No matter who you ask, when you ask how to be a millionaire, just about anyone, from financial specialists, businessmen and academics to ‘everyday’ people, agree that the path to financial success is investing. Although there are many types of investments, the stock market offers a buffet to put your money in different companies and products, but: How to buy shares to invest in the stock market?
One of the barriers that commonly stops us from entering the stock market is the fear of risk: Investing is gambling, because stock prices can fluctuate from moment to moment and there is no guarantee of profit. Therefore, it is important be prepared to take potential losses and take a long-term viewyou can take actions like investing.
The other big hurdle is that we don’t know where to start or how to buy shares. However, before you take that step, there are three points you need to cover:
- Set your goals. It is important to be clear about your financial goals to determine your investment strategy. Are you looking for long-term growth or do you want to generate short-term income? Or maybe a combination of both suits you. Think about it.
- Strengthen your financial education. Familiarize yourself with the basics of the stock market, learn about the different types of stocks, how they are traded, the factors that affect stock prices, and investment strategies.
- Define your budget. Establish the amount of money that you are going to invest, that is, the amount that you would be willing to lose if things do not go well. Define a budget that fits your possibilities and objectives, and that you do not need in the short term.
How to invest in shares? Shares are bought and sold on the stock market, which is an organized market where securities issued by companies and government entities are traded.
To buy and sell shares, it is necessary to open an account with an investment platform, such as a brokerage house or an online broker. These act as intermediaries between the investor and the stock market, are regulated by the financial authorities and must comply with the laws and regulations established to protect investors.
In Mexico, brokerage firms require the authorization of the National Banking and Securities Commission (CNBV) and are governed by the Securities Market Law. The highest stock exchange entity in the country is the Mexican Stock Exchange (BMV).
It should be noted that each stock exchange has its own rules and limitations, so it is recommended to read the terms and conditions carefully before making any transaction.
How much money do you need to invest in stocks?
The amount needed to buy shares of a company It is highly variable, as it depends on factors such as the price of the shares you want to buy and the commissions of the intermediary (broker).
In turn, the stock value is subject to variables such as financial situation of the companythe offer and demand in the market, and performance history, among others. Therefore, there is no fixed amount to start investing in paper.
It’s possible to find stocks and financial products at very affordable prices to start investing if you have little money. Can start with a small amount and increase your investment as you gain experience, confidence and, very important, performance.
Please note that some platforms may require a minimum amount to open an account or to make transactions. Some intermediaries may have minimum entry amounts from 10,000 Mexican pesos, and there are even platforms where you can open an investment account from 50 or 100 pesos.
There is no minimum amount of ownership that you must purchase to invest in a company. It can be said that the minimum to invest in shares is generally to buy a share.
The maximum to buy would be 100% of the shares of a company, like when Elon Musk closed the acquisition of Twitter. But, in general, the founders or owners only give up a percentage of the company to offer as securities on the stock market.
What is the risk of investing in stocks?
Although there are many myths and truths about buying stocks, of course the biggest risk is losing your money to begin with. As we said, investing is gambling and being willing to lose, which is why you should take the time to see the big picture and assess the risks you could take in the short, medium, and long term.
According to the portal Free Investmentthe biggest risk when buying stocks is the market volatility.
The share price can fluctuate based on economic, political, commercial, business and social factors. Even unexpected events like natural disasters, regulatory changes, and of course, economic crises, can have a negative impact on stock values.
Fluctuations can lead to profit or loss for investors, sometimes overnight. Events outside of trading hours that alter the price of shares may occur before trading resumes in the morning when the markets open.
Once you have evaluated the risks, you have the bases (objectives, knowledge and budget) and you have decided to start investing, it is time to take action: how to invest in the stock market to earn money.
The first step is to choose a brokerage house, an online broker or a reliable investment platform, with authorization and registration with the CNBV and the BMV, to avoid falling into fraud. Investigate well what products and services they offer, the commissions and what tools they have.
In Mexico there are several brokers to buy shares. Among them is GBMa brokerage house with more than 35 years of experience in the Mexican market, as well as Bursanet and finamexboth with more than two decades operating.
In addition to stocks and investment funds, platforms such as eToro and Capex allow you to invest in digital assets like cryptocurrencieswhile Interactive Brokers It has an advanced trading platform and market research tools.
2. Open an investment account
Once you have selected the broker, you will need to open an investment account. The broker will verify your identity and financial information through official documentation and will guide you in your first steps.
3. Research the companies you want to invest in
To have more chances to win in the stock market, it is vital know the financial situation of the companies that catch your attention. And those that don’t too, because along the way you will find opportunities that will surprise and tempt you.
Before buying shares you must know the performance history of the company, your position in the market and the predictions from reliable sources: experienced investors, specialized media and financial experts, mainly.
4. Buy, buy, buy!
you shall deposit funds into your investment accountn, so you will have enough money to buy shares. As said, there is no established amount to start investing, unless the intermediary sets a minimum amount of money to open the account.
Now that you’ve researched and chosen the stocks you want to buy, you can place a buy order through the investment platform. Different types of orders can be chosen: limit, market, conditional, stop and others.
Once your order is approved and the operation is done, you become a part owner of the company in which you are investing. Since then, you receive a proportional part of the profits it generates, or you take the loss if it turns out to be a bad choice or the market takes an unexpected turn.
5. Monitor and diversify your investment portfolio
Track your investments and stay informed of changes in the market. Periodically review how the returns and projections are going, and consider making adjustments to maintain a balance and achieve your financial goals.
As you gain experience and confidence, you can begin to diversify your investmentsthat is, put your money in different products to integrate a good portfolio or investment portfolio and have more chances of success.
If you don’t feel confident about starting to invest on your own, consider seeking financial advice from a professional. before making investment decisions.
Good luck!
Mairem Del Rio Addicted to watching series and movies, doing (a little) exercise and changing my hair color. I am also a journalist, with more than 16 years of experience and dedicated 100% to digital media since 2011. I have been from a reporter and community manager, to an editor in various media and agencies. My areas of expertise are as diverse as they are contrasting: entertainment, travel, lifestyle, health, business, and finance. Now I am focused on the entrepreneurial ecosystem, cryptocurrencies, NFTs, metaverses and the promising cannabis industry in Mexico.