Before venturing into the ever-complicated world of stock investing, check out our experts’ recommendations. Check the level of risk and the term of your investment that best suits your investor profile.
If you are one of those investors who are venturing to take their first steps in the stock market, read the following recommendations carefully.
Can you afford to invest directly in stocks?
To find out if you are interested in direct investment in individual stocks, ask yourself the following questions:
How to choose the best stocks?
To begin, you must identify those actions that are interesting and in which it is therefore worth investing in them. Depending on your investment capital there are many stocks under $2 to thousands. To identify them, a series of criteria must be taken into account that take into account the valuation of the stock market where they are listed and some variables of the company in question (such as profit, cash-flow or expected dividend). With them, the investor will be able to target those companies that offer sufficient profitability to remunerate the risk that is being assumed and to offer juicy returns if the expected prospects are confirmed. Hence, they are the factors that we take into account when issuing our advice to “buy”, “sell” or “hold”. Do not forget these instructions. The important thing is not whether a stock has risen or fallen a lot, but whether it is cheap or expensive.
1. What level of risk are you willing to take?
Of all investment products, stocks are the most exposed to significant fluctuations in their prices. When in financial terms we refer to the volatility of a share we refer precisely to those lurching up or down. Are you willing to expose yourself to these ups and downs or even to the risk of ending up losing your investment, yes, in order to obtain a higher return? If your answer is yes, investing in stocks might interest you. On the other hand, if you are completely allergic to risk, forget about investing in stocks.
Being aware of the risks that are assumed, you can adopt certain measures with which to try to limit these eventual losses as much as possible. To achieve “good returns” investing in stocks, you must first diversify. And how is this done? Well, betting on shares of several companies that develop their activity in different sectors. If they are also from different countries, all the better.
2. What is your investment time horizon?
By investing long-term in a well-diversified portfolio of stocks, your investment returns will be higher than that of any short-term, risk-free investment, and all at moderate risk. But in the stock market the long term is not a few months. The time horizon must be distant: at least 5 years and better if they exceed 10 years.
Depending on what your goals are, you will also need to take into account other factors such as your age or your financial, social and professional situation. Someone who is 50 years old with a stable job, without dependent children and who does not have to face a mortgage on his habitual residence will generally have more room to invest in stocks than, for example, a 25 year old .
3. Do you already have a diversified global portfolio?
A well-diversified global portfolio is the cornerstone of any investment strategy. Before thinking about which stocks to buy, you should determine, based on your profile, how much weight you should give them within your global portfolio. When building such a portfolio, it may be easier to do so through mutual funds than by investing yourself in individual stocks. A portfolio of funds in which there should be room for equity funds (from different countries and sectors) and bonds (in different currencies and from solvent issuers -public or private-), and in which it should also make room for other investment products. fixed income such as time deposits or Treasury obligations. We propose to you our global model portfolios, mathematically designed so that in the long term, and no matter how much the investments that make them suffer, you never lose money with them in real terms, that is, obtain at least inflation.
4. To what extent can you get personally involved?
Investing in stocks requires your time. It is not a question of spending 24 hours a day in front of the computer, but of keeping up to date on those news or events that may affect those that you have in your portfolio or others that you have had your eye on and could be susceptible to future purchases.