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Establishing where to invest in the stock market is difficult if you are unfamiliar with your goals. Sometimes I find it difficult to establish where to do it myself, not because I am lacking ideas, but because I wait for the right moment. At the same time, the fact that not all investments have the same meaning. Some are determined by their duration in time, others by the amount invested and, decidedly, the purpose of the investment. They are not all the same.
The great utility of the present times, despite the world problem, is that much of the products in stock are available to the public in general. And if we can't invest directly in what we want, we can do it in other ways. As an example, ETFs manage to fix part of these problems that the small investor wants. Some of them were related to investing in indices, government bonds, which was traditionally more complicated and required larger sums of money. Therefore, and in connection with current times, we are going to see what options we have and where to invest in the stock market according to the objectives pursued.
Options to understand where to invest in the stock market
There is a long list of products and things to select from in the commercial world. Among the existing ones to understand which one is adequate for us to invest in the Stock Market are the following:
- Forex: It is the decentralized exchange market. It was born to facilitate the monetary flow derived from international trade.
- Raw Materials: In this sector we can find the main raw materials used for production such as copper, oil, oats and even coffee. There are also within this sector precious metals such as gold, silver or palladium.
- Behaviour: It is best known for its excellence. In this type of market we can buy "portions" of companies and benefit from their evolution or lose out. Everything will depend on the company whose shares have been bought. We can also find stock indices for countries like India.
- Bills, Bonds and Obligations: This market is characterized by the purchase and sale of debt securities, both corporate and state.
- Financial derivatives: They are products whose value is based on the price of another asset, generally an underlying one. There are many types of them, CFD's, Options, Futures, Warrants ...
- Investment funds: Algunos de ellos gestionados por una persona, otros por algoritmos y algunos automatizados que replican índices o sistemas de strategy de inversión. Los más populares suelen trabajar con stocks, pero pueden dedicarse a otros productos como las materias primas.
What to consider when choosing where to invest
There are different factors that will determine where to invest in the stock market. The period of time whose investment we are willing to bear, the level of profitability we are pursuing, how much risk we are willing to take on, etc.
- Time frame: Many of the different investment philosophies are found in the time horizons that we set ourselves. Then there is from short to long term. The longer term those investments are put in, the more likely they will not lose the investments. However, this great horizon has as its counterpart the fact that we cannot have the money sooner. Guaranteeing the capital that is expendable for us to live will help us establish what temporary flexibility we have.
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- Cost effectiveness: The level of profitability that is pursued may vary depending on the company and the sector that is being used. An operation with a certain degree of leverage is not the same as a fixed income investment. This profitability bonus is usually accompanied by higher risks. In the leveraged operation, capital could be lost or even doubled, while in the second, the fixed income operation, it would be unlikely (not impossible) that one of the two scenarios would occur. On the other hand, profitability can be achieved by looking at the long term, or also with companies whose growth is essential. Knowing where to invest for the profitability obtained is very sensible.
- Risk: What losses are we willing to bear for possible gains? An investment focused on the short term is not the same as on the long term. There are many events that can occur over a long period of time, so the risk always exists. However, there are specific events that cause the price of assets to change in the short term, so it is also essential to know how far we can go. It is always necessary to pursue the least risk, to guarantee the returns, but if the risk is greater, that is justified.
Differences between investment and speculation
Finally, and personally it is the most important thing, it is essential to differentiate investment from speculation.
Speculation is the buying or selling of any asset with the expectation that its price will go up or down. en un futuro determinado. Por tanto, el papel de un especulador es anticipar el precio futuro del producto que ha comprado. Cuanto más precisa be el pronóstico, mejores serán los resultados. Este tipo de movimiento suele caracterizarse por un análisis contextual de la situación, análisis técnico, o cualquier indicador o motivo que haga anticipar el precio. A modo de ejemplo, comprar oro con la expectativa de que subirá o colocar una orden de venta en el eurodólar con la expectativa de que el euro perderá valor, el dólar ganará valor o ambos.
The investment is usually the purchase of an asset with the expectation that a higher return will be generated. del capital aportado. Si la especulación tiende a ser más a corto plazo (no siempre, hay especulaciones a largo plazo), la inversión tiende a mirar a largo plazo. En este punto el inversor realiza los cálculos pertinentes en los que trata de hallar un retorno del capital y al mismo tiempo asegurárselo. Si se logra el target, el activo comprado puede revalorizarse de manera que en el momento de la venta genere estas plusvalías como en el caso del especulador. Como diferencia, la rentabilidad que puede haber obtenido, como en el caso de muchas compañías cotizadas, es la consecución de pagos pagados en forma de dividendos. Una regularidad que a largo plazo habrá que sumar a las plusvalías, para ver la rentabilidad total.
