How to Invest in stock market, How does the stock market work? The purchase and sale of securities is the great protagonist of the financial markets. But do you understand what it is and how the stock market works?
Do you know what steps you must follow to invest or the associated commissions? in this content, We help you answer these and other key questions.
The stock market is the market in which buyers and sellers meet to trade shares and other financial assets -both fixed and variable income- (bonds, public or private, or ETF, exchange-traded funds, among other values).
Publicly traded companies looking for financing raise capital by selling their shares while investors looking to make a return on their money get liquidity by becoming shareholders.
In this sense, a share is a title that represents a proportional part of the capital of a company. Thus, shareholders own a percentage of the business (based on the proportion of shares they own).
For a company to be listed on the stock market, it must meet a series of requirements, such as demonstrating economic solvency and transparency before the regulatory body.
Among the main stock markets in the world, by market capitalization, are the New York Stock Exchange, the Tokyo Stock Exchange, and the London Stock Exchange.
How much money do you need to invest in the stock market?
What is the first step to investing in the stock market?
The first thing you should do before investing in the stock market is to organize your finances. Knowing what your income, expenses, savings, and debts will help you identify with certainty if you have the required resources available to invest in a stock market.
It will also help you to have economic planning for the future since the stock market is considered an investment instrument in the medium and long term.
After assessing that you have an amount of money that you want to invest in the stock market, the next step is to find out how the stock market works.
Consulting professionals in the stock market sector, reading specialized media, or doing some training are ideas to resolve any doubts that may arise. In addition, most professional can help you find out about some important issues that define your investor profile, such as the financial objective, the time frame, or your risk tolerance.
At present, there are applications and web portals in which you can create an account only to simulate financial operations and familiarize yourself with the environment. This way you can start making investment decisions in a fictitious way and see how the stock market behaves, but without investing your money yet.
Once you have your financial situation clear, you have defined your investor profile and decided that you want to invest, the next step would be to go to an authorized financial intermediary, who executes the purchase or sale orders since investors cannot buy and sell by themselves actions.
Below are the two roles that play a major role in the stock market.
The first is the broker -also known as a stockbroker- and it can be a professional or an authorized intermediary company that executes the purchase and sale operations required by its clients, in exchange for a commission to the client (the investor).
The second is the agent in charge of defining the purchase and sale operations or negotiator -trader, in English- who is dedicated to buying and selling the securities, in his name or for third parties, to obtain profits from the operations. Consequently, the trader will use the broker’s platform to carry out the transactions.
If you want to learn more about the differences between these two leading figures in the markets, you can do so in the Santander Asset Management Spain virtual classroom.
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In which markets and securities should you invest?
When you invest in stocks, you expect the company to grow and perform well over time. Diversifying the investment is the most frequent advice that experts usually give.
Combining different companies, sectors, types of assets or geographical areas is a strategy so that all the capital is not exposed to the same market. Building a diversified portfolio from stocks is possible, but it requires considerable investment and research.
The stock market reflects business realities and expectations and, therefore, the economic situation of a country. Environmental disasters, political crises, or war conflicts, among others, are factors that can affect the performance of companies and that is reflected in the price of their shares on the stock market.
You can also opt for those financial products that, in addition to offering you profitability, have a positive impact on the environment. Stock market are sustainable investments that take into account environmental, social, and corporate governance criteria, ESG, for its acronym.
Conclusion: Learn how to Invest in stock market as a beginner to be able to make a lot of money to yourself and your family and you live in financial freedom throughout your life.
This article have been able to teach you different ways on how to invest in stock market UK and make a lot of profit without any forms of risk involved.
