Stocks are a popular financial instrument. They are known even to those who do not know anything about investments. We tell you how to buy stocks, find a broker, earn and invest wisely.
What is the exchange and stock market
Stock market – a market where securities are bought and sold..
A stock exchange is an organization that creates conditions for trading, concludes transactions between stock market participants and controls them.
The main ones in Russia are the Moscow Exchange and the St. Petersburg Exchange. The main ones in the USA are NYSE (New York Stock Exchange) and NASDAQ (specializes in IT sector shares).
Stocks exist like computer data cells. They are not printed on paper. You can buy and sell them only through a broker. You cannot trade on the exchange yourself.
Broker – a company with a special license. She registers the client on the stock exchange, helps to make an investment portfolio, fulfills the requirements of the investor for the purchase or sale of securities.
How to buy stocks
- Choose a broker, go to his site, fill out an application.
- Open a brokerage account (conclude an agreement with a broker). Many companies open accounts remotely. They use an electronic signature or send documents by courier.
- When opening an account, the broker gives access to your personal account, where the investor makes transactions and monitors the status of assets.
- Choose stocks to buy.
- Top up brokerage account.
- Make a purchase through your account.
But investing is easier than it sounds. Shares can be bought before opening an account. For this, Investlab together with the Finam broker made online stock store. There is a large selection of Russian and foreign companies, a convenient interface, relevant information.
All offers are divided into categories. Use filters to assess the status of companies. Pay for securities with a card – just like paying for any goods on the Internet. Broker account can be opened later.
How to choose a broker
The broker is an investor partner. All operations in the stock market pass through it. There are many brokers in Russia, but when searching for the first one, choose from the largest.
What’s important:
- Minimum deposit amount, commissions, tariffs. The broker is not working for free. Before signing the contract, look at the size of the commission for operations with securities. Do I need to make a deposit or can I start trading with any amount.
- Rating. Choose famous brokers, read reviews. Check out number of registered customers broker on the Moscow Exchange website.
- Access to foreign companies. Not every Russian broker has access to foreign markets.
- Training and assistance opportunities. To quickly solve problems, choose a broker with an operational support service. It’s good if the organization has educational courses, articles, videos.
According to the Moscow Exchange, the TOP-5 brokers in Russia with the largest number of clients include:
- Sberbank
- Tinkoff Investment
- BCS
- VTB
- FINAM
Remember that the broker may not work together. Therefore, ask in advance how and on what terms your assets will be transferred to another company..
How much are stocks
Quotes change every day under the influence of supply and demand. The more investors want to own specific securities, the higher their value.
What affects the price
- Business success. The more stable the company operates, its profit grows, revenue and debts decrease, the higher the demand for its shares.
- News. This is noticeable in the IT, biotechnological and pharmaceutical sectors – tests or new product tests push quotes up. Failure or scandal, on the contrary, can bring them down.
- General economic and political background. Shares are linked to the economic sector to which they relate. If a country is involved in international conflicts, cannot solve internal problems, or is under sanctions, then the growth opportunities for some industries are falling. Companies operating in these industries are losing stability..
Examples (prices are indicated at the time of publication)
- Sberbank – 222.65 ?
- Gazprom – 156 ?
- Lukoil – 5.958 ?
- Apple – 13.331 ?
- Facebook – 11.974 ?
- Google – 82.689 ?
What stocks to buy
It all depends on how deeply you are ready to dive into investments, how often you want to trade and what goals you set.
- If the goal is to maximize profits, look for stocks of companies undervalued by the market. They can greatly increase in price from year to year. But for this you need to be an active investor: read news, analyze reports, look for ideas.
- If the goal is passive income, choose the blue chips. These are shares of large, liquid and reliable companies with stable rates of return. Such companies have a long-term growth trend and regularly pay dividends..
Examples of blue chips in Russia: ALROSA, Severstal, Gazprom, Tatneft, Sberbank.
U.S. Blue Chip Examples: Microsoft, IMB, AT&T Inc, Exxon, Walmart, Boeing.
How to search for undervalued stocks
The main indicator is the P / E (price-to-earning) coefficient. This is the ratio of capitalization to profit. The lower the ratio, the stronger the underestimation: the company makes good money, but the demand for stocks is low. P / E should be compared with other companies from the same sector. If it is noticeably below average, the company is underestimated..
P / E – shows how long the company pays off if you buy it in its entirety. Capitalization (P) – the value of the entire company at the moment. Profit (E) – income that the company brings annually. Netflix P / E is 136.11. So, if you buy Netflix in full, then your investment will pay off in 136.11 years. Netflix is overrated.
Stocks and dividends
Shares of companies that pay dividends are bought and sold in the same way as others. To receive dividends, it is enough to be a shareholder of the company. The rest happens automatically. First, the board of directors announces how much money the shareholders will receive and on what day. Then the payment comes to the brokerage account.
Principles of Reasonable Investment
- Create a separate investment bank. Do not spend all your savings. Keep up to 25% savings in stocks.
- Do not use money not from a bank for investments. It should consist of those means that will not affect the standard of living in case of loss. Also do not invest in debt.
- Do not put all your eggs in one basket. Diversify your portfolio. Invest in companies from different industries to reduce risks.
- Do not make a portfolio of stocks only. There are other investment instruments: bonds, mutual funds, ETFs, currency.
- Invest long-term (from three years). It is believed that the market is always growing in the future.
- Avoid frequent trading. So, you will pay less commission.
Where to look at information on securities
- Moex.com – Moscow Exchange website
- Investing.com – financial and analytical magazine
- Tradingview – analytical service
- Finam.ru – Finam broker website
- Google finance – financial news section on Google
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I’ve always been interested in the stock market and investing, but I’m not quite sure where to start. Can anyone provide some tips or guidance on how to buy stocks and make money on investments? What are some key factors to consider? Any recommended resources or strategies for beginners? Any insights would be greatly appreciated!