How to invest in stocks?
Investing in shares
Certainly investing in the stock is an exciting activity and a very attractive way to get good results in terms of profitability, even without the necessary knowledge, it is a high-risk activity.
What are the actions?
The shares correspond to a title of ownership over the assets of a company. The actions represent not only an instrument of savings and investment. They are also a title of ownership over the assets of a company. So, whenever you buy a stock, it becomes a part owner of the company, which is directly related to the number of shares held. Therefore, the more a company’s share capital, the greater the percentage of the property that you control. In turn, companies issuing shares as a way to get funding for their various projects.
When a company is publicly traded, its shares can be traded on the stock market; buyers and sellers determine the price of the shares. The result of multiplying the share price on the market by the number of shares is equal to the market value or capitalization of a company. This approach is very useful to determine the real value of a company. The pricing of the shares of the companies involved, ultimately the assessment made by the market on expectations of listed companies. In this sense, the stock market can be considered a “barometer” of the economy.
Sources of Income
- Capital Gain : The gain obtained from the sale of a stock. This gain is determined by the “higher value” to get between the price at which bought stock and the selling price.
- Dividends: By law, corporations must distribute to its shareholders at least 30% of the profits they generate. That profit is distributed in proportion to the number of shares that each person possesses.
Rights to purchase shares
- Participate in the profits of society through capital gains and dividends.
- Right to speak and vote at meetings of shareholders.
- Preferential subscription rights in capital increases.
- Withdrawal rights in cases of mergers and sale of core assets.
- Participate in equity resulting from the liquidation of the company.
A stock index corresponds to a statistical composite, which tries to reflect changes in the value or average returns of the component stocks. Generally, stocks making up the index have common characteristics such as belonging to the same stock exchange, have a similar market capitalization or belong to the same industry. These are usually used as a reference point to different portfolios such as mutual funds.
Major stock indexes in the Santiago Stock Exchange are:
- IPSA. The Selective Price Index Shares is the main index of Chile, is the most representative market indicator, as it reflects the market dynamics. It is made by the Santiago Stock Exchange and corresponds to an indicator of profitability of the 40 stocks in terms of market presence, the securities held annually indicator and the weighting of each are selected. In calculating the index considers all variations of each share capital included in the index, weighted by the relative weight of each of them, said weight being calculated from a formula that considers both market capitalization and the number transaction.
- IGPA. The General Price Index (IGPA) created in 1958 and composed of a majority of the shares and annual review.
- INTER-10. It brings together the top 10 companies of the IPSA as ADRs traded abroad. Stocks selected quarterly.
Considerations investment in shares
- It is an investment in equities, therefore, the gain is not assured.
- Consider liquidity needs.
- Only invest in the stock resources without compromising financial future.
- If you invest in stocks, you should consider the tax issue. In Chile is charged tax capital gain (profit made on the sale of an instrument) and dividends received.
- Always consider much are you willing to lose and its target return and search operations enabling it to maintain that ratio of risk and return.
- To invest in stocks, you need to be informed of economic developments both internationally and locally, so that information is key when making investment decisions.
- Learn to use the main tools of market analysis and valuation of shares.
- If you want to invest in stocks should develop and implement an investment strategy that is defined according to your investment profile.
Equity Research Tools
The equity research aims to study the behavior of financial markets and the values that constitute them. With this analysis is to achieve relevant information to support investment decisions in situations incertidumbre.Implica an increase or dimension of the stock market taking into account the fluctuating market supply and demand in a given time.
The main analysis tools are:
- Chart analysis and technical indicators.
- Fundamental or financial analysis.
Both categories are based on different assumptions in interpreting the behavior of financial markets. They can be used in different types of financial assets and intended to broadly determine values, assets, markets may be more attractive or higher future returns can hide, or better economic prospects.
An objective investment strategy should have at least the following elements:
- Defining the risk profile.
- Analyze the Market.
- Analysis of the Basis.
- Design strategy to identify signals buy / sell.
- Set a good monetary management.
Want to know which variables influence the Chilean stock market when making an investment decision are?
- Learn to develop your short-, medium- and long-term investment strategy your own agreement.
- Improving the profitability of your investments with our online course .
- Receive a free semester to alerts and investment recommendations on shares subscription.