One of the ways to conserve the capital that one owns and not lose it due to its depreciation is to invest. The more you want to earn, the more you must be willing to risk, however you can be cautious to avoid or minimize losses. As mentioned above, whoever wants profitability must take risks, and one of the great options is the stock market.
According to the Spanish publication El Confidencial, in the world of savings and investment to obtain a return on money, it is necessary to be willing to take risks, an interesting option is a stock investment that promises higher returns than other options. You could also choose to invest in buy-to-let properties, gold, lands but the returns could be less in comparison.
To specify this type of investment it is necessary to keep in mind some concepts.
1. If it is called equities … it is for something.
The stock investment is a type of variable income investment, that is, the profitability varies and this variation can be upwards – that the price of the securities or shares rises – or downwards – that the price falls. Therefore, as it is not possible to know exactly what movement the shares in which we have invested will follow, the final profitability that can be obtained is unknown, hence we speak of equities. This is a fundamental factor when thinking about investing in the stock market. In other words, just as you can gain a lot, you can also lose a lot.
The universal principle that ‘the higher the profitability, the higher the risk’ is shown in all its dimensions on the stock market.
2. An important factor is that money that may be needed tomorrow should not be invested.
According to experts, you only have to invest in the stock market with money that you will not need in the short term. Although stocks are easier to buy and sell than other financial assets, if you are forced to sell because you need that money, the price may be lower than that paid when you bought them, incurring a loss or loss. the money originally invested may not even be collected. A stock market aphorism says: whoever sells out of necessity, loses out of obligation.
3. How can you earn money?
There are two ways: to buy shares in a company and have their price rise to be able to sell them at a higher price, with the corresponding profit -plus value-, or by dividends, that is, the part of the profits that companies distribute among their shareholders. There may be other avenues, such as the sale of rights in capital increases, the shares that are given in a paid-up capital increase or remuneration for attending shareholders’ meetings, but they are less common.
4. Do all listed companies pay dividends?
No. They have no obligation to pay them. In the event that the company in which you have invested does distribute dividends, it is necessary to bear in mind that the day the dividends are distributed they will be discounted from the price; If our stock is trading at 10 dollars and a dividend of 1 dollar is delivered, the price will go to 9 dollars, without this implying that that money has been lost, because that dollar will be in the pocket. And the second, that there is another option Among listed companies, it is the scrip dividend or election dividend, through which companies offer investors the possibility of collecting dividends in cash – money – or in shares.
5. Have real expectations.
If you invest little money you will not become a millionaire.
Equities is an additional option available to you to try to get an extra return on your savings; as it has more risk than deposits, you can also earn more money with it. But that’s it. In other words, it is unlikely that $ 5,000, $ 10,000, or $ 20,000 will turn into $ 1, 2, or 3 million overnight. With money, time, wisdom and discipline the prize can grow, but there is no magic in the short term.
6. Get real advice and documentation.
If you want to invest in the stock market, the idea is to go to professionals who are dedicated precisely to that, in addition, there are also books and manuals that can help.
7. Follow-up and discipline.
If you decide to invest in the stock market, you need to monitor the actions, set goals, and act with discipline. In other words, if we buy some titles, we should mark how much we would tolerate losing and force ourselves to sell at that price and how much we aspire to earn and sell at that price. In this sense, one of the most famous stock market aphorisms states that the last dollar earned by another; I mean, beware of greed.
8. Can you buy and sell directly?
No, an intermediary will always be needed. That is, you must be a client of a financial intermediary -if our bank is, request access on its platform to buy and sell shares– and pay the corresponding commissions for the use of that service, which is now more accessible because it offers an Internet platform to operate.
9. There is also the possibility of investing in the stock market indirectly.
That is, through investment funds that are managed by professionals. Not only do they offer this professionalism, but they also allow diversifying the portfolio; a fund invests in several stocks at the same time, so not all eggs are in the same basket.