Stocks investing for dummies: how to get started with shares?

Are you looking for a simple guide on buying and trading stocks for beginners? Then you’ve come to the right place! In the article “Stocks for Dummies”, we’ll explain everything you need to know about shares.

How to start investing in stocks?

You can invest in stocks through a broker, which is a company that facilitates the buying and selling of stocks.

Before you can start investing in stocks, you first need to open an account with a broker. In the table below, you can see which brokers allow you to invest in shares:
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Stocks for Dummies: What are stocks?

Large companies such as Google and Shell are in the hands of the shareholders. As soon as you buy a share, you become a co-owner of the company. Many stocks are traded on the stock exchange, where the interplay of supply and demand determines the price.

Increased demand for a stock with equal supply generally results in an increase in the price of the stock. By considering supply and demand, you can predict the price of a stock:

• Do you think more people want the stock? Then the price increased.
• Do you think more people want to sell their shares? Then the price declines.

Do you want to read more details about what stocks are? Read this article!

Methods to invest in stocks

As a novice investor, there are several methods to invest in stocks:

• Speculation: You can speculate on the price movement of a stock by using a derivative.
• Buying a stock: You can select and buy individual shares.
• Stock fund: You can invest in a basket of shares.

Speculation requires the most knowledge and is therefore the riskiest investment method. Investing in a stock fund is the least risky and therefore the most accessible for many beginners. Click here to read more about investing in ETF’s.

Is investing in stocks right for you?

Before you start investing in stocks, it’s wise to consider whether it’s right for you. Remember that investing in shares is always risky; you can lose your entire investment.

At the same time, by investing in stocks wisely, you can increase your capital. You can do this by selecting stocks yourself. If you don’t have much time, you can also choose to invest in an ETF: this is a basket of shares, allowing you to spread your risks even with a small amount of money.

How do you buy your first stock as a beginner?

Step 1: Ensure you have sufficient funds

Before you can start trading stocks, you must first have sufficient funds. It is important to  only invest money that you can truly miss. Nowadays, it is already possible to invest in stocks with 100. However, with a smaller amount, it is more difficult to diversify your risks, which lowers your chances of success.

Step 2: Select a reliable broker

A broker is a party that enables you to buy or sell stocks. It is essential to select a broker with low transaction costs.

Do you want to know where to buy stocks as a beginner? Click the button below to compare the different stockbrokers:

Step 3: Choose a few stocks to buy

After you open an account with a stockbroker, you need to select a few stocks that are suitable for you as a dummy. For this, you must first determine your risk profile. Do you prefer to invest in risky stocks with a potentially high return, but also a potentially high loss? Or do you prefer stable stocks with less volatility?

Step 4: Research the companies

Before you buy the stock, it is important to thoroughly research the companies behind the stocks. You can do this by conducting fundamental analysis. You then investigate whether the value of the stock corresponds to the intrinsic value of the company. When stocks are undervalued, it may be wise to buy them. This method is similar to the investment strategy of Warren Buffett.

If you prefer to speculate on short-term price movements, technical analysis is a better technique. With technical analysis, you search for patterns within a chart.

Step 5: Place your first stock order

When you are certain that you want to buy a certain stock, you can place an order. You can choose between two types of orders:

• Market order: You buy the stock at the current price.
• Limit order: You buy the stock at a fixed price.

After you have placed the order, the broker executes it for you. Don’t forget to regularly evaluate whether your investment still suits you!

How to make money with stocks?

Important: Remember that investing in stocks is risky. You can also lose money with investments in stocks, especially in the short term!

Way 1: Capital gains

You can earn a positive return on stocks by selling them for a profit. When you buy a stock and the company performs well, the price can rise.

When using derivatives, you can also profit from a decrease in price. This is called short selling. When you open a short position, you speculate on a declining stock price.

Way 2: Dividend

When a company generates a profit, it may choose to pay out a portion of that profit in the form of a dividend. If you want to read more about dividends, you can read our article on what is a dividend.

Even Dummies Can Predict Stock Prices

Pay Attention to the News

By keeping an eye on the news, you can predict the price of a stock. Especially with negative news, the price of a stock can suddenly drop significantly. This was seen during the COVID-19 crisis of 2020, where the prices of almost all stocks dropped significantly. Beginners often panic, but in the long term, there is a good chance that prices will recover.

