When the interest rate is low, many people choose to put their savings in investments in the stock market. But investing in the stock market is not easy and requires a few skills to do it well.
This article will look at important aspects of investing in the stock market, which will reinforce the idea of the need to train in this regard.
You have to know what the Stock Market is
The Stock Market is a market. Would you dare to intervene in the art market? Do you think it is optimal to operate in the cattle market without knowledge? If the answer is no, unless you have training via stock market classes in this regard, apply the same for the Stock Market. The Stock Market is a market in which savers and companies need funds to make their operational investments operate. In general, we differentiate between the primary market (stocks, bonds, etc., are acquired and traded directly). Then these shares and bonds can be purchased and exchanged, no longer by businesses but by savers and investors, creating the secondary market. In addition, you should know that you can invest directly or do it through an investment fund.
When is it optimal to invest in the Stock Market?
Not all moments are ideal. If the interest rate that financial institutions pay you for your savings is low, it might be good to invest in the Stock Market since the yield will be higher there. Although this argument may seem easy, it is not so. One has to take into account the risk they want to take with the investment. In the Stock Market, the yield is variable, which means that you do not know what yield you will obtain. And we are not talking about whether we will get 3% or 12%, but that the return may be harmful; that is, your investment may lose value. Also, if an investment “promises” very high returns, your risk will be increased, and that can lead to high losses. How to balance profitability,
What kind of income can I get if I invest in the Stock Market?
In addition, you have to know where the investments to be made will come from. On the one hand, our investment can pay us dividends. The company has obtained benefits at the end of the year and is paying back its shareholders. But the company does not always pay dividends even if it has had those benefits. The other way to earn an income is by making capital gains by selling the shares. That is, selling the investment for a price higher than the purchase price. How these ways of obtaining returns are combined is not trivial, it requires a detailed analysis.
With whom do I “compete” on the Stock Market?
In the Stock Market, there are many operators, and most of them are experts on the subject. Most agents and brokers have been trained a lot in the stock market and investment, so if we are not at their level, surely we will choose the wrong types of investments, terms, and times.
Stock market terminology is not easy
Do you know exactly what the terms mean: par, the underlying asset, book entry, arbitrage, beta, junk bond, market capitalization? If you don’t know how to define them precisely, you need training, and joining stock market classes is recommended for proper training.
Do you know how income from investments in the Stock Market is taxed?
Indeed not, and it is a critical point. An investment can bring more profit than another, but at the same time, have worse taxation, and that the extra obtained is cancelled by the tax effect. If you do not know what is going to return from movable capital (and, if within this concept it is a return obtained from the participation inequity of any entity or is returns received from the transfer to third parties of own capital) or to capital gains, you need some specific training in this area.
And finally, it is not enough to choose the stock market investment
We must follow the investment made, inform us of the results that the company is obtaining, or the evolution of the investment fund. And we must do it systematically over time. With this information over time, we must determine when to keep the investment, when to sell it or when to expand it.
After seeing all this, it is clear that one needs to train seriously and rigorously to make investments in the Stock Market. And that we are aware that it is a market for experts, so we must always continue preparing every day.