All you want to know but never asked about the stocks and options markets.

sábado, 14 de diciembre de 2013

What is a stock exchange?

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The Stock Exchanges

Whether in newspapers, television, magazines, or any information media, we have all heard the term "stock exchange", in contexts such as "the stock exchange has raised so far this week" or "x company shares are listed on x exchange. "Let's start with defining what is a stock market: 
A stock exchange is an organization or entity in which you can buy/sell financial instruments such as stocks and bonds. The fundamental importance of an exchange is that it is the main source of long term supply of capital.
A stock exchange facilitates the transaction of shares of companies and their purchase by investors, ie, if a company seeks financial capital it "goes public" and this is where investors who choose to participate in its profits or risks come together. When the investors, in the same way, want to sell their shares or bonds to receive their profits is through a stock exchange where they can find a buyer. We could also say it is the meeting point for companies seeking capital and investors seeking opportunities in which to place their capital.

Here you can find the main stock exchanges worldwide:


The following are the different ways to invest in the stock market:

Stockbrokers

An agent or broker is an entity by which transactions which allows traders and investors to conduct transactions for a fee. Currently there are online stockbrokers, discount brokers and full service brokers. Depending on your trading needs, choosing the right broker is different for each trader because each type of broker has its advantages and disadvantages so you must know how to choose which is best for you.

Mutual Funds

The stock market investment through mutual funds is the easiest method because it is a company that will take care of all investment in stocks using our money for the payment of a fee. By this means it is not necessary to know about the fundamentals of companies and the movements of each one in the market. Is only required to use the services of mutual fund management companies.

Exchange Traded Funds

With this option you need to first have an account with a broker. In a way, ETFs operate similarly to Mutual Funds, with the difference that we can buy them as if we were buying shares. ETFs follow a market index so they are not actively managed.

Direct Investment Plans


This is the most direct option by which we can purchase the shares directly from the issuing company. In this case there is no need for the services of a broker, thus avoiding paying high prices. The price depends on the market price and dividends are automatically reinvested in buying more shares.

Financial planner


Registered brokers or agents who work directly with brokers, the downside is that the price of their fees and services is high.


The options by which we can access the stock exchange and start investing in companies have their advantages and disadvantages and it is up to each investor to choose the one that best fits their needs.


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