A profit warning is a clear negative signal. The company performs worse than expected, and it is recommended to keep an extra close eye on the company.

Examine Fundamental Data

As a beginner investor, it is important to work like a detective. Investigate at least the following components of a company in which you want to invest:

• Revenue: Is the revenue increasing in relation to the previous years?
• Profit: Is the company profitable, and is the profit margin high?
• Debts: Does the company have many debts or is it manageable?
• Growth: Is the company still growing?
• Competition: Is the company performing better than its competitors?

Do you want to know more about fundamental analysis? Read this article!

Recognize Patterns

Stock prices typically move in logical, predictable patterns. It is wise to first determine whether the price of a stock is mainly moving up or down. Once you have determined the general trend, you can determine an attractive entry point.

Indispensable Tips for Dummies

Tip 1: Invest in things you understand

Many investors make the mistake of investing in things they find amusing. For example, if you like cannabis, you may randomly start buying cannabis stocks. However, this is not a winning strategy.

Do you want to achieve good results as a beginner? Then invest in stocks that have proven results. Warren Buffett used this strategy and became one of the richest people on earth.

Tip 2: Draft a plan

Beginning investors sometimes randomly buy stocks. Buying Apple stock just because you bought a nice iPhone is not a solid strategy. Therefore, think about when and why you want to buy certain stocks. When you have a good plan, you can also monitor how the plan works out. This allows you to slowly improve your investment strategy.

Tip 3: Dare to take a profit

You can never lose on profit! Many beginners tend to beat themselves up when they see the value of a stock rise further after they have sold it. That’s a shame! Every profit you make is positive, and you can never predict with certainty what the top is.

In some cases, it can also be wise to take the part you have invested out of your stock investment. Has a stock risen tremendously? Then take your profit and keep a small part of your investment. You can use the released money for new investment opportunities.

Tip 4: Don’t panic

Many beginning investors panic when stock prices collapse. Dummies sell their shares during these kinds of crashes. However, this is not a good strategy: precisely when stock markets fall, you can achieve good results.

For example, during a crash, you can speculate on falling prices. You can also buy new stocks at advantageous prices during a crash. Short-term movements are rarely relevant to your long-term strategy.

Tip 5: Don’t worry

A stock loss is only a loss on paper. When your stocks are worth 10 or 20 percent less, this is not definitive. You still own the same number of stocks, and you can hold on to them for as long as you want. Waiting for better times is often the best advice when your portfolio temporarily performs poorly.

This also illustrates why it is so important for both beginner and advanced investors to only put money at stake that they can actually afford to lose. Only carry out investments that do not keep you awake at night.

Tip 6: Diversify your investments

It is advisable to diversify your investments as much as possible. Many beginning stock investors make the mistake of investing the majority of their wealth in a handful of stocks. When you do this, you increase the chance of losing a large part of your money on the investment. Therefore, it is wise to diversify your stock investments as much as possible.

You can diversify your investments in different ways:

• Time: buy at different moments.
• Sector: buy stocks in multiple sectors.
• Region: buy shares from different regions.

Tip 7: Practice first

When you just got your driving licence, you did not directly race in a Ferrari. It is critical to first take some test drives. You can do this, for example, with a demo. You can also choose to keep track of fictional investments on paper. In any case, as a beginner, it is advisable to practice first.

What you always need to remember about the stock market

Both beginning and advanced stock investors regularly forget the most important lessons about the stock market. Stocks are always risky investments. In the long term, you can achieve a solid, average return of 6-8% per year with investments in stocks. However, you can lose heavily in the short term.

For building a large fortune with stock trading, you need time. If you spread your investments sufficiently and patiently wait, you increase the chance of success. However, there are never any guarantees: only invest with money that you can afford to lose!

From dummy to millionaire with stocks?

I am not exaggerating when I say that everyone can eventually become a millionaire by investing in stocks. This also applies to beginning investors. With the power of exponential growth or compounding, you can build a large fortune with a small monthly investment.

For example, if you invest $ 1,000 every month for 10 years at a return of 8%, you will already own $ 173,838 at the end of the ride. If you do this for 20 years, you will own $ 549,143, and after 30 years, you will own over $ 1,359,398.

But how is it that your return is increasing faster and faster? This is due to the principle of compound interest. When you reinvest the money you earn with your stock investments over and over, you also receive return on these amounts. At first, this effect is limited, but over a long period, the effect increases enormously.

