How to make money investing in the stock market

Investors set themselves three main tasks: to preserve capital from inflation, to increase

it, and with the help of smart investments, reach a certain income. Considering

investing in the stock market, it is difficult to call investment income passive. Before

When making transactions, it is necessary to analyze the company or asset. Today, we will tell you how to work effectively in the stock market.

Basic Concepts

The stock market is the place where securities transactions take place. The investor chooses

the asset pays for it. After the broker executes the purchase order, the investor's portfolio

stocks, bonds, currencies and other instruments appear. The sale is similar

way.

The issuer is the one who issues securities. They become not only companies, but also cities,

states. When someone issues an asset, they do so for the purpose of raising capital.

* If money is needed for a while, and then it can be returned, the issuer issues bonds that

also called promissory notes.

* If the goal is to receive money and use it until the investor demands the amount back,

then they issue shares. Sometimes they can be dividend, that is, bring holders

(to shareholders) a certain percentage of the company's profits.

To use stock market tools you need to be a professional participant. Access to the exchange is directly prohibited for private investors, so to work on

the exchange provides intermediaries. They can be a bank, a broker, a manager

company. Some securities are not available to everyone, but only to qualified investors.

Where can I invest?

Stock investing is subject to the Federal Law “On the Securities Market”. In them, the rights and obligations of all trading participants, both professional investors and

brokers act as intermediaries. Regulations protect and regulate market participants

relationships.

There is also an over-the-counter market, which conventionally assumes the absence of intermediaries.

Investing in it is considered riskier.

* Activities are not regulated by Federal Law.

* Transfer of papers occurs directly from person to person. For example, you issued a share and

independently transferred it to another person.

But even here, there are auction organizers who monitor the process. It could also be banks

brokers and other appropriately licensed persons. It turns out that the exchange stock market

Safer than OTC for both the novice and experienced investor.

How to start investing and what to pay attention to

To make money by trading in securities, you need to build your own

strategy. We offer you a step-by-step plan.

1. Set yourself a goal

As cliché as it may sound, investing just for the sake of investing is not the goal.

It is important to understand why you are entering the stock market. Answer the question: “does it justify the end of the means?

For example, you can invest for:

* access to passive income;

* savings from inflation;

* savings for education, travel, apartment;

* pension provision.

Each goal has its own time period, based on which it is built as an investment strategy.

For example, if you need the amount in a year, you are more likely to have to go to

risky transactions and use short-term investments. If immediate income is not for you, you may want to look at long-term, low-risk investments.

2. Register a brokerage account

Even if you do not plan to perform transactions yourself, but want to entrust it to a financial advisor or any other person, you must open a brokerage account. Now, it can be done online without leaving home. All you have to do is choose an intermediary and submit an application.

What to look for when choosing:

* what commission does the broker take;

* customer reviews;

* financial cleanliness (were there any legal proceedings);

* information about bankruptcy.

Take some time to protect yourself in the future.

3. Decide on ways

How will you invest: on your own by opening an Individual investment account, or

contact the management company? If you decide to do everything yourself, you need to study the assets in the stock market and get acquainted with graphical, technical and fundamental analysis.

4. Highlight the amount

Do not invest with borrowed money or money you need in everyday life. Write down your

income and expenses, allocate a free amount and invest it in assets.

5. Calculate your expenses

On one hand, brokers and management companies charge a percentage for services: for the complex services or separately for each operation. On the other hand, tax residents can open

individual investment account and save on taxes. Take into account all the details so that

correctly calculate the return on your investment.

Investments in the stock market, their profitability depends on experience:

* ability to assess the market situation;

* analysis of the company and the sector to which it belongs;

* chosen strategy;

* willingness to go for risk;

* initial investment amount.

If you are not ready to devote time to studying the stock market, but want to form a strong

investment portfolio, contact the management company.

Who to contact to make money on the stock exchange

As I already said, only professional market participants have access to the exchange. Therefore

Each investor has two options: to become a professional participant himself or to choose

intermediary.

Becoming a qualified investor is not easy. In the U.S., an accredited investor

is anyone who meets one of the below criteria: Individuals who have an income greater than $200,000 in

each of the past two years or whose joint income with a spouse is greater than $300,000 for those years,

and a reasonable expectation of the same income level in the current year. In all other cases

you need to choose a broker or management company for trading.

Working with a broker

A broker is a professional licensed participant in the stock market who will become

an intermediary between you and the securities. He can purchase most of the assets at

according to the client's instructions. The broker submits applications for transactions and conducts them completely. To him

You can also entrust the placement of securities. Such a broker earns from interest on

transactions; can also provide credit (leverage) to the client.

Getting brokerage services is not difficult, just download the application and register. From

disadvantages - constant operating costs. Brokers also often act in their own

interests, for example, by suggesting certain products or tools for purchase.

When investing in this way, you need to independently analyze and select assets.

To effectively understand the tools, you can take investment courses at

stock market. But the courses do not guarantee results, you will receive theory, but apply it to

practice and get the hang of it yourself. In some ways this is a risk, because

knowledge will have to be practiced on one’s own portfolio, and in case of an error one loses

money.

Trading

Trading platforms and robotic services for

speculation in the market. Trading involves short-term investments when a person

evaluates the company, buys its asset, sells it when it increases in price, and makes money on

difference.

Advertising promises reliable signals, working algorithms and other tricks for

guaranteed income. But all this is a hoax, and the risk of such investments increases significantly.

