitability can be obtained from the capital gains due to the evolution of the market price, although losses can also be generated. That is, losing money because the price at which the share is sold is lower than the purchase price. The performance of the shares, in addition, can also come from the distribution of dividends among the shareholders or delivery of free shares. However, to invest from scratch it is important to take into account some points.
Inform before investing
Before taking the step of investing in the stock market, it is important to be aware of the investment we are making and the operation of the market in which we are going to enter. Among others, the CNMV highlights that it works based on “expectations about the future profit of the company and its growth rate, expectations about the economic evolution of the sector or the country, interest rates and investor confidence” .
Also, not all products are the same and if you don’t understand the product, it’s better not to buy it. One of the key issues to invest is to be aware of where the money is going and the risks associated with that investment. You have to ask to know all the details of where we are investing our money.
Define your investment profile
For beginner investors, the Cnmv poses two questions: if it is convenient to invest in the stock market -holding the Finnsor objectives- and what is the profile of the del of the del of the investor -based on the level of risk that can be assumed, the financial objectives or the term of the What do you have to invest your money? Knowing the profile as an investor is essential to adapt the strategy to the risks that each one can afford.
Not everyone has the same economic characteristics or objectives. The financial and personal situation will determine the investor’s profile and from it the investment style and the risk that each investor must and can assume must be established. Risk is one of the main points to consider, what level of profit or loss you expect to apply to the investment based on risk aversion.
Analyze investment risk
Based on the information obtained, each investor must analyze the associated risks and how they may affect their financial situation. The answer will determine whether or not to carry out the investment. In this sense, the CNMV affirms that, if there are outstanding debts with a very high interest, such as credit cards or other consumer loans, it is more advisable to allocate the savings to lower or eliminate them, before thinking about investing.
Choose the financial intermediary
In order to invest in the stock market, you must resort to an authorized financial intermediary. When choosing an intermediary through which to operate, you must take into account the commissions they charge for the different services they provide. For example, every time you buy shares you will have to pay commissions for the purchase operation carried out, in addition to the expenses associated with maintaining the titles.
Specifically, two types of expenses can be distinguished: own and third-party expenses. To this we must add the expenses for stock market fees, a charge made by the market itself, outside the financial intermediary. It is, therefore, expenses that detract from the return on investment.
diversifies
When choosing where to invest, it is not necessary to allocate everything to the same product. In fact, among the most repeated tips when it comes to investing, diversification stands out. Concentration risk is the possibility of suffering losses from investing too high a proportion of available money in a single asset or type of asset.
To avoid this, the investor must maintain a portfolio with assets with different levels of risk and potential profitability, from different sectors of activity -industry, services, food, new technologies, banking, energy, construction…- or from different geographical areas. Thus, the possible losses of some investments could be offset by the gains of others.
