What is The Stock Market?
The stock market opens- The purpose of the stock exchanges is to be able to exchange financial securities under satisfactory security conditions for the buyer and the seller. To further facilitate these exchanges, individuals must use intermediaries such as online or conventional banks, management companies. Stock brokers or financial advisers, who will place their buy or sell orders. When we talk about the stock market in general, we mean the – virtual – place where financial securities are exchanged between different investors.
It is essential to know how much time you have in front of you to invest . Typically, if your time horizon is long, then you can afford to take more risk (for example, stock-picking with part of your portfolio if you believe in certain companies, investing in more volatile sectors such as the Nasdaq …). If your investment horizon is less than five years , then you will have to limit your risk and choose wide equity panels (a World ETF for example) and be vigilant by quickly taking your capital gains if they rise. at once.
Risk you Are Willing to Take
Logically, when you invest in the stock market, you are aware that there are risks. Thus, if you are not very comfortable with this, and if you term yourself more as a defensive or balanced-defensive profile, we advise you to invest via life insurance a limited part of your capital (for example example, 30 or 40%) in ETF-type funds, and the rest in euro funds . And for those who, on top of that, do not want to invest in the management of their portfolio because the stock market frightens them, we recommend managed management: we have dedicated a complete article to the choice of management under mandate .
There are three ways to make money in the stock market:
Investing for the long term and recovering all the added value at the end this is a very good technique. In our opinion for people who have many years ahead of them, for example those who wish to invest for their retirement. Statistically, the stock market always goes up if one has an investment horizon of added than eight years. Thus, by investing the same amount every year or every month, reinvesting the dividends and without withdrawing part of your investment, you will certainly be a big winner in the end, despite the ups and downs of the market.
Bet On Dividends
It’s a little more contested technique, but some people choose to ensure a nest egg on a consistent basis and only buy shares with dividends (Total, for example, is known to detach a dividend every three month). But it should be noted that each time a company pays dividends, it does not use this money to invest in the future and its growth, which is why not everyone agrees with this technique. .
Swing Trading Or Short-Term Investing
those who have time on their hands, they can try to beat the market by buying and reselling. The goal: buy low and sell high. This technique is the riskiest of the three, since even professionals fail. Remember, if it was that simple, everyone would be doing it. People who invest in the short term rely on technical analysis, which can sometimes be misleading a market movement is always unpredictable. And in the event of buying at the wrong time, it can be tempting to choose to sell at a loss to buy back lower… at the risk of seeing the action go up after having sold.
Build your Portfolio
Once you’ve chosen your broker, it’s time to get down to business. Building a balance portfolio is indeed the key to reaping returns over time. But concretely, how do you know if a stock will increase in value? To anticipate price changes , you need to be interesting in two things: the economy in general, and the company in particular. Start by choosing a few sectors that seem promising to you. Then determine for each of them which companies seem to you to be the best equip to develop their activity. For this, make way for fundamental analysis .
First, look at the profits generating by the business. To some extent, a company’s market valuation reflects its ability to generate profits.
Ask Yourself The Right Questions
- Is The Company’s Turnover Increasing?
- Do The Benefits Follow?
- What About Costs?
- Is The Sector Growing?
The whole purpose of the workout is to estimate the future potential of a business. If this were to happen, its stock market valuation would change accordingly.
What You Need To Know Before Opening Out On The Stock Market
The world of the stock market suffers from many misconceptions. Many imagine that it is an area reserved for an elite , bankers or professional traders, when others, on the contrary, liken it to a giant casino . But in reality, the stock market is none of that. Our goal with this article is to make you understand that any saver would benefit from investing in the stock market.
This is the area that has generated the greatest growth it has even done better than real estate. And this, for several reasons: the stock market is pushing by the economic growth. Historically bullish, by the profits of the companies which are passed on to the actions and to the dividends, as well as by the capital of the investment funds.
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