Learning to invest should be something Basic for anyone, but very few people devotes time to this task. The economic future of a person is determined by:
1.) The money that wins
2.) The percentage saving money that wins
3.) How you invest that money you save
The 3 points are fundamental. But most of the people focuses only on the money that wins, some reach the second step (saving) and only a few take seriously the third step (invest). 3 "legs" are very important for the economic future, but if I had to name one of them as the least important when it comes to accumulating a heritage I think it would be the first; the money earned.
If money is won but spent all cannot create a heritage. However, it is possible to earn little, save a lot, invest well and get a very good result. The time is also very important, accumulate a good heritage with low income in a short time is extremely difficult. But in longer time and discipline make virtually any can significantly raise their standard of living.
The most important investments are:
Investing in stock market is much easier than think the majority of people, it is something that anyone can, and should, do, no need to have any prior knowledge or an above-average intelligence. I think that everyone should devote at least part of their money to invest in stock market, as it is shown that long term bag is the most profitable investment that there is. And it is not only the most profitable, but that through dividends, it provides a more stable and increased to real estate income or fixed income. But it is also highly recommended to have a portion of the money in fixed income, and both are equally compatible with the investment in real estate. Properties:
Historically it has been the second most profitable option after the bag. Altogether has been a good investment, but not as good as you think the majority of people. Investment in real estate, in practice, has enough drawbacks that are not usually take into account when speaking of it in theoretical form, as you can see in the above link. The real estate market are pending for a reform that would radically change the valuation of real estate; the liberalisation of the ground. If soil liberalizes realistically the value of real estate will fall significantly.
It is considered as the safest, but its real return (which takes into account inflation) is very low. You can use temporarily, but it is not a good investment in the long term by their low profitability. Obviously it is preferable to be a time in fixed income to buy overvalued shares. But it is not possible to "live the income" investing in income sets, since at the time where interests are left to reinvest the real value of assets begins to descend almost to disappear in long terms.
It is very difficult for people who are not very expert. Most art objects can even be considered as an investment, since only very high quality deserve this consideration. Falsifications, fashion, etc. make it very difficult this type of investment. They also do not provide an income and the same work can have very different prices at a time depending on the place of purchase, who is the buyer and the seller, etc.
The first thing that should be done is to design the asset management and decide which percentage of the total is to invest in stock market. It can range between 10% and 100%, depending on each inverter.
To invest in stock market, there are 2 options:
A mutual fund is an intermediary between investors and the market in which to invest. For example, an investor may purchase Spanish actions directly or can invest in a mutual fund that bought Spanish actions. Each option has its advantages and disadvantages, and this makes none of the two options is the best for all the inverores. Each investor must decide if in your case is preferable to direct investment (in fixed income, Spanish, European, emerging stocks, etc.) or the investment through a mutual fund. Both options are compatible, so a same investor could invest directly in the Spanish stock market, because of their greater knowledge of the same, and use the funds to invest in Japan or USA.
Direct investment in bag:
The main advantages of direct investment in actions regarding investment funds are:
(1) periodic income:
A securities portfolio generates an income the dividend paying stocks that make up the portfolio. This advantage is very important. The money obtained by the payment of dividends be used with flexibility; reinvest in buying more shares, destine it to consumption or to pay basic expenses (electricity, water, owners, etc.), payment of the mortgage on a property (residence, second residence, premises for a business, property to rent, etc.), payment of letters of a vehicle, etc. And all this without having to sell the shares. Throughout the life of the inverter the fate of dividends can go varying with total flexibility depending on your needs and the stage of your life you are. Get a regular income by investing in funds is very difficult because the evolution of dividends is much more stable and predictable than the contributions. To earn an income regular an investment fund must sell shares, and that is to reduce the size of our heritage. Therefore would not be a real income (such as dividends) but a divestiture. Also there is a risk of disinvestment in market falls.
(2) lower commissions:
the commissions that are paid to maintain a portfolio of values are significantly lower than a mutual fund, and this has a decisive influence on the final profitability. An equity fund may charge a total Commission (management, deposit, etc.) 2,00%-2, 50%. There are people who believes that it is a low Commission because it compared to the total value of the portfolio. The problem is that this Commission is charged every year. The a the IBEX35 index dividend yield is not very far from those numbers, at times can be something higher and others lower. This means that the Fund, approximately, stays with paid dividends for doing his job. To put it in perspective imagine the case of an investor in real estate that engages a Manager you carry your portfolio of properties and to change the Manager stays with all the money obtained by the rentals. The investor would keep real estate but wouldn't get anything from rentals. In addition, investing directly in shares can select stocks that pay high dividends and discard the
you pay lower dividends and those that do not pay them, with what the portfolio dividend yield can be superior to that of the IBEX 35 (or the chosen reference index).
