Investing in Stocks: 9 Things You Need to Know

This content was originally posted on the Easynvest blog. On August 17, 2021, Easynvest became Nu invest and this content was transferred to Nubank’s blog.

What does it mean to invest in stocks?

Investing in shares means buying “bits” of one or more companies. There are several ways and strategies to do this, the most common is to buy shares for a price, betting that they will appreciate, and sell at a future date for a higher price.

Stocks are considered a risky investment, as there is no guarantee of income (as with fixed income ), and the market varies a lot according to the purchases and sales that take place on the stock exchange .

But in the investment world, risk often accompanies earning potential. In other words, investments considered safer tend to yield less, while riskier investments can generate more profitability.

How to invest in stocks?

Before starting to invest in stocks, the first step is to know a little more about this reality of investments. Here are nine tips to get started.

1. Study the market

Before investing in stocks, it is important to study the company and the market niche it serves. This is also true for other types of investment, including fixed-income ones (such as Treasury Direct and CDB bonds ).

2. How much to invest in stocks?

As important as knowing the market is determining the amount you will invest. Remember that the market variable annuity your investment may lose value.

Thus, it is essential that the money you will use to buy shares is not what you will need tomorrow – having an emergency reserve on a safe and highly liquid product is very advisable.

3. What is the minimum amount to invest in shares?

There is no minimum amount to invest in shares traded on the Stock Exchange. The amount invested depends on the type of action and the amount. That is, anyone can start investing.

An investor can start by buying, for example, a lot of 100 shares. Therefore, the value will depend on the share price at that moment. If the stock is worth R$10, it would take R$1,000 to make the transaction.

Of course, if you find a company with shares worth R$1, this will be your minimum value. On the other hand, there are other companies that are traded at a higher value and the investment can become more expensive.

It is also important to keep an eye on the brokerage fee, a charge from some brokers , to know how much it will impact the value of your investment.

In Nu invest, brokerage is zero for stocks, BDRs, real estate funds, ETFs and options. There is also no charge to invest in fixed income assets, such as Tesouro Direto , CDBs , LCIs, LCAs , debentures, etc.

4. What is the minimum number of shares you can buy?

To invest in shares it is necessary to respect some rules. Thus, in the spot market (where investors buy and sell shares at the price established in the trading session ), it is necessary to buy at least 1 lot consisting of 100 shares.

Therefore, if this person wants to buy shares in a company that cost R$10, he must invest at least R$1,000.

But there is also the option to buy on the fractional market. In this case, the amount varies from one to 99 shares. As much of the market trades shares in lots of 100, there is a difference in price, and it may be harder to sell the shares later.

5. How to invest in shares with R$100?

As there is no minimum amount to invest in shares, it is possible to have profitability investing R$ 100. One of the important points for your earnings is to maintain the frequency of this investment, in addition to the time your money remains invested in a stock.

6. Common or preferred stock?

There are two types of shares of companies traded on the stock exchange: common shares and preferred shares. The common ones are the most common in the market and give the right to vote at extraordinary meetings and meetings; the preferred give priority to the investor when the company distributes the year’s profits,

All publicly traded companies are required to distribute at least 25% of their profits – these are called dividends .

7. What is a ticker?

Ticker is the code of an action. As a practical matter, common shares always have the number 3 at the end of the trading code. For example: PETR3, VALE3, etc.

Preferred shares have the numbers 4,5,6,7,8 at the end. For example: PETR4, VALE5 etc.

8. Understand the types of operations

There are a few ways to invest in stocks. In a normal trade, an investor buys a lot of shares today and sells on another trading floor . This is the process known as “buy and hold”, that is, buying and holding.

In this trade, you can sell your stock at different times in the future – after a week, a month, years or even decades. 

Another way to trade is the Day Trade , in which a stock is bought and sold on the same day. This is considered a riskier operation, as the market moves a lot and it is not easy to identify the best time to buy or sell.

9. Start small

If you can’t swim, it’s best to stay in the shallows. When you learn more, then you can take risks. Do this to start investing in stocks too.

If you are taking your first steps in the Stock Exchange, start investing little and always diversify , that is, don’t put all your eggs in one basket.

Understand how the market works and, once you’re used to it, take more chances.