How to start investing in stocks step by step

Learn everything about how to start investing in stocks in an uncomplicated way!

At first glance, the equity market is a great opportunity to earn higher returns.

However, many beginner investors are afraid to take this step, or think that investing in stocks is complicated and a big deal.

Nowadays, this is no longer the case. After all, you can do everything safely through your cell phone screen. Therefore, the main requirement for doing good business is knowledge and strategy.

So, if you want to know how to start investing in stocks, check out this essential step-by-step guide. Find out what stocks are, the stock market, how it works, the best strategies and market analysis!

What are shares?

First of all, you need to understand some market terms. In short, shares are small parts of an organization sold to third parties.

That is, part of the value of a given company can be sold to people outside the company.

The purchase and sale record is done digitally, in fact, today there is no need for paper to prove that the investor owns a share in a certain company, as was the case in the past.

Furthermore, it is important to know that the shares are divided into specific groups. Each one has different characteristics, so the rights and responsibilities of each buyer depend on the type of share.

Ordinary shares: In this type, the shareholder has the right to vote, as well as participate in the company's decisions, if he wishes. In fact, the more shares the investor has, the greater the voting power.

Preferred shares: It does not generate voting rights, but shareholders have preference when receiving the company's profits.

Share deposit certificate: are several financial assets with different shares. In other words, the certificate works as a “share combo”, which includes common and preferred options.

Blue Chip Stocks: are shares of companies that have the highest trading volume on the Brazilian Stock Exchange.

Mid Caps: These are an intermediate level of shares traded on the Stock Exchange.

Small Caps: are cheaper shares, coming from small companies.

What is the Stock Exchange?

In fact, a very common question among beginners who want to know how to start investing in stocks is related to the Stock Exchange. In short, this is the place where the trading of shares of various companies takes place.

Therefore, the Stock Exchange is the institution responsible for organizing the trading of assets and ensuring the security of operations. Together with the Stock Exchange, several bodies also work together to ensure integrity.

Regarding the previous paragraph, we can mention the active participation of the CVM (Securities and Exchange Commission). The institution is responsible for regulating and monitoring the market to prevent fraud.

How does the Stock Exchange work?

As we have seen, share trading begins on the Stock Exchange at the exact moment that companies make a public offering. Thus, organizations make a part of the business available in the form of shares.

Therefore, the first stage of the offering is known as the “primary market”, where the assets are first released to be traded by investors on the Stock Exchange.

In other words, to help you better understand the concept, we can say that the primary market is where “0KM shares” are offered.

On the other hand, the Secondary Market is where an investor's shares on the Stock Exchange are traded to other investors. In this case, it would be “similar to a used car sold on the market”.

Step by step guide on how to start investing in stocks

First of all, the steps on how to start investing in stocks are not at all complicated or bureaucratic. In fact, it is much simpler than it seems.

However, first of all, you need to be cautious and select a strategy that is consistent with your expectations. After all, this is a great opportunity to secure advantageous profits, but there is also the risk of losses.

1 – The first step on how to start investing in stocks: save up a good amount of money

The first step to starting to invest in stocks is to save up a good amount of money. There is no minimum amount to invest, but the larger your investment, the greater your profits will be.

Most stocks are traded in “Lots of 100”. In other words, if an asset costs R$$17.00, to make the investment it is necessary to multiply the value by 100. Resulting in R$$1,700.00.   

It is also possible to buy small quantities of shares, but for this they must be negotiated individually.

Another important piece of information to serve as a parameter when making your application is regarding costs. There are three existing costs in trading: brokerage fee, custody fee and income tax on capital gains.

Currently, there are brokers that do not charge brokerage or custody fees. However, you need to be aware of the reliability of the institution that will handle the transaction.

2 – Discover your investor profile

First, know what your preferences and expectations are regarding financial investments. There are several platforms that offer tools to identify your investor profile, such as Ágora and Toro, for example.

When accessing the platform, you simply need to answer the questions in the form of a quiz. From then on, the investments you make must be in line with your expectations. Because this is the path to success!

3 – Open an account with a brokerage firm

The next step to start investing in stocks is to open an account with a brokerage firm. These institutions are the intermediaries between investors and the stock market.

In other words, investors buy and sell shares through brokerage firms. Trading is carried out over the phone or online using a Home Broker.

In fact, there are several brokers on the market, but as we mentioned earlier, it is essential to have a good reputation. One of the most reliable ones is Rich and Bull.

4 – Select the best options

Above all, to make a good deal and be successful in your financial operations, acquire knowledge about the companies that trade their shares on the stock exchange.

Therefore, the first step is to study the available options and know how to identify the right time to buy or sell shares. Therefore, everything needs to be aligned with your investor profile and the amount of money that will be put into play.

Strategies to start investing in stocks

In fact, there are endless techniques and strategies for trading stocks. However, it all depends on your profile and your financial goals. Below, we have listed the best strategies for earning good returns with variable income.

Day Trade

Day Trading involves trading stocks in the very short term on the Stock Exchange. With this strategy, you can buy and sell them on the same day. In some cases, it only takes a few hours or minutes!

Short Term

To make an investment, you need to follow market trends and select the most liquid stocks. This way, you can sell more easily.

Long Term

The tactic of operating with long-term shares fits perfectly with objectives that demand more time. In this way, the investor becomes a partner in the company and earns income according to revenue and results.

However, when choosing to invest in stocks for the long term, they can rise or fall from one moment to the next. Therefore, one of the most commonly used strategies is Position Trade, where stock positions are maintained for a longer period of time.

Dividends

Rightly so, one of the best ways to earn money with stocks is by using the dividend strategy. Furthermore, companies that pay good dividends are most often the most established in the market and with revenue that is constantly growing.

One example is energy distribution companies, as they do not need much investment to open branches in other cities. Consequently, the profit amounts obtained are higher!

You can use the Dividend strategy both to receive recurring income and to continue buying shares in the company and increase your share.

Long Short

In short, Long Short involves selling shares before actually buying them. The goal is to invest in assets at a lower price, estimating a value for future sale.

How to choose and analyze stocks?

In the Stock Market, there are two very important forms of analysis that you must master: technical analysis and fundamental analysis. Check it out!

Technical analysis

With technical analysis of stocks, key information is expressed in the form of a graph. This makes it possible to identify patterns and estimate future behavior.

In fact, technical analysis is widely used in Day Trade operations!

Fundamental Analysis

From another point of view, fundamental analysis studies the financial characteristics of a company, such as: growth projection, risks, cash flow, profits and losses, and the like…

Through this information, the investor has a parameter to determine the growth and development potential of an organization. Having at hand, the necessary data to decide whether the shares of a given company are a good deal or not.

Finishing the topic on how to start investing in stocks…

Regarding all the content presented, we can conclude that investing in shares with caution and strategy is one of the most advantageous financial investments that generates promising results.

But to make a good deal you need to be comfortable with the situation and not be afraid of future losses. After all, they work as if you were “opening a business”.

Today, sales are booming and results are promising. Tomorrow, due to a crisis, the business goes into recess and the doors may even close.

Or, on the contrary, where today the company is just a “small and medium-sized” business and tomorrow it expands and dominates the market. For this reason, it is necessary to be very aware of economic trends, analyze the segment of the company in which you are going to invest and the reputation of the managers.

In short, the information presented here is the main information you should know before starting your stock investment strategy. Take advantage and also read: “Financial Assets, what are they, how to invest? Click the button below and find out more!