Editor’s note: This article was first published in July 2010. Its list of Spanish banks is from that year: Banesto was absorbed by Santander in 2013, and ING Direct now trades as ING in Spain.
If you’ve already decided that investing in mutual funds isn’t for you and you want to get into stock market investing, managing your own risk and returns, here are some tips on how to make your first stock market investment.
1. The first step is to find a broker to carry out your investments. A broker can be either an individual authorized to carry out this kind of transaction or an institution. Either one will handle the paperwork for you.
2. It doesn’t matter what country you’re from or where you’re going to invest. Nowadays, any bank can act as your broker:
- BBVA
- Banesto
- Caixa
- ING Direct
- etc.
There are many more, and each one may charge a different commission, although it is usually a very low fee or percentage. Still, commissions should be the least of your worries: with any luck, your broker will get rich thanks to you. Even so, choose the one that offers you the best terms.
3. Either you tell the broker where to invest, or you let them advise you. It never hurts to listen to the advice of someone who invests for a living, but it’s time you began your own learning: use your “intuition” and common sense, and keep up with company news, mergers, a particular company’s new products and so on. It’s time you started deciding when would be the best moment to buy shares.
4. To begin with, don’t invest much capital, and try to diversify. There will be time to take on more risk later; remember that right now this is a learning process. Like all learning, it involves winning and losing, and I want you to be very clear about that. Before you start earning large sums of money, you may lose some. Losing is part of learning, so in the beginning, take it one small step at a time.
Remember: investing is not a game of chance, but a matter of financial education and knowledge.
Further reading
- Why the stock market is the most profitable investment
- What a professional investor analyzes before investing
- Investing in a merger: the best time to invest
- Investing in a business
- Investing in high-yield bonds
Featured image: Tomás Fano, CC BY-SA 2.0, via Wikimedia Commons.
