You'd like toinvesting in stock exchangeBut don't know where to start? Here are some tips to help you see more clearly.
How to understand the operation of the stock exchange
To invest well in the stock exchange, it is necessary to understand how it works. This section explains the role of shares and the process of buying and selling shares.
The role of actions in the economy
Actions allow companies to raise funds to grow. For investors, they offer dividends and the opportunity to diversify their portfolio, reducing risks.
Investing in shares allows you to become co-owner of the company and helps boost the economy. For example, equity fundraising can help a company like Tesla develop new automotive technologies, creating innovative jobs and products.
How does the purchase and sale of shares work?
To purchase shares, you must open a securities account or life insurance, a PIP or a PIP. Take stock orders (market, limited price, trigger threshold) online via trading platforms or through your financial advisor. Each order includes brokerage fees, which vary according to the intermediaries.
For example, by investing via Nalo, you can use trigger-threshold orders to secure your earnings. These orders become active when the share reaches a certain price, allowing you to automate your transactions.
Market order:executes the purchase or sale immediately at the best price available.Limited order:sets a maximum price for purchase or a minimum price for sale.Trigger threshold order:becomes active when the price reaches a certain threshold.
The different types of actions to know
Not all shares are identical. This section explains the different types of actions and their particularities to help you make informed choices.
Common shares
Common shares represent most outstanding securities. Holders have voting rights and may receive dividends, although they are not guaranteed.
For example, common shares of companies such as Apple Inc. give you a right to vote at general meetings and the possibility to receive dividends according to the company's performance.
Preferred shares
These shares offer a priority right over dividends and assets in the event of the liquidation of the company, but generally do not confer voting rights.
The preferred shares of companies like General Electric allow investors to benefit from a degree of security on dividends, even in times of economic turbulence.
Porter shares
These shares allow investors to remain anonymous. They are easily transferable because they are not nominal.
Nominal actions
These shares are entered on behalf of their owner in the company's records and may offer benefits such as increased dividends or additional voting rights.
Nominal shares can be particularly beneficial in start-ups where shareholders may have additional voting rights influencing strategic decisions.
Set up in an advantageous tax environment
Choosing the tax framework can greatly impact your earnings. Discover the various securities accounts and their tax advantages.
Comparison of different types of securities accounts
This overview presents a comparative table of securities accounts (Regular Securities Account, PEA, Life Insurance) with their advantages and disadvantages.
| Account type | Benefits | Disadvantages |
|---|---|---|
| Common securities account | No deposit limit, varied choice of assets | Tax on capital gains and high dividends |
| Share Savings Plan | Tax benefits after 5 years, diversification | Deposit ceiling 150,000 €, limited choice of European assets |
| Life insurance | Tax benefits after 8 years, succession preparation | Management costs, withdrawal constraints |
For example, the EAP is an excellent option to benefit from tax benefits after a certain period of detention. EAPs allow a capital gains tax exemption after five years of detention.
Diversifying investments
Diversification is a key strategy to minimize risks and maximize returns. Learn how to efficiently diversify your investments.
Why diversify your investments
Diversifying your investments between different sectors (automobiles, new technologies, etc.) and geography helps you reduce the risks associated with a single market or sector.
For example, investing in both Tesla Inc.'s shares in the automotive sector and Microsoft's shares in new technologies can create a balance by reducing reliance on one sector.
Geographical and sectoral diversification
Invest geographically by choosing SICAVs and CFPs on European and international markets. Sectoral and geographical diversification reduces risks.
By investing in SICAVs that include assets from emerging markets and European markets, you can take advantage of growth opportunities in different regions, while reducing the risks associated with a single geographical area.
Gains and losses
It is vital to know when to sell to realize your gains, but also to understand strategies to limit losses.
Determine your earnings targets
Define if you want a regular valuation of your portfolio or short-term gains. Use trigger-threshold orders based on your objectives.
For example, you can set an automatic order of sale if an action like Amazon reaches a certain price, allowing you to enjoy your winnings without requiring constant monitoring.
Limit losses
Set a maximum loss threshold. In the event of a decline in the market, the execution of an automatic order may limit hazards.
Before you start, find out if2021 is a good year to start tradingand maximize your opportunities.
Use risk management tools such as stop-loss orders, which automatically sell an action as soon as it reaches a fixed floor price, protecting you from drastic decreases.
Learning to invest according to your profile
Knowing your investor profile is crucial to choosing an investment strategy tailored to your ambitions and risk tolerance.
Determine your risk profile
Use tools or simulators to clearly establish your risk profile. This will help you choose the investments that match your risk tolerance.
Nalo offers simulators to help determine whether you are a prudent, balanced or dynamic investor. For example, a prudent investor will favour stable shares while a dynamic investor will seek high-potential market segments.
Choose an appropriate strategy
Whether you are a prudent, balanced or dynamic investor, your strategy needs to be tailored to your profile and performance objectives.
A dynamic investor could opt for strategies to buy and sell quickly on high-tech shares or promising startups. A prudent investor will instead focus on securities of large, stable companies and bonds.
FAQ for beginners on the stock exchange
This section answers the most common questions to clarify your doubts and help youstart on stock exchangeWith confidence.
What is an AEP?
The Savings in Shares Plan allows investment in stock exchange with a favourable fiscal framework after 5 years of holding.
What are the costs associated with buying and selling shares?
Fees may include brokerage fees, custody fees and miscellaneous fees charged by brokers. It is recommended to compare offers.
For example, brokerage fees at Nalo may vary from those of traditional brokers, check and compare fees before choosing an intermediary.
How to reduce risks on the stock exchange?
Diversify your investments sectorally and geographically. Choose different types of assets to allocate risks.
Investing simultaneously in equities, bonds, and ETFs by diversifying geographically can reduce the risks associated with concentration in a single market or type of asset.