Over a period of 60 years, this amount even grows to $ 15,038,559, and over a period of 100 years, to $ 329,814,188. Now you understand why rich families often remain rich. All you need is time, and when your wealth has grown sufficiently, this effect just keeps going and going.

Because of this effect, it is wise to start investing early. As long as you do this with money that you can afford to lose and in a way that suits your personality, this works better than putting all your money in a savings account. With a savings account, you know for sure that you will lose money. Everything becomes more expensive due to inflation, and the money in your savings account hardly earns any interest.

Do you want to see for yourself how quickly your wealth can grow at a certain return? Then try this tool!

Frequently asked questions by stock dummies

Registered shares: preferred, cumulative, common, convertible and vinculized shares

Registered shares are securities issued in the name of a specific person and registered in the register of the shareholders’ company. In other words, these shares must bear the name of their owner. This person is a full member of the company’s board of shareholders.

Registered shares can be sold and transferred in two ways

1. Inclusion in the company’s register of data on change of the owner, issuance of the corresponding certificate to the new holder of shares.
2. Making a transfer inscription on the certificate itself, after which it is also necessary to enter it into the register.

In addition to the data of the new owner, it is also necessary to indicate the date of transfer and certify it with the signature of an official. The transfer inscription on the reverse side of the share is called an endorsement.Naturally, they have value only when they are in the hands of the registered owner, unlike bearer shares, the owner and beneficiary of which can be absolutely any unregistered person. The main purpose of the existence of registered shares is to keep strict account of the company’s shareholders and to avoid attracting undesirable capital to the company.At the inception of the securities market, only registered shares existed. If a company issues only registered shares and not preference shares, it raises its prestige considerably.

Types of registered shares

A subspecies of registered shares is vinculized shares. They can be transferred to third parties only with the authorization of the issuer-company, joint-stock company. The purpose of their issue is to precisely control the composition of shareholders. In essence, it is a tool to prohibit the sale and transfer of shares to undesirable persons.Preferred shares are also registered, their owners have the right to receive dividends in a fixed and priority order. A subspecies of preferred stock is reversible stock, which can be exchanged for common stock at a predetermined ratio. Registered ordinary (common) shares mean that their holders receive dividends on a residual basis after holders of preferred shares.Cumulative shares are registered, preferred shares that give the right to receive dividends accumulated during the period when for any reason the company did not pay them. Another type of registered shares is convertible shares, which can be exchanged for ordinary and preferred shares at a strictly fixed price on a specific specified date.

How to buy Caterpillar shares (2024) – invest in Caterpillar

The American company Caterpillar builds heavy machinery for mining and construction. Do you want to buy Caterpillar shares? In this article, you can learn how to invest in Caterpillar stocks and examine the latest stock price.

How to buy Caterpillar shares?

If you have confidence in the future of Caterpillar, you can decide to buy shares. It is wise to time your investment well. For example, during a crisis, it may still be attractive to buy the stocks after the price has dropped sufficiently. You can buy Caterpillar shares through one of the brokers listed below:

Brokers	Benefits	Register
	Buy Caterpillar without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of Caterpillar! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of Caterpillar with a free demo!	Register

What is the current stock price of Caterpillar?

If you want to know the current stock price of Caterpillar, you are in the right place on this page. Below, you can see the graph of Caterpillar stocks. You can open a position directly using the buttons.

Company information of Caterpillar

Below, you can find the key company information of Caterpillar.

Analysis of Caterpillar shares

Before deciding whether to buy or sell Caterpillar shares, it is important to analyse the stock thoroughly. In the overview below, you can see how Caterpillar has performed over the past period.

Stock prices of Caterpillar over the last 5 days

In the table below, you can see the stock prices of Caterpillar for the last 5 days:

What does the stock price of Caterpillar do in 2024?

Are you curious about what analysts predict Caterpillar will do in 2024 and the following years? We have combined analysts’ predictions using data from Alpha Vantage. Remember that this figure is only a forecast of the price movement of Caterpillar and may not come true.

Why can it be interesting to invest in Caterpillar stocks?

• Strong brand: Caterpillar is known for its mining and construction equipment.
• Global presence: Caterpillar operates in more than 200 countries, and mining equipment is particularly popular in emerging economies.
• Technological improvements: Caterpillar has recently introduced new construction equipment that consumes less fuel. Sustainability is increasingly important, and such improvements can have a positive impact on the company.

