Today it is no longer necessary to be an expert graduated from the faculty of economics or finance to invest in the stock market as one. The advent of the internet has made it possible to democratize knowledge that previously seemed exclusive to a few of a select elite.
So that you can invest in the stock market from 0, we have prepared this small guide which will help you learn how to invest easily. If you have decided to make your savings grow by investing in stocks, then this is for you, here we will tell you how you can start exploring this wonderful world of the stock market.
➡To begin ...
The first thing you should know to get started is that in the stock market world a specific jargon or language is handled. This is usually technical and at the beginning, a bit difficult to understand, that is why you should start by learning as much as you can of the investor's language.
Another point that you must take into account is the structure and operation of the exchange and its participants. The stock exchange is an organization which is in charge of selling and buying assetsBe it mutual funds, stocks and more. In it we find different participants such as brokers, investors, funds and more.
➡How does the bag with fruits work?
Suppose a vendor opens a street stall and sells bananas for $ 2 a bag. Since it has no sales since the starting price is expensive, it drops them to 1.5 dollars, then it begins to sell its products.
Almost at sunset, closing time, he sees that he still has a few bags left so he decides to sell them for $ 1, thus he ends up with his merchandise and can leave his stall. The same happens with the bag, the price varies and depending on the schedule, you can pay more or less for an asset.
➡Investing in the stock market step by step
To invest in the stock market follow these steps:
- A good broker
If you want to be successful when investing in the stock market, you should know that the broker is a fundamental part. A broker is the agent or institution that will allow you to access the assets of the exchange much more easily.
We recommend taking into account points such as the quality and prestige of the broker, the tools it offers, assets, commissions and operating costs, as well as security, trust and legal support to choose the best option.
- A demo account
Many beginners in the world of finance start with a demo account which serves as a kind of simulator. In it you can make investments with play money which will allow you to know in a realistic way, but without risking your money, how the stock market works.
Some experts recommend starting with a demo account as a good way to invest in the stock market. You can use it as a kind of training to familiarize yourself with the broker's tools and strategies before you start investing your real money. This will reduce the risk of losses due to an error.
- Initial budget
Another point to take into account is the budget or initial amount of money with which you are going to start. Take into account that there are brokers that ask for a minimum deposit, for example, $ 100, in addition to that there are stocks with prices ranging from a few dollars to hundreds.
The ideal is not to invest more than 10% of your budget in a single share or in the same asset, as this can cause losses. Think of the analogy of eggs, if you have all your eggs in one basket and it breaks, you would lose them all, but if you separate them into different baskets ...
- A good strategy
If you want to be successful, you should know that strategy is an important part of every aspiring investor. Big investors did not make their fortunes by chance, they followed an analytical and intelligent path known as strategy.
Defining a strategy can be difficult at the beginning, since there are many variants to consider. You can have an aggressive strategy or a more passive oneYou can only bet on Start Up companies, pharmaceutical or tourism companies, this will depend on you.
- What to invest in?
You must know that the stock market has a large number of options for investment. For example, we have the ability to invest in a large number of companies ranging from technology to services, pharmacies, oil and more. We can even find famous Start Up like Airbnb.
We can also find assets such as oil or water, that's right, assets on the stock market. It is important to learn to define a strategy for selecting assets, as this should not be done randomly. Rather, we must follow a line which must match the previous point.
➡Tips for first timers on investing in the stock market
- Constant Learning: Just as markets are constantly changing, you must be too. Never stop learning, as falling behind in knowledge will cause your ability to drop and your decisions to be imprecise. In addition, learning is very easy thanks to the internet.
- Constancy and patience: For many this is one of the most difficult points to develop, but also one of the most important. So much Constancy and patience are two very important tools when making your way in the world of the stock market, remember that Rome was not founded in a day nor did millionaires become millionaires with a single investment.
- Reduce risks: At the beginning, what we least want to have are losses, that is why experts recommend starting by reducing risks. We recommend you go for much safer investments, perhaps with a lower return, but also less risk.
- Follow the markets closely: Finally, you must always stay informed about trends and changes in the market. This is because events such as a war, a terrorist attack and even a declaration can cause that from one day to the next, assets change in value.
Financial analyst and economist with a master's degree in finance.