Beginner’s guide to learning stock market

Investing in the stock market is one of the best ways to increase your savings in the long term. If you’re just starting out, you might feel like there’s a lot to learn before you can even start buying a stock. But in fact, learning the stock market is much simpler

1. Nature of investment:

Investing is buying an asset today with the intention that it will be worth more in the future. Investing in the stock market has always been a great way to do this. Especially when it comes to long-term investments.

Keeping cash in the bank is one way to save, but when it comes to increasing your savings, it’s not the best option. Over time, the value of money, and what you can buy with it, will change. Inflation causes over a long period of time your savings left in the form of cash to begin to depreciate.

Even so, when you invest, your capital is at risk.

So what about investing in stock market? When you buy shares of a company, you become the owner of that company. And as an owner, you’ll share in the ups and downs of the business that lead to stock values ​​falling and rising over time.

Learn securities
Learn securities

Some businesses also pay a portion of their profits (called dividends) to investors, and this is another way they can share in the success of the business. In exchange for being an owner in a business and taking the risk of potential ups and downs in the business, investors have historically been rewarded with higher rates of return on cash. their savings and the opportunity to increase their savings. However, in addition to stocks, securities also include bonds, ETFs or derivatives.

Before getting involved, it’s important to remember that when you invest, your capital is at risk. This means that the value of your investments can decrease as well as increase, so you may get back less than your initial investment.

Remember that everyone has their own goals and financial circumstances. These, along with your investment risk tolerance and timing, will inform the mix of asset classes you choose and whether an IPO is part of your portfolio.

2. Why should you study securities?

The stock market is where we go to buy and sell stocks, they are our go-to point for investing in stocks.

Before we learn securitiesit’s important to understand why the stock market can be an ideal place to save money in the first place.

In the long run, economies tend to grow. They grow because populations (in most places) grow, and so does productivity (our ability to produce more goods and services with the same pair of hands). If economies grow in the long run, overall corporate profits should also increase.

Over time, stock prices tend to track underlying earnings growth. And that’s why if we show you a chart of the stock market, it’s going to go up in the long run.

Therefore, learning securities from now on will help you not to miss good investment opportunities.

3. How to learn securities?

3.1. Set your investment goals

Before starting to invest and learn securities, it’s important to decide what you want to gain from it. Some people invest to save for their retirement. Others may have specific purchase intentions in the future or just want to beat inflation. Understanding your goals is important as it will help establish an investment foundation such as how much to invest and what to invest in.

3.2. Understand your feelings about the risks of investing

How you feel about risk is important to learn in your stock market education before you start investing in stocks. The simplest way to think about risk is how much you feel comfortable losing in return that it’s worth it. The more risks you take, the more likely you are to lose or gain.

Learning stock through reading books
Learning stock through reading books

Next, to learn stocks, you need to train your investment mindset through reading books, learning on Youtube or taking instructional courses. Note, investment mindset is a very important thing. Having a solid foundation will help you stand out in the market. Then, choose a type of stock to invest in.

3.3. Choose your investments

In the end you will learn securities through the investment process. The choices include:

Stocks: As we discussed, stocks represent ownership in a company and give you the opportunity to share in the current or future success of the business.

Many big-name companies have stocks that you can buy as a beginner. Businesses in the top VN30 can be a safe choice for you. These stocks have low growth but are safe. But you may not need to choose the big companies, many smaller companies also have shares. Smaller companies tend to attract venture capitalists, they may be newer businesses with more to prove. The key is that you always need to learn about the performance of that business and the company’s management to make decisions.

ETF: You don’t have to pick individual stocks if you don’t want to. With an exchange-traded fund (ETF), you can invest in a collection of stocks or other assets in one go. Most ETFs tend to track an index – like the VN INDEX.

Stock investment
Stock investment

In the financial world, an index is a group of stocks or other assets that are combined and used to analyze or understand how the entire market is performing. From a practical standpoint, this is much cheaper and faster than buying shares in each of those 500 companies. It also provides investors with a more diversified portfolio, reducing the risk they could lose large sums of money.

The downside to ETFs is that they mean you can’t get the superior returns that individual stocks can sometimes. You can also be affected by market crashes, some of which can have a lasting impact on profits.

Investment trusts: Investment trusts are typically set up by wealth management firms. Once they have been established, they are listed on a stock exchange, allowing investors to purchase shares of them. The money raised from their initial share sale is then used to invest in various assets. Like ETFs, investment trusts are a great way to invest in many different stocks or assets in one go.

Besides, you can invest in bonds, which are the safest and easiest assets to invest in, with interest rates slightly higher than bank rates.

Epilogue:

The first step of learn securities It’s mental training. You can choose for yourself a good teacher, a good book, or a methodical first step to learning the stock market.