What are the risks of investing in Caterpillar shares?

• Economic situation: When the economy is not performing well, the demand for commodities decreases. Mining companies then postpone the purchase of new equipment.
• Competition: Caterpillar must stay ahead of the competition. Therefore, compare Caterpillar with its competitors before buying the shares.
• External factors: Rising costs and political pressures can put pressure on Caterpillar’s financial performance.

Who are Caterpillar’s biggest competitors?

• Deere & Company
• Komatsu
• Hitachi Construction Machinery
• Hyundai Heavy Industries
• Liebherr

Step-by-step guide: How to invest in Caterpillar shares?

Step 1: Determine your strategy

Before buying Caterpillar shares, you need to go through a few steps. First, you need to establish a solid strategy. Decide at what price you want to buy the stock and when you would like to sell it. You should also consider how the stock fits into your overall portfolio. Caterpillar is a cyclical stock which is heavily influenced by economic developments. If you would like to build a stable portfolio, consider buying stocks that are less cyclical as well.

Step 2: Open an account with a broker

Before placing your order, you have to open an account with a broker. A good broker should be reliable and cost-effective. You don’t want your broker to steal your money or manipulate stock prices. In our broker overview, you can see which brokers are available:

Step 3: Buy Caterpillar shares

Once you open a brokerage account, you can open an investment position in Caterpillar stocks. You can do this by placing a market order or a limit order. With a market order, you open the investment at the current market price. With a limit order, you set a price at which you buy the stock.It is often advisable to use a stop loss. With a stop loss, you automatically close the investment at a specific loss. You can also use a take profit, which automatically closes the position at a certain profit.

What does Caterpillar do?

Caterpillar is one of the largest producers of heavy machinery used in various sectors. In addition to manufacturing equipment, Caterpillar also produces diesel and gas engines capable of delivering high power, as well as industrial gas turbines. Furthermore, Caterpillar supports its customers with financial products and insurance. The headquarters of this leading manufacturer of construction machinery is located in Deerfield, Illinois.

The origin of Caterpillar

In 1925, the California-based company Caterpillar Tractor Company was formed through a merger between the Holt Manufacturing Company and the C.L. Tractor Company. After a reorganization in 1986, the company became a Delaware corporation and adopted its current name, Caterpillar Inc. You can recognize machines produced by Caterpillar by their distinctive “Caterpillar Yellow” colour and the “CAT” logo.

Market monopoly

Several decades ago, Caterpillar almost had a monopoly in the world of construction materials and equipment. After World War II, countries needed to be rebuilt, and the multinational companies played a significant role in that reconstruction. This allowed the company to establish a strong market position, which it has never really relinquished despite the power of other players in the market.

Expansion in emerging economies

After World War II, Caterpillar built factories in Russia, China, Brazil, and India.

• In the Russian city of Tosno, Caterpillar built its first Russian factory in just sixteen months. The production of machine components began in the factory in 2000.
• In the People’s Republic of China, Caterpillar built the Caterpillar Suzhou factory for $125 million. This factory produces medium-sized wheel loaders and motor graders intended for the Asian market.
• Caterpillar has been producing equipment in Brazil since 1960. In 2010, the company announced the construction of a new factory in Brazil for the production of backhoe loaders and small wheel loaders.
• In India, Caterpillar has three facilities that produce machines, engines, and generator sets.

If you want to invest in Caterpillar, it’s wise to keep an eye on such expansions. When the emerging markets where Caterpillar operates perform well, the company’s profitability can further increase. It may then be attractive to buy more Caterpillar shares.

Should you buy Caterpillar shares?

There is no objective answer to whether you should invest in Caterpillar shares right now. It is favourable that the company has built a strong position in emerging economies. Particularly within these economies, the demand for construction and mining equipment is expected to increase. When you consider buying Caterpillar shares, don’t forget to analyse the competition as well. And remember, investing always comes with risks!

How to buy Chevron shares (2024) – invest in Chevron

Chevron is one of the largest oil companies in the world. It can be interesting to invest in Chevron due to its stable dividend policy. In this article, you will learn how to buy Chevron shares and also find the current stock price.

How to buy Chevron shares?

