It is not easy to get money in a competitive world like today. Because of this, when we can get a good amount together, we want to make it earn money safely, minimizing the risk of loss.
One of the ways to multiply our money is by investing in the stock market, but the fact is that if you do it the wrong way you can lose what you invested. Want to find out how to invest in the stock market without running the risk of getting red?
What is the stock exchange?
Many people hear about the stock market and even follow their market variations day by day, but the truth is that few understand what it really is: an organized market where stocks (securities issued by companies) are traded, whether they are public, mixed or private capital. These stocks are securities that represent small portions of a company.
When you buy one of these small parts, you become the “owner” of the company and you are entitled to the profit you make – of course, in proportion to the percentage you own. They also trade debentures (bonds issued for long-term loans).
How to invest in the stock market?
The first thing to do is decide what you want to do with the money invested, and on that basis, what is the best kind of investment to achieve the desired value: direct purchase of stocks, ETFs, investment clubs and equity investments. Learn more about them now:
Direct purchase of shares
In this mode you can choose the stocks you are going to buy, so that you do not share the risks of the investment or the gains with anyone else. This type of investment also generates dividends, which are portions of the company’s profit distributed among shareholders. Want to learn more about direct stock buying? Click here.
Index Funds (or ETFs)
Exchange Traded Funds, as they are known in Brazil, seek to obtain the return of indices, which represent the performances of certain areas of the market, with quotas that you can buy through the stock exchange.
If you do not have a very large amount of money, ETFs are a great way to start learning how to invest in the stock market, since you can invest a few sums each time: with $ 200 you can start. In this mode, dividends are reapplied automatically, which makes the fund grow, and you can buy and sell your shares without difficulty, as if they were stocks. In addition, by investing in sets of stocks, such as ETFs, you diversify your investment while reducing risk.
Learn more about ETFs here.
They are groups of people who come together to invest in the stock market. In this modality, the gains and losses are divided among all the participants proportionally to how much they invested. The cost of investment, in this way, is not so high, also because the resources are added together. You can find investment clubs through the brokerage firm linked to your bank or through independent brokerage firms.
In this mode the investor buys shares from a stock fund, which is usually managed by an independent broker or a bank. You do not buy stocks, but quotas for a fund. It is a convenient and relatively easy way to invest because you do not have to do any trading and it is possible to invest through your bank.
How to choose a brokerage and stock
Once you choose the investment method, you will need to choose a brokerage and create an account to become an investor. The broker is who helps you choose the best stocks for your investor profile and gives you tips on new products and better returns. You can consult a list of brokers here.
Remember that even with accurate analysis, you should not invest everything in just one company. Diversifying is one of the secrets of those who work with the stock market and avoids great losses if something goes wrong. Also, always count on the use of investment simulators.