This article is aimed at beginner investors, in which I will tell you how to start investing. The stock market is a topic that can be grasped and it is best to do it from the very beginning from the right side. You engage your own money on the stock market, so it is worth starting to invest well from the beginning. By the rules. Here is a stock market for very beginners.
How to start investing when you are a beginner?
I will try to discuss below exactly what I would like to hear at the very beginning. Perhaps I would not have wasted many years. Perhaps this will save you many years of searching yourself, starting everything right.
Choosing a brokerage account
A brokerage is meant to be your partner in investing, giving you the tools you need to make money. On this occasion, I will write that if you are not going to do your homework related to learning how to invest in the stock market, it is better to outsource the management of your account to professionals. Such professionals can be, for example, employees of your brokerage house who manage the IKE/IKZE account on request. If you are not going to take investing seriously (and it requires a lot of study and a lot of time), then outsource such a service to professionals. This way, you have a chance to make money.
I don’t know whether to treat it as an advertisement or more as an opinion. Personally, I have always used the Bossa.pl brokerage house, having all the services there, except for servicing investment funds. I don’t need it. In this brokerage house I have:
Futures account,
IKE and IKZE accounts (both with support for foreign markets in their currencies – translated into US markets in dollars),
Foreign account (where you invest in the USA, UK, Netherlands and other markets, of course in the appropriate currencies and without a deposit limit).
In bossa.pl I have the opportunity to exchange zlotys for dollars, euros or pounds at a quite preferential rate. It is in any case cheaper than in a bank transaction or through the procedure of sending dollars with any fees along the way. As part of the IKE or IKZE account, I have 3 currency exchanges for free each year.
A brokerage account is therefore supposed to fulfill virtually every function I need to efficiently navigate the financial markets. However, this is only a tool that will not do the trick for us when it comes to choosing an approach to investing or the way of investing itself.
Investor profiling, or how to start investing?
The brokerage will conduct an automated survey with you, which will be designed to assess your profile as an investor. This will allow automated systems to tell you which instruments are right for you and which are not.
In my opinion, this is definitely not enough. If you start investing and the survey shows that you are the most cautious investor in the world, the system will basically indicate that stocks will be suitable for you.
Stocks in themselves are not bad or good. Each share is a share in a company listed on the stock exchange. These companies are excellent, good, average, so-so, or totally sucks. If you don’t know how to invest, you may start choosing stocks by popularity, because someone writes about them in superlatives on the Bankier.pl forum. I’ve been analyzing such stocks recently and the analysis turned out that these are the ones that suck. And yet, they are popular among investors.
How to start investing?
We start with a financial analysis of the company we are interested in. There are a number of free tools that will allow us to determine in an automated way whether we are dealing with a good company. Since I don’t want to write another 25 pages on this topic, I recommend downloading our guide. It is free to download until March 31, 2024 when you register on our site for free.
Fundamental analysis seems to be quite a complicated concept. I assure you that you do not need to rummage through financial reports. The simplest analysis may be based on seeing whether the company is increasing its revenues year-on-year and whether it has the most important indicators (e.g. profitability) “in the black”. You can also see revenue projections for the next two years ahead, determining whether the company has the potential to grow. Of course, it is good to know whether the company is fairly valued at a given time or whether it creates a discount.