Chevron listens closely to its shareholders. Most Chevron shareholders appreciate its stable dividend policy. Even during the pandemic in 2020, they remained committed to the promised dividend, which makes it an attractive stock for generating income. You can directly buy Chevron shares through one of these stockbrokers:

Brokers	Benefits	Register
	Buy Chevron without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of Chevron! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of Chevron with a free demo!	Register

What is the current stock price of Chevron?

The stock price of Chevron is closely related to the fluctuation of oil prices. In this graph, you can see how the Chevron stock has performed over the recent period. You can also use buttons to initiate an investment in the stock.

Company data of Chevron

Below is the key company data of Chevron.

Analysis of Chevron shares

Before deciding whether to buy or sell Chevron shares, it is important to analyse the stock thoroughly. In the overview below, you can see how Chevron has performed over the past period.

Stock prices of Chevron over the last 5 days

In the table below, you can see the stock prices of Chevron for the last 5 days:

What does the Chevron stock price do in 2024?

Are you curious about what analysts predict Chevron will do in 2024 and the following years? We have combined the predictions of analysts using data from Alpha Vantage. Keep in mind that these figures are only predictions of Chevron’s stock performance and may not necessarily come true.

Why is it interesting to invest in Chevron shares?

• Well-known brand: Chevron is one of the most renowned oil and gas companies in the world, known for its quality and reliability.
• Global presence: Chevron operates in over 180 countries, including many emerging economies. The demand for gas and oil is expected to rise, particularly in these emerging economies, and Chevron can benefit from this.
• New technologies: Chevron actively invests in developing new technologies. An example of this is a new method the company uses to extract oil and gas from shale formations.
• Dividend: Chevron offers an attractive annual dividend, which makes it an appealing option for investors looking to build a stable income.

What are the risks of Chevron stocks?

• Cyclical: The demand for oil and gas fluctuates regularly, which leads to volatility in profitability. As a result, the stock price of Chevron is also quite volatile.
• Competition: Chevron has to compete with other major oil and gas companies worldwide.
• Sustainability: Governments increasingly focus on sustainable alternatives. If Chevron fails to transition to alternative energy sources in the future, their profitability could significantly decline.

What are the biggest competitors of Chevron?

• ExxonMobil
• ConocoPhillips
• BP
• Shell
• TotalEnergies

How to invest in Chevron shares?

1. Click here to compare different stockbrokers first. It only takes a few minutes to open an account with a stockbroker.
2. You can then deposit money from your bank account to your investment account. Make sure your investment account is fully activated beforehand.
3. Navigate within the trading platform to the Chevron stock and click on “buy” to open the order screen.
4. Enter the amount you want to invest in Chevron shares and click on “buy” to immediately send the order to the stock exchange.

Is it wise to invest in Chevron shares?

Investing in oil stocks is becoming increasingly controversial. Fossil fuels are harmful to the environment, and more and more people turn  away from such companies. Therefore, it is uncertain whether Chevron will still have a place in the future.However, in the shorter term, fossil fuels like oil are still essential for our economy. Supplies are diminishing while demand is increasing. In the coming years, there is still plenty of room for Chevron to grow. Therefore, buying Chevron shares can be attractive for investors looking for a stock that offers a solid dividend yield.It is advisable, however, to compare Chevron with competing oil companies. Another company may have a more efficient operation and deliver better results. You can also choose to invest directly in the price of oil. You can read about how this works in this article.

The activities of Chevron

Activities of Chevron include refining, marketing and distribution, manufacturing chemicals, and energy generation. In its refineries, nearly 2 million barrels of crude oil can be processed into petroleum products per day. The company has its own global network of gas stations for the sale of motor fuels.

The history of Chevron: the brand name

The history of this company begins in 1876 when Star Oil discovered oil, marking the start of the oil industry in California. In 1979, Star Oil was acquired by The Pacific Oil Company, which was later purchased by Standard Oil, the largest oil company in California in 1900.In 1907, the company’s name was changed to Standard Oil Company. Due to a Federal antitrust law, Standard Oil was split into 34 companies in 1911. Standard Oil Company (California) decided to continue as its own separate entity. In 1926, the company changed its name to SOCAL, which could only be used in California, Nevada, and Arizona, while the Chevron brand was used outside those states.

