Putting savings to work in the capital market is not just for experts. Despite the risky reputation that it has, the Stock Market has not suffered from corallites or pacifications as they have suffered the savings bank.
To invest in the Stock Market it is required to have a principal account in a Negotiation and/or Liquidation Agent (better known as Stock Exchange Companies).
How does the Stock Market work?
- Investor: Performs all its operations by bank transfer.
- Negotiation and/or Liquidation Agent: Purchase, sell and manage the assets of the investor according to the specific instructions received from the latter.
- National Securities Commission: It is the regulating entity of the Stock Market.
TIP 1: First, Savings
Not obvious is less important. It does not matter if someone works in a relationship of dependence or owns their own business, it is necessary to generate capital that manages to work in tandem with one and report benefits. Specialists usually recommend having the equivalent of three months’ income in cash or very liquid assets. From there, once armed the “security mattress”, all the extra money that is saved can be passed to the next level of Investment.
TIP 2: Know the vehicles of Investment
There are many investment assets, at the time of choosing the asset it is important to determine the amount that is going to be allocated to the investment, the term that you want to have the money immobilized and the expectation of risk to assume.
Main investment assets:
Guarantees: Reversible 7-day investments, for surplus short-term Pesos.
Managed investment portfolios: Investments in pesos or dollars from medium to long term.
Bonds: For investors looking for a fixed income, in Pesos or in Dollars.
Actions: Medium to long-term equity investment.
Rofex: Contracts for the future, to obtain coverage against a devaluation of the Peso.
TIP 3: Choose the Stock Exchange Company with which to operate.
To invest in the Argentine Securities Market, it is necessary to open a principal account in a Trading and/or Liquidation Agent (known as stock exchange companies). The difference between the bank account and that of a Negotiation and/or Liquidation Agent is that it does not manage the values of its clients, as if the bank does with a fixed term, for example.
TIP 4: Start with a Conservative profile
For those who are taking their first steps or for those who do not have the time necessary to analyze the available options, there are the “managed investment portfolios” composed of Shares, Bonds, and other Assets. These portfolios are offered for the 3 types of investor profiles there are, the Conservatives (they prefer not to lose money before aspiring to earn a lot), the Moderates (they assume some risk to generate a better income), and the Aggressive (they are willing to take losses in order to make important differences). The conservative profile is a good way to start to lose the fear of the market.
TIP 5: Invest only in assets that you understand.
The good thing about the capital market is that you are responsible for yourself. There is no one to blame. Investing is declaring our independence from banks and the limited returns they offer. This implies, more than anything, knowing the decisions that are made. There are no good or bad assets, but there are times and ways to use them. The important thing is to be well advised, to know in detail what is being invested, what are the potential gains and losses.
TIP 6: Plan the investment
Planning is everything. Many of those who never dared to the capital market see it as a rollercoaster of prices that go up and down, fortunes that are made and undone in seconds. Nothing is further from the truth. But here I want to give one of the best suggestions – Stock market education is the best option for you.
The market has the virtue of reporting the value of assets minute by minute. Can you imagine what your mood would be like if you could see minute by minute how the value of your house or car goes up or down? It would be an adventure for the nerves … but everything will remain the same: it would only have more and better information.
For example, if you believe that a company is valuable and you want to own a part of it in the long term to benefit from your dividends, the day-to-day price of an action does not matter. Now, if that same action is purchased with the aim of raising its price and then reselling it, the strategy is different. The same goes for a bond, who buys a debt issue to collect semiannual interest and capital at the end of its useful life does not worry much about the resale price. Here, the only thing that matters is whether the issuer will pay the maturities or not.
TIP 7: Follow the Plan
The key to the art of investing is in evaluating risk: measuring, calculating, and deciding what degree of risk you are willing to accept. The greater the risk, the greater the possibility of profit and vice versa, the lower the risk the more modest the expected returns.
When knowing the term of an investment and the profits that are expected to be obtained by it, the daily variations in the price become irrelevant.
TIP 8: Diversify your investments
As it is clear from the above, it is not convenient to put all the eggs in the same basket. To invest it is necessary to do it in the portfolio, that is, in different assets. But it is not enough that they are different roles, they also have to respond to the objectives planned in the investment strategy.