Did you know that, The Stock Exchange is a store? Surely you knew it, but were you fully aware of it? It is common to read or listen on a daily basis how to invest in the Stock Exchange, not only the Mexican, but those of other countries. The terminology used, let’s be honest, is not colloquial and if this is added that it is common to associate it with terms that only economists fully understand, it generates that we make erroneous judgments about what the stock market is and how it works. Many think that the stock market is a place where speculators gather to make money at the expense of others, however, in very simple terms, the stock market is a specialized store. Let’s see why and then, let’s review how to invest in the stock market.
Open a company or business for ourselves
When we decide to become entrepreneurs and earn money for it, we usually contemplate one of the following possibilities: open a company or business for ourselves, do it next to other people – who become partners -, acquire a franchise or, Invest in a business that already exists but seeks to expand its capital to make it grow. The Stock Exchange is the specialized store we go to review where we will invest our money and we will do it through the purchase and sale of shares. Easy, right? Well, now, let’s review how to invest in the stock market.
As in this space we do not like to provide information lightly, (National Commission for the Protection and Defense of Users of Financial Services), in this regard and we find that:
Discovering how easy it is to invest in the stock market
- We must take it easy. Let’s not let emotion beat us by discovering how easy it is to invest in the stock market. It is suggested that we diversify our investment or divide it into different instruments to protect money and at the same time get returns without losing liquidity.
- Let’s develop and increase our financial culture. One of the basic tips of every investor is not to invest in what we do not know or do not know how it works, so, we have to start reading, researching and studying about the stock market; The more we know, the better we understand how to invest in the stock market. Do not be frightened, we do not need to be experts in finance but it is important to understand certain basic concepts, such as:
- Price and quotation index (CPI). It is an indicator that measures the behavior of the stock market and is calculated with the prices of the 35 most traded shares. If the CPI goes up or down, we know how the market behaves.
- They are the titles that represent the share capital of a company and serve to provide and transfer the rights of a partner, that is, when we buy shares of a company that are listed on the Stock Exchange, automatically, we become owners of a part of that business. If all goes well, we can get benefits, if not, we will have losses.
- It is the ease with which we can buy or sell a stock. A low stock exchange action implies a liquidity risk, which is, we cannot convert our investment into cash as quickly as we want.
Invest in the stock market implies that we know
Now where do we start? Knowing how to invest in the stock market implies that we know what the instruments are and the means through which we can do so. The most traditional and direct way to invest in the stock market is through funds that allow us to benefit from savings in stock market instruments. We can also start through banks, fund operators and fund distributors, but no matter which one we decide, we always, always, should always consider:
- Make an investment plan and set profitability goals to know how much we can invest in the stock market and at what term.
- Review the historical performance of the instrument we choose.
- Check the commissions that we will have to pay in terms of purchase, sale and administration, according to the investment channel we have chosen.
- Periodically review how our investments are going.
- Confirm that the financial intermediaries we choose to invest in the stock market are duly authorized, regulated and supervised by the National Banking and Securities Commission.
- Consider investment in shares as long term. Let us think that what we will get can be used for our retirement or for the opening of a business within 5 years. If we want quick gains, we can lose everything quickly. Let’s be judicious.
- Take care of the investment term. The stock market is volatile, do not be afraid if we have losses in the short term, the recommendation is to endure and not sell, it is likely that at the end of our term, the investment will be recovered.
- Keep us informed about what happens in Mexico and the world to understand what happens with our investments.
Well, now that you have a clearer idea about how to invest in the stock market, we all have left to wish you much success.