The history of Chevron: the foundation of the company

In 1933, SOCAL obtained a concession to search for gas and oil in Saudi Arabia. In 1936, SOCAL sold half of the concession to the Texas Oil Company, a company strong in distribution. Together, the companies formed Caltex.In 1944, the name changed to Arabian-American Oil Company (ARAMCO). After World War II, SOCAL sought American partners with capital and markets. In 1947, Standard Oil of New Jersey and Socony Vacuum became partners in the existing joint venture.In 1950, Saudi Arabia acquired half of ARAMCO, and in 1980, ARAMCO was nationalized. During 1984, Chevron Corporation decided to acquire Gulf Oil for $14 billion. The new combined entity was named Chevron Corporation. At its inception, the company became the third-largest oil company in the United States after Exxon and Mobil.

Companies acquired by Chevron

• In 2001, Chevron acquired Texaco for $44 billion. After the acquisition, the company’s name was changed to the ChevronTexaco Corporation.
• In 2005, Chevron acquired Unocal for $18 billion. Unocal had significant oil and gas reserves in Asia.
• In 2011, the company acquired Atlas Energy for $2.1 billion.
• In 2019, Chevron acquired Anadarko Petroleum for $50 billion. Anadarko Petroleum had significant interests in shale oil fields in Texas and New Mexico, among others.

When investing in Chevron stocks, it is advisable to study the impact of these acquisitions on the company’s financial results. This will help you decide whether it is a good time to buy Chevron shares.

Climate lawsuit against major oil and gas companies dismissed

In 2017, the cities of Oakland and San Francisco sued companies like Chevron, Shell, and BP, claiming that these companies were complicit in climate change due to their significant investments in fossil fuels.Due to climate change and rising sea levels, it became necessary to protect the cities against flooding, and the oil and gas companies were expected to contribute to the costs of flood defences. However, the case was dismissed by a federal court in California in 2018.Nevertheless, these companies will increasingly face pressure from climate activists in the future. This is something to consider when contemplating buying or selling Chevron stocks.

Should you buy Chevron stocks?

An increasing number of investors avoid the oil and gas companies due to concerns about the energy transition. However, I believe that this transition will take a long time, especially considering the significant importance of oil and gas in emerging economies. Due to declining reserves, the price of these commodities is likely to increase in the long term.If you have no ethical objections, investing in Chevron stocks can be interesting. However, it is always advisable to compare Chevron with other companies in the same industry. A competitor may turn out to be a more attractive investment option.

What are the disadvantages of investing in shares?

In this article, we describe the biggest disadvantages of investing in stocks. By preparing well, you can minimize the effects of these disadvantages.The biggest disadvantages of investing in stocks are:

• You can lose money with investing in stocks
• It can take a lot of time to select the right stocks
• The transaction fees on stock transactions can be high
• Investing in stocks can come with negative emotions
• In case of bankruptcy, you lose your investment
• You compete against professional investors

We briefly discuss each disadvantage to examine if it really is a problem.

Disadvantage 1: There is always risk involved

You can make a lot of money by investing in stocks. However, there are no guarantees: when you invest in stocks, you can also lose a lot of money, especially in times of falling prices.By applying smart risk management, you can reduce the chance of loss. You can do this by:

• Diversifying your investments over different shares.
• Entering gradually: this is also called dollar cost averaging.
• Only investing money that you can miss.

Practice makes perfect, and this also applies to investing. Click here to try investing for free with a demo.

Disadvantage 2: It takes a lot of time

If you want to invest in stocks successfully, you need to do a lot of research. Randomly buying stocks is not a smart investment strategy. For example, you will have to research whether:

• The company you would like to invest in is financially healthy.
• The company can keep up with the competition.
• The sector and region are performing well.
• The company has a good plan for the future.

You can use fundamental or technical analysis to investigate whether a stock performs well.If this seems like too much work, but you still want to benefit from the stock market, it may be interesting to invest in ETFs. With an ETF, you can invest in the price movements of an entire stock market index at once. Click here to read more about this method of investing in shares.

Disadvantage 3: Investing in shares costs a lot of money

Many investors discover that investing in stocks can be costly. This is especially the case when you invest in stocks with your bank. This is a shame; every dollar you pay in transaction fees limits the return you can achieve.The purchase and sale costs you have to pay when investing in stocks depend on the party with whom you trade. It is recommended to compare the costs of different brokers with each other. With some brokers, it is even possible to invest in stocks without commissions, which allows you to get started with small amounts.Click here to compare the best brokers & start investing.

