Many times the best way to improve your investments in equities is through a series of questions that you ask yourself as an investor but that you have never asked in public. It is something completely normal and even very appropriate since through their answers you will get to know a little more how the world of money really is. And as a consequence of them, how can you benefit through your operations in the financial markets. At the end of the day it is a strategy that will not take much effort to carry out.
On more than one occasion, surely you have been wondering if equities are better than fixed income, what are the most convenient stock values for your profile as an investor or because your portfolio has appreciated so little in recent years. Now you have the chance to go a little further through a series of approaches that will not be very alien to your interests. To the point that they can offer you some of the guidelines to follow from now on.
However, the stock market is not an exact science and there can be many interpretations. More than you can initially imagine. Especially depending on the different scenarios that may arise in the financial markets. Although what it is about is that you have your own opinion and fundamentally about what you have to do to defend the balance from your checking account. Sometimes it will not be an easy task, far from it. It will require a further refinement of skills to relate to this exciting world that is the stock market. In any case, these will be some of the questions that can help you channel your investments from now on.
Investor: with a lot of money?
Surely you have ever considered that the stock market is a rich man's game. Well, in some respects you are completely right. Either way, it becomes completely clear that as your currency exposure is broader, the odds of improving wealth are higher and proportionally. In these situations, you could even live off the stock market if your equity trades mostly paid off in a positive sense. In fact, big investors are the ones who get the most benefits in these markets where the law of supply and demand prevails.
But instead, you are wrong in another aspect of the approach. It is no other, that you yourself can make investments in equities from a few euros only. Of course yes, no one will stop you. But in contrast, capital gains will be practically negligible. In a more convincing way, it is not worth it that you open positions in the financial markets for so little reward. It is preferable that you opt for other more conservative savings models.
In the stock market as in other financial assets, you have neither maximum nor minimum to invest your savings. You have no limits, one way or the other. Not surprisingly, it is one of the advantages that you will find if you opt for these markets to make the savings profitable. the freedom you have is almost total. Even to direct them to the deadlines that you think are most convenient. To the short, medium or long. In short, the one that seems most appropriate depending on the profile you present as a small and medium-sized investor. In any case, it will be different in each of them.
Do you always win on the stock market?
Depends. Of many things and of certain scenarios that can be generated in all economic cycles. It is true that in the long term it is much more feasible that this wish you have is fulfilled. But it does not always have to happen, as you may have seen with some of the actions in the financial markets. Although if your portfolio is not excessively complicated, the normal thing is that within a more or less reasonable time you have earned money in the bag.
Another very different thing is the driven operations short to medium term. Where almost anything can happen. From earning a lot of money to leaving you many euros along the way. You should bear in mind that there are many factors that will determine this variable. From the investment model chosen to the selected terms. And of course the trend that financial markets may set. All a cocktail that can have the exit that you least expect on more than one occasion. It is the bag after all.
Does it carry more risks?
Not necessarily, especially if you know how to channel your movements correctly. So that you look at this approach in detail, just an example that you can understand. Right now, fixed income offers greater risks than equities. Even with the threat of a bubble in these financial assets. While the operations in the stock market are less risky and the only possibility that you can improve the performance of your assets. At least while current circumstances last.
From this general perspective, the stock market does not have to be associated with increased risk. But it will depend fundamentally on the turn you give to your investments. If it is not correct, your positioning in these markets so sensitive to economic cycles can be very worrying. Without a doubt. In any case, it is true that equities in general offers better performance than other banking and financial products based on fixed income.
Have a financial culture?
Of course it is advisable. Not only to avoid certainly complex or at least unwanted situations, but to improve your business expectations. You should know the product in which you are investing your money. Without letting yourself be advised by people who do not have the proper qualifications. You will also need to know how financial markets work. And if you can inform yourself as best as possible about the situations of the securities that you want to hire from now on.
It will be one of the most decisive keys for your investments to go better from now on. Although having an excellent financial culture will make things better for you. You must have that other factors of great relevance are also determining factors. Among them, also luck. It is necessary in all areas of life, and how could it be less, also in your relationship with the world of money. Although not with as much intensity as in other tasks.
Is investing in the stock market expensive?
It depends above all on the results you obtain in the operations that you formalize in the financial markets. Whatever it was and in all the products to invest part of your assets. This will be the golden rule by which you should guide yourself from now on. But knowing in advance that you must assume a series of expenses and commissions. In any case, the disbursements will not be especially striking. Compared to other financial products.
Most of the expenses come from commissions. They can mean an average of 15 euros for an average operation of 5.000 euros. However, you have different strategies to reduce them. If not radically, yes at least to save you a few euros every year. Through very simple lines of action. In some cases they go through hiring a single rate such as the flat rate. You can boost as many operations as you want always for the same amount. And in others, through the increasingly competitive rates that you can detect through online banking. Sometimes with discounts of almost 50%, that is to say half as cheap.
Do the big investors win?
Not entirely true, since although it is true that they are always in a better position to take advantage of the best business opportunities, you can do it too. Although with greater complications as a result of your news limitations regularly generated by financial markets. To the point that on more than one occasion they can catch you with the changed foot. In this sense, you must be very careful about applying certain movements. The damages can be enormous.
In addition, you will have worse access to the corporate movements of companies. Arriving many times late and badly. Missing a good part of the climbs experienced by the main values, sectors and indices of the international stock exchanges. From this perspective, you are in a worse position to trade equities than large investors.
Be aware of prices?
Usually the answer is yes. Especially in the operations that you carry out in the short term. Where it will be really necessary that follow the stock quotes. With the aim of closing operations in the shortest time possible. Or in the worst case, to stop the falls in the prices of your shares. Even so, in all scenarios it is a very scenario that you are very attentive to the evolution of your securities portfolio. It is a very effective strategy to preserve your savings with greater guarantees.
If you don't, you will be making a serious mistake that can pay dearly in the future. How could it have happened to you on one occasion or another. Either way, a good investor is always aware of everything that happens with his money. On a regular basis and not on time.