(3) effect "herd" in the Fund managers:
named to the trend that fund managers have to be very similar to the peer management, differing little from the Administrators group. The consequence is that the vast majority of managers performs a management very passive, with very similar results (almost always lower, as reflected in the studies carried out on the subject) to the index that is used as a reference. In these cases the supposed advantage of professional management on management that an individual can do fades until it is virtually null and void. There are several reasons for this behavior. One of the most important is that managers live on his salary, not of profitability that obtain in the market. Many managers have bonuses, bonuses and so forth, but the mortgage, the light and the schools are paid with salary. If they are separated from the Group and are right you can get a higher bonus, but if they are wrong and get a yield much lower than the average they can be dismissed. It is clear that most would prefer not to risk, not only because of the possibility of being fired but because, even in the case of clearly exceed the group, the tension suffered every day until it can be very high. The individual investor can buy values that they are not in fashion (and therefore have fallen significantly) but have magnificent fundamental and good prospects without worrying about rankings of the next quarter. Following the index managers invest the most money in the larger values, which are not always the best option.
(4) total freedom to invest or not:
the individual investor has no obligation to be bought at all times or sell if you don't want it. Instead a fund manager not only has to be always in market but it may be the case that receives lots of money to invest (by new contributions of participants) in moments that would prefer not to do so and at other times it may be forced to sell (for massive withdrawals of participants) when his opinion is that it is good time to buy rather than sell.
(5) to enter and exit agility:
A private investor can enter and exit a value at any time, since their positions are negligible compared with the size of the market. On the other hand a Fund Manager may take several weeks, or even months, in entering or leaving a value for the large volume of money it manages. This can cause the Manager to get worst prices (for the whole of its portfolio) of purchase and sale to the individual investor. The smaller the higher value is the advantage of the individual investor to the Fund Manager.
(6) ability to invest in securities that are not in the rates:
most of the funds are referenced to an index, so ignore all those companies that do not belong to this index. This leaves out very good companies that do not meet the requirements to be included in the indices due to their size or liquidity. In Spain the cases of CEPSA and Zardoya OTIS, include companies whose profitability of recent decades is among the highest in the Spanish market and which are not yet in the portfolio of many funds because they do not belong to the IBEX 35. Other funds have or have had shares of these companies, but in a percentage very low, taking into account its fundamental, for not being included in such index solidity. On the other hand, sometimes included in rates companies with a large market capitalization and cash but whose fundamental and profitability leave much to be desired. An example of the latter (among many that there has been, is and will be) can be Terra. The vast majority of participants of investment funds in Spain had a portion of your money invested in Terra during the fall of 157 to 2 euros, since almost all funds owned Terra shares purchased in their portfolios. Many of those funds, however, had no Zardoya or CEPSA shares that had an appreciation well above the average while Terra fell. Indexes are a selection of the most solid and profitable, values but the most liquid and with greater market capitalization. There are very solid values that are very large and liquid but not so in all cases.
(7) the stock indexes do not reflect dividends paid by companies
I think that direct investment is more interesting, but for some investors, it is preferable to invest through mutual funds. But before deciding on the investment via funds think that you should read the articles stock indices do not reflect dividends paid by the companies and how to match (and overcome) to the indexes so that you understand the implications of its decision.
You must also take into account that direct investment in stock exchange and investment funds are compatible options.
Before you start buying shares we had to choose the strategy that will be used to invest in stock market. You can use more than one strategy, in which case must decide how much money to devote to each strategy be and open a securities account to each of them. The same account should not be used for several strategies, since it hinders the assessment and it could happen that a bad strategy will "eat" the benefits of good strategies of slow and "silently". They must be separated to evaluate them easily and be able to take corrective measures if one strategy is failing.
The choice of the strategy and the acquisition of the skills needed to carry it out are parallel tasks. To do this you can read books or websites like this one, whose contents are completely free. Bag items will be useful.
An initial difficulty is to choose the strategy should have some knowledge, to which you should read books and spend some time. But that initial lack of knowledge does not you can choose which books to read and it is possible to read several books that do not adapt to your needs, what will have been a waste of time and money.
If you don't know what strategy choose or what books to read I recommend a strategy that seems very suitable for the majority of private investors for its combination of profitability and safety long term. It consists in forming a solid portfolio and with good future prospects that have a high profitability by dividend. And what, also those profits and dividends grow long term above inflation. These companies tend to be banks, utilities (electric, gas, water distribution, telecommunications operators), highways, insurance and construction companies. They are not the only ones, but many of them belong to these sectors. All contents of this site prove useful to develop this strategy or other.
is that tries to determine the value of the companies based on their results and assets (factories, brands, machinery, real estate portfolio of customers, etc.) that has.
Technical analysis only looks on the stock charts.
Does not pay any attention to the results and assets of the companies, only to the evolution of its listing on stock exchange. On many occasions it is situated fundamental analysis and the technician on two sides opposite and irreconcilable. In my opinion, they are fully compatible. A long-term investor should use fundamental analysis to say 'what' companies purchase and technical analysis to decide "when" to buy them.
You must follow the results presenting companies each quarter. This can be used multiple sources, as the section of results of this website, the websites of the companies themselves or newspapers. Use the most convenient and better understanding. By very good be a company cannot buy it at any price. Pay close attention to the present dividend yield and the prospect that in the future this dividend increase above inflation.
The majority of businesses in the sectors named above (banks, utilities, highways, insurance and construction companies) meet these characteristics.
If you find a better strategy and you like more, please do not hesitate to use it. But don't start buying shares without knowing why does it nor objectives intended to accomplish with your investment. Each investor must find a strategy that suits your needs, its objectives and its way of being. The strategy must adapt to the investor, not the inverter to the strategy.