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How to Invest in Actions: Beginner’s Guide

Learn all about the stock market with the Toro series: how to start investing in the stock market

Knowing how to invest in stocks is the desire of those looking for good options to invest their money. After all, this is a great opportunityto make big dreams come true, such as getting out of income or ensuring a peaceful retirement.




If you plan to invest and see that your money yields more, you have surely heard of investing in stocks. Just before getting your hands dirty, you need to know what this type of investment is and how it works.

Do you want to learn to invest in stocks? Let’s answer this and other questions throughout this article, which is the eighth in the series: How to start investing in the stock market.

What are the actions?

Actions can be understood as small pieces of an organization. That is, part of its value can be converted into shares and sold to people who were not previously part of the company.

Do you still have questions about what an action is? Watch this video and understand a little more:

Actions are also called roles. This is because, before digital innovation, they were printed on paper to prove a person’s right to a small business property.

Today, fortunately, everything is done digitally. The registration of actions is done in the electronic environment. Therefore, you no longer need any paper documents to prove that you own an action of a particular company, for example.




In addition to printing the stock, in the past, the entire process of buying and selling a stock was very complicated. It took several mediators and very specific knowledge of finance and techniques to operate the systems.

Many people do not know, but the actions are divided into some specific groups. Each group gives the buyer a type of right and responsibility in the company. Know the main types of actions:

  • Common Shares (ON): By investing in these types of shares, you will have the right to vote and may participate in the company’s decisions.

 

  • Preferred actions (PN): If your choice is a PN action, you will not be entitled to participate in business decisions, but you will be given preference when you receive company profits, such as dividends and other compensation.
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  • Stock Certificate (Unit): These are assets composed of more than one type of shares, usually common and preferred shares. The logic is quite simple: it is as if you bought a set of several actions in a package.

 

  • Blue Chip Shares: These are shares of companies with the highest trading volume on the Brazilian Stock Exchange. Some of B3’s blue chips are: Petrobras, Ambev, Itaú and Vale shares.

 

  • Medium limits: these are actions that have an intermediate level of negotiation in the stock market. As such, these assets are often from medium-sized organizations.

 

  • Small capitalizations: if you are looking for cheaper shares, you will generally find this opportunity in small capitalizations. They are actions linked to “smaller” companies, taking into account the financial capital of the organization.

Understanding each existing type is an important step in understanding how to invest in stocks. The daily trading volume and the variety of options can confuse investors. Therefore, it is necessary to understand this market well to better observe its movement.

To facilitate this task, in Toro, we have developed an innovative platform where you can see what stocks are currently quoted and receive good investment recommendations in real time.

Now that we explain what the actions are, let’s talk about the environment where the transactions involving these assets take place: the Stock Exchange.

What is the stock market?

In summary, the Stock Exchange is the environment where corporate actions are traded, in addition to fixed-income securities (such as Treasury Direct), some types of commodities (such as coffee and corn), currencies (such as dollars and euro) and other assets

The stock market has two clear objectives: to organize the trade of assets and to guarantee the security of the roles and data involved in these operations.

This means that when making a purchase or sale of an asset, the exchange ensures that the agreement is made correctly between the buyer and the person selling the asset in question.

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Understand more about what the stock market is in this video:

To guarantee trade, the Stock Exchange acts in conjunction with other entities, which also participate in the processes of organization and security of transactions that take place in this market.

See the institutions that make up this system:

  • B3 is the Brazilian Stock Exchange. It was once known as BM&F Bovespa, but was renamed after the merger with Cetip (Central Securities Custody and Settlement) in 2017.

 

  • The B3 works in conjunction with the Brazilian Liquidation and Depositary Corporation (CBLC), which is responsible for ensuring the security of all transactions on the stock exchange.

 

  • In addition to these entities, there is also CVM (Securities Commission), which is the body responsible for regulating and supervising this market, preventing fraud and guaranteeing the integrity of transactions involving actions and other securities.

Do you have any questions about the security of your money when you invest in stocks? Ask our team of advisors. We are always pleased to help you understand how this investment works and how to protect your money.

How does the stock market works?

Before knowing how to invest in stocks, it is important to explain the entire process from the beginning. The Stock Exchange begins to function when a company decides to make the Initial Public Offering (IPO), that is, when this organization is made public and makes part of its business available as shares.

From this moment, what we call the primary market happens. It is characterized by the transfer of the shares that were exclusive to the company to the investors of shares that buy these assets for the first time.

The secondary market is the next step for the primary market. It is characterized by the stock trade between investors.

That is, the secondary market refers to purchases and sales of shares among people who wish to invest without having to go through the company that issued the shares through the IPO.

However, what not everyone knows is that these operations on the stock market do not occur 24 hours a day. In fact, they follow certain specific moments, and to know how to invest in stocks, you must pay attention to these times.

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What are the advantages of investing in stocks?

You already know that the investment market has several options to choose from. Traditional savings, through fixed-income securities, which come in shares of companies and also in futures contracts, all of these alternatives are ways for you to request your money.

However, not all options have the same profitability. Savings, for example, is rather a way of saving money than investing it. Fixed income securities, on the other hand, may yield more than the savings book, but they are still options for those who wish to invest giving more priority to security than to profitability.

The great advantage of investing in stocks is the ability to achieve better results and thus achieve bigger dreams. In addition, time is also an advantage. You can invest as a trader in agile operations that can only last a few minutes, such as Day Trade, or invest in the long term for those who do not have time to keep up with the market throughout the day.

Want to see a clear example of how stocks can become the best investments? In 2002, Netflix first launched its shares on the US Stock Exchange. UU. According to data collected by CNN, which invested $ 1,000 in the company, in May 2017 it would have around $ 140,000.

Have you considered investing in the next Netflix and get a valuation 140 times higher than what you initially applied? Of course, this is just an example, which despite taking place on the United States Stock Exchange, serves to illustrate the possibilities that the Exchange can offer.

However, it is always worth remembering that past profitability is no guarantee of what will happen. To identify opportunities now, it is always good to pay attention to the stock market and rely on the experience of those who know the market a lot.

 

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