How can I invest in the stock market?
If it has ever crossed your mind that leaving money in your checking account makes you lose purchasing power year after year and you want to turn that situation around, this is the ideal time to start investing in the stock market.
If you have already taken the step and decided to invest, one of the first thoughts as a novice investor is the direct purchase of the shares of one or more companies, that is, investing in the stock market. However, from En Naranja they explain other alternatives such as investment funds or ETFs that can be very interesting for smaller investors.
But, what is the first thing to start my investment? As we mentioned previously, the first option is to buy the shares directly from the companies that are listed on the stock exchange at the price set by the market. However, in order to make this investment, you must first open a brokerage account and transfer money to it.
Direct investment in shares
Investing directly in the stock market has a series of advantages, as well as disadvantages that are necessary to know. Among the existing advantages, it is the person who buys and sells the shares at the time the investor wants; you can enter and exit a security with agility and you obtain profitability due to the revaluation of the share and the payment of dividends to shareholders.
However, to make a direct investment in the stock market, great dedication is necessary, since an exhaustive analysis must be carried out before making a decision and it is difficult to have a varied portfolio, because you need to buy a large number of shares at the price that you set. the market.
Likewise, this type of investment brings with it different commissions, including those for buying and selling, which are charged by the broker for carrying out operations with the shares; those of custody that are those that the bank charges for depositing your shares in it and the specific ones such as the collection of dividends among others.
So, who would be the ideal person to invest in the stock market? This type of investment is designed for a profile of people with a higher level of risk, among which are the less aggressive investors who invest long-term in highly consolidated companies and the more aggressive, who instead make short-term investments. taking into account the volatility of the stock market and focusing on smaller companies.
investment funds
Also, investment funds are a good alternative to start investing. Unlike direct investment in the stock market, the capital is contributed to a common fund in which other investors also participate, that is, when you contribute assets to the fund, you also participate in its results. These are intended for long-term investing, as the value is determined based on the fund's performance.
In this case, there is a management team which is responsible for managing the assets, which is why they charge a management fee. Likewise, in these funds there are other types of commissions, some by depositary in which the entity in which the money is deposited must be paid and by subscription, which although they are not always applied, they can charge the participants for buying or sell shares.
However, the advantages of these funds are multiple. The first one is that you can diversify your investment, having a wide variety of assets in your portfolio and you will also have a manager in charge of moving your money. It also has greater tax advantages, because if you change to another fund it is not necessary to pay taxes on profits and greater access to different markets that would be impossible to access as small investors.
This type of product is focused on any investor profile, however, those who bet on this specific type are those who do not have a clear preference for a specific company and prefer to diversify their investment with the help of a manager.
Invest in ETFs
ETFs, that is, exchange-traded funds, would be an intermediate route between direct investment in shares and investment funds, since they combine the diversification offered by a fund's portfolio with the flexibility of being able to enter and exit that fund with a simple operation on the stock market. These are a product whose function is to copy the behavior of an index, to do it in the "image and likeness" of it. That is why investors who might be interested in ETFs are those who are looking for an investment that is diversified, but at the same time, they are aware at all times of the price at which the ETF is trading.
This type of investment has lower costs, since by not having a manager day by day it is not necessary to pay for their work, however not having this figure can be a disadvantage, since their presence can be a positive difference. Other advantages are that at all times you know the price at which you buy and sell; and you can also invest in all the values of the index. However, to transfer the ETFs it is necessary to pay the corresponding taxes, since it cannot be done directly.
