22 days ago - Economy and Finance

Keys to start investing in the stock market

By Paula Spitaleri

Keys to start investing in the stock market

The stock market offers us a wide range of investment opportunities for different types of investors, from the most conservative and risk-averse to the most dynamic and bold.

Since it is possible to speculate in the stock market, it is often associated with a casino or high-risk investments. However, this reflects a biased view that we aim to debunk in this article, as the stock market also offers conservative investment alternatives. It is crucial to understand that it is all about knowing and managing the risks involved in each investment to achieve the risk-return relationship that best suits our investor profile. In this regard, the range of options is very broad and varied.

The key question, then, is to know “everything” that the market has to offer us and to “choose well” those investments that match our investor profile, as well as our financial needs and life plans.

Are you interested in what the capital market can offer you? Do you want to take your first steps in stock market investing? We share with you some key tips to do it successfully.

First key: Choose a broker that meets our needs. The first step to start investing in the capital market is to open an investment account with a broker or ALyC (Settlement and Clearing Agent). Through an investment account, we can acquire negotiable securities and invest our savings. If we are taking our first steps, it is advisable to have the advice and support of a qualified professional who can explain to us not only the specifics of each investment alternative, its risks, and advantages but also provide us with an overview of the market. For example, an instrument may seem very attractive, but it may be exceptionally expensive at the moment we want to buy it. In that case, having the perspective of an expert who can explain the context in which that asset is moving at that time and adjust the timing of purchase or sale is very valuable. The level of advice provided by each ALyC is different. It is important to do good research on those agents that provide us with the full range of services, from technology to advice. At Balanz, we know that the role of the financial advisor is a key variable that adds value to the investor, so when a client opens an investment account with the company, they are assigned a financial advisor at no cost to guide, support, and help them make the best financial decisions with their savings.

Second key: Know our investor profile and financial needs. It is essential to be clear about our financial goals, needs, and objectives. This is the first filter that investment alternatives must pass when being chosen. We must evaluate whether they fit what we need or not. For example, it is not advisable to invest in stocks (which are generally volatile assets) the capital that we will need in a few months for a real estate investment, as we run the risk that stock prices will drop when we need to access the money.

Third key: Clearly communicate our goals and needs to our financial advisor. When we open an investment account, we will be asked to complete a test to know our investor profile, but this represents only a first approximation of what our financial advisor needs to know to better assist us. The clearer and more specific we are, the better they will be able to guide and support us when making investment decisions.

Fourth key: The first experience in the capital market should be a positive and enriching practice. If, already on the first opportunity to invest in financial instruments, things do not go as expected, it will be difficult to gain confidence and move forward.

The first tip, without a doubt, in this case, is to invest safely and conservatively in the first investment. This will give us an expected gain or one very close to it, and the guideline on whether we agree with those levels of risk or if we are willing to take a bit more in search of greater profitability.

Fifth key: Invest in what we know and understand. Our financial advisor can guide us, but we are the ones who make the decisions, so we must make conscious decisions. It is not advisable to invest in what we do not fully understand. At some point, we can realize that training ourselves and investing in quality financial education is also a very important step to broaden our personal range of investment opportunities.

Sixth key: Diversify appropriately. It is advisable to spread our capital across different investments to avoid being exposed to the performance of just one or a few assets. This is valid even for conservative portfolios. However, we should also consider that, depending on the assets we choose for diversification, excessive diversification can become unprofitable due to increased commissions and operating costs. Discussing this topic with our financial advisor is crucial when choosing the best alternatives that match our profile.

Seventh key: Mutual funds (MF) are an excellent option to consider for those taking their first steps in the capital market. With low amounts, it is possible to access well-diversified portfolios managed by expert professionals. Additionally, these are easy investments to subscribe to and redeem, as they are liquid and the redemption is credited within no more than 48 hours.

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Paula Spitaleri


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