Stocks are one of the financial products that attract the attention of many investors in the world because of their profitability. There are three ways to bring your money into the stock market. The key below is to find which better
it adapts to your desired investment style.
How can I start investing in the stock market?
In addition to the tens of thousands of stocks you can choose from, you can also invest in mutual funds, invest in exchange-traded funds (ETFs) or hedge funds, or ask a stockbroker to select for you.
1. Purchase of shares through mutual funds
If you are busy and short on time, stock mutual funds are the best option for you. Investing in stocks through mutual funds is very simple. All you have to do is log in to a funds company’s website, fill out some application forms, and zap them some money.
Mutual funds take the money invested by investors and pool it into a single investment portfolio in securities (stocks and bonds). The portfolio is then managed professionally. Equity mutual funds invest mainly or exclusively in stocks (some equity funds sometimes invest a little in bonds).
2. Use of Exchange-traded Funds (ETFs) and Hedge Funds
ETFs are in many ways similar to mutual funds, particularly index funds, except that they are traded on a stock
substitution. The main attractions of ETFs for investors are lower operating expenses than mutual funds.
Like mutual funds, hedge funds are a managed investment vehicle. In other words, an investment management team researches and manages the portfolio of funds. However, hedge funds are geared towards wealthy investors. Typically, the annual management fee ranges from 1.0 to 1.5%, plus a 20% cut in the fund’s annual returns.
3. Autonomous selection of individual titles
Good reasons to choose your own shares:
- You have a significant amount of money to invest.
- You are a buy-and-hold investor.
- You like the challenge.
- You want to know more about the business.
However, choosing a title is not as simple as visiting a restaurant chain. The vast majority of investors are better off not choosing their own shares. So, amateur investors need to educate themselves and take responsibility for their own financial affairs.
Where do investors buy individual shares?
Currently, investors can buy stocks easily through many different channels.
There are 4 channels of trading ordinary shares: brokers, issuing companies, investment funds in securities and individual investors.
1. Buying shares from the broker
One of the most popular and easy ways to invest in stocks is through a broker. These companies usually require you to open an account and deposit money to trade the desired shares.
With this investment method, you need to choose a trading code and place an order at the right time. Brokers will ensure that your orders are executed instantly during the open market and ensure the payment of dividends to investors.
This is also the easiest and most effective investment method for Vietnamese investors who want to access and own foreign stocks.
2. Buy directly from the issuing company
Some companies allow you to buy or sell shares directly from the company without going through any broker. Save on costs (fees) for investors. However, you will not be able to buy or sell shares at the market price or at a specific time. You will have to buy/sell shares according to the time prescribed by the company – daily, weekly or monthly and buy them at a price set by the issuer and resell them at a different price.
The direct method of dealing with the issuer is more complicated than buying and selling shares through a broker. For example, when you buy shares directly from the issuer, you are responsible for keeping them safe.
3. Repurchase from other investors
You can buy and sell individual shares from other investors. Suppose a friend owns a certain amount of shares and you want to buy them back, then the transaction is quite possible.
However, this method of trading stocks is quite risky because they can falsify certificates. If you want to buy in this way, you will have to sign an exchange contract and then send it to the company to register again with the name of the new owner.