Such transactions require knowledge and ability to analyze sectors, make forecasts on them,

and even in this case there will be no guarantee of earnings.

Trust management

The client contacts the management company (MC), transferring his funds to it. Is concluded

agreement, a strategy is chosen, and financial consultants begin to formulate

investment portfolio. Portfolio asset allocation (rebalancing) is performed

several times a year.

In this option, the client pays not only for the company’s services. A whole team is working on the portfolio

a team of analysts, strategists, their every step is verified and aimed at results. Manager

the company is interested in the client earning money, since their own income depends on this

managers. You can transfer to management not only funds, but also securities.

Individual investment account

You can open an individual investment account to get a tax deduction -

together with or instead of a brokerage account. With an Individual investment account you can do

both long-term and short-term investments.

Peculiarities:

* Standard brokerage accounts come with more flexibility, but no tax benefits.

* There are many types of retirement accounts, which come with tax benefits but specific rules to follow.

* There are specific investment account types to get your kid started early.

* Education and ABLE accounts can help pay for college and save for disability-related expenses,

respectively.

An individual investment account can be opened either with a broker or with a manager

companies. To choose a reliable intermediary, check reviews, financial statements and

find out about the terms of the transactions. This will help you secure your future assets.

Stock market instruments

Stock. The most famous and common instrument, suitable for beginners

investors. They are:

* Privileged. Owners have first priority on dividend payments, but

can participate in deciding the fate of a company only if they want to liquidate it or

reorganization.

*Non-preferred shares do not provide dividend benefits. If the company is from

due to the difficult situation, decided to refuse dividends, holders of non-preferred securities

suffer first.

* Bonds. They are also called promissory notes. Bonds can be issued by the state

or company. When purchasing, pay attention to:

* Maturity. The larger it is, the more difficult it will be to monitor changes in value

bonds. As a valuable asset, it is influenced by many factors.

* View coupon: fixed or floating. In the first case, growth or fall is possible

predict. If the bond is floating, it can be taken in an economic situation.

the closest one will make noise. Investors call such securities “protective”.

* Degree of risk. If you take out corporate bonds, check the company that issues them.

produces (how many years it has been on the market, what reputation it has).

Exchange-traded mutual funds (ETMFs) for stocks. Acquisition of exchange-traded mutual investment

fund, you will become an effective part of the investment portfolio. This allows you to avoid

diversify on your own, buy a ready-made solution.

How to choose Exchange Traded Mutual Funds (ETMF):

* Train the management company that offers it and clarify the size of the commission.

provision of funds.

* Pay attention to which index the investment funds are assigned to.

Exchange Traded Fund (ETF). Works similarly to Exchange Traded Mutual Funds (ETMF):

ETF assets that are purchased at a soft price, following the movement of quotes when they have risen -

sell and make money on the difference. When choosing, pay attention to the following points:

* What the fund is based on: it includes one or more sectors, stocks, bonds and so on.

* Will you receive dividends.

* How much commission do clients pay? Yes, by buying the ETF, you felt a small part

a thoughtful investment portfolio that reduces the influence of factors. Behind

diversification requires paying a commission.

* What amount is under the control of the fund. The higher it is, the higher the stability of the fund.

* When the fund has foreign shares, find out the amount and procedure for tax payments on them.

How to make money in the stock market if you are willing to spend time studying and analyzing it?

You can pay attention to futures. Their features:

* This contract between the seller and the buyer is for a limited time and amount.

* You predict an increase or decrease in activity and make a “delivery” on it.

* Futures prices may differ slightly from current commodity or asset prices.

* Contracts are used for long-term transactions.

Futures are riskier instruments than stocks. Therefore, for novice investors they

doesn't fit.

Pros and cons of investing in securities

The advantages are as follows:

* It is realistic to start investing with a small amount.

*Extended selection. You decide which tools to use and what shift

line up. Long-term investments with reliable results - stocks and bonds, more

risky quick trades - futures.

* Access to passive income. You can purchase securities and receive dividends.

and coupons.

*Transactions are protected by federal law (if you invest in the stock market).

The most common disadvantages:

* Complexity of analysis, forecasting and processing. When a person puts money in a bank

deposit, he only needs to wait until the term increases. There is a calm observation in the stock market

assets in the portfolio will not work. It is necessary to constantly analyze companies, industries and

economic situation in the world, diversify your portfolio and be prepared to take risks.

*High risk. Even blue fish can go bankrupt and cause problems.

* Incomplete independence. You need intermediaries to form a strong

investment portfolio.

Is it profitable to invest now?

News about when the stock market will fall will begin to appear from the end of February 2022. Yes,

There were levels of difficulty. But there is no reason to say that the stock market will close,

Not yet. Issuers continue to operate, issue shares, bonds, and pay dividends.

Let's remember the 2008 crisis. He had another support. If we now see prices rising,

inexplicable movement in quotes and panic against the backdrop of an aggravation of the geopolitical situation,

the reason was mortgage lending. Its overheating provoked a crisis that led to

the S&P 500 index fell by almost half. Restore stock market stability

The market took about five years.

The impact of the crisis on life and activities has decreased. What is needed now

compound:

* do not succumb to general panic and fear;

* give to preferred trusted companies, and carefully check new ones;

* diversify the portfolio;

* change risk management, adapting to the current external situation;

* We constantly expand our knowledge about the stock market by reading analysts’ research,

professional deterrence and companies.

There are many stories when people in a crisis not only did not lose their savings, but also

on the contrary: they multiplied them. The main thing is to understand at what point you need to do this or that

action.