Disadvantage 4: Emotions and the roller coaster ride

Stocks have only risen in the long term. However, this does not mean that you always make money with shares: especially in the short term, you can lose a lot.Both novice and experienced investors sometimes have trouble with their emotions. They sell stocks in blind panic, which results in significant losses. Click here to read how your emotions can affect your investments.

Disadvantage 5: You are the last in line in the event of a bankruptcy

When the company goes bankrupt, the chances of getting your money back are slim. For example, bondholders receive their money first. Only if there is still money left after all creditors have been paid, will you receive something as a shareholder.In practice, this means that you lose all your money when the company in which you own shares goes bankrupt. This makes it important to research the company’s standing thoroughly before investing in stocks.

Disadvantage 6: Professional competition

Finally, do not forget that as a private investor, you are competing against institutional, professional investors. Banks and insurance companies buy stocks worth billions of dollars.Beating the market with speculation is almost impossible for novice investors. Therefore, focus on the long term: by doing so, you will probably achieve the best results.

Should you invest in stocks?

As you can see, investing in stocks has some disadvantages. Before we can draw a conclusion, it is important to discuss the advantages of stocks:

• Investing in stocks can help you build wealth.
• Shares have always performed better than bonds in the past.
• You can sell stocks at any time.
• Shares can protect you against inflation.

Do you think the disadvantages outweigh the advantages? Then you may be better off investing in another investment product. However, by taking the mentioned solutions into account, the disadvantages of investing in stocks do not have to be a major problem.

How to buy Sinopec Group stocks (2024) – invest in Sinopec

The oil market is enormous, and the middle class in China is still growing. This can make it interesting to invest in a Chinese oil company like Sinopec. In this article, we discuss how to invest in Sinopec Group shares .

How to buy Sinopec Group shares?

An increasing number of countries indicate that they want to say goodbye to oil and other fossil fuels. However, it will still take a long time before alternatives really take over the market.If you would like to buy Sinopec Group shares, you can do so with a reliable broker:

Brokers	Benefits	Register
	Buy Sinopec Group without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of Sinopec Group! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of Sinopec Group with a free demo!	Register

What is the current stock price of Sinopec?

Are you curious about the current price of Sinopec stock? In the chart below, you can see how Sinopec shares perform. Moreover, you can start trading Sinopec shares directly with the buy & sell buttons.

Corporate information of Sinopec

Below, you can see the most important corporate information of Sinopec.

Analysis of Sinopec stocks

Before you decide whether to buy or sell Sinopec shares, it is essential to analyse the stock thoroughly first. In the overview below, you can see how Sinopec has developed over the past period.

Stock prices of Sinopec over the last 5 days

In the table below, you can see the stock prices of Sinopec of the last 5 days:

What are the strengths of Sinopec shares?

• Diversification: Sinopec is active in both upstream, midstream, and downstream activities of the oil and gas industry.
• Economies of scale: due to Sinopec’s large scale, the company can efficiently utilize its assets.
• Focus on innovation: Sinopec emphasizes technology and innovation, which allows new products to be developed efficiently.
• Social responsibility: the company works on programs to help local communities, which can attract investors who consider ethics.

What are the risks of investing in Sinopec stocks?

• Dependence on the Chinese economy: more than 80% of the revenue comes from the Chinese market.
• Regulation: new regulations can put pressure on Sinopec’s profitability in the future.
• Geopolitical risks: the Chinese government’s policies can put pressure on Sinopec’s performance.
• Competition: Sinopec faces significant competition from local and international players, particularly in downstream activities.

Who are the competitors of Sinopec?

• PetroChina: this is the largest Chinese oil and gas producer in the country and operates in more than 80 countries.
• ExxonMobil: ExxonMobil is one of the largest oil and gas companies in the world.
• Royal Dutch Shell: this Dutch company operates in 70 countries and carries out various steps in the production process.
• BP: a multinational with headquarters in the United Kingdom.
• Chevron: this American oil company operates in 180 countries.

About Sinopec Group

The large petroleum and petrochemical conglomerate Sinopec Group was founded in July 1988 by the state from the former China National Petrochemical Corporation.In 2018, Sinopec became a limited liability company. Sinopec Group is the largest supplier of oil and petrochemical products in China, and the second-largest producer of oil and gas in the country.In the world, the company is the largest refinery and the third-largest chemical company. With 30,000 gas stations in China, the company is China’s largest petrol station. It is responsible for 60% to 70% of all crude oil imported by China. Currently, the company focuses on developing shale gas in China.

The subsidary of Sinopec

China Petrochemical and Chemical Corporation is a subsidiary of the Sinopec Group. The group transferred a significant portion of its activities to this subsidiary.In 2000, Sinopec had 25 refineries with an annual capacity of 130 million tons of crude oil, which accounted for approximately 50% of all Chinese refining capacity. The shares of Sinopec are  listed on the Hong Kong, London, and New York stock exchanges. Sinopec Group owns 70% of the shares of this subsidiary.

Sinopec and the environment

In November 2020, Sinopec established a strategic partnership with three institutions to jointly research the peak in carbon emissions and carbon neutrality in the energy and chemical industries. Opinion leaders and experts in the fields of climate change, energy, and chemical industry are conducting research on the strategic path to achieve carbon neutrality by 2030.

History of Sinopec

The China National Petrochemical Corporation, the predecessor of Sinopec Group, was founded in 1983. This company was established to build and operate refining capacity and petrochemical production. The company took over over 90% of the refining by local governments and various ministries.Sinopec Group, together with BP, undertook underwater exploration in Angola as the first Chinese oil company. The company also searched for gas in Saudi Arabia. In 2009, the Switzerland-based company Addax Petroleum was acquired for CAD 8.27 billion. This company, which is active in West Africa and the Middle East, is one of the world’s largest oil producers.The company can increase its profitability with these international investments in the future, which could make buying Sinopec shares attractive.

How to invest in Sinopec stocks?

• Step 1: Open an account with a reliable stock broker.
• Step 2: Verify your account by uploading a copy of your passport.
• Step 3: Deposit money from your bank account to your broker account.
• Step 4: Place an order on the Sinopec share.

Analysis: should you buy Sinopec shares?

You may be wondering whether to buy Sinopec shares. Always research whether a company like Sinopec fits within your risk profile. It is wise to compare the strengths and weaknesses of the company with each other.For example, if you are very concerned about the environment, it may be better to avoid investing in Sinopec stocks. However, if you are interested in investing in the Chinese raw materials’ industry, Sinopec may be worth a consideration.

How to buy Electrolux shares (2024)? – invest in Electrolux

Electrolux is a well-known Swedish electronics company that includes popular brands such as AEG and Zanussi. Do you want to invest in Electrolux by buying its shares? In this article, you can read about how to invest in Electrolux stocks!

How to buy Electrolux stocks?

Do you have confidence in the future of Electrolux? The company’s electronics are popular, especially its kitchen products. You can buy Electrolux shares with a reliable broker:

Brokers	Benefits	Register
	Buy Electrolux without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of Electrolux! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of Electrolux with a free demo!	Register

Why might it be interesting to invest in Electrolux shares?

Electrolux manages several well-known electronic brands. The company is active in various markets, which reduces investment risks. Electrolux is also known for its innovations in sustainability, which enables it to stay ahead of the competition.Another positive point for investing in Electrolux stocks, is that the company is constantly looking for appealing companies to acquire. As a result, the company has grown significantly from a small local player to a multinational.

What are the risks of buying Electrolux stocks?

Electrolux faces intense competition and is also dependent on the European market. Moreover, the economic situation strongly determines whether the company can achieve good results: when the economy is weak, people spend less money on new electronic equipment.

Who are the biggest competitors of Electrolux?

• Whirlpool
• LG Electronics
• Samsung Electronics
• Miele
• Haier

What is the stock price of Electrolux?

Are you curious about how the Electrolux stock price development? In the graph below, you can see at what price you can buy Electrolux shares:

Company information of Electrolux

Below are the key company details of Electrolux.

Stock prices of Electrolux over the last 5 days

In the table below, you can see the stock prices of Electrolux for the last 5 days:

Origin of Electrolux

In 1919, Elektro Mekaniska merged with Lux, which created the company Electrolux. In 1957, the company changed its name to Electrolux. Today, Electrolux AB is the world’s largest producer of household appliances. The company’s products are sold under brand names such as Electrolux, Zanussi, and AEG.

The history of Electrolux

In the 1960s, the company was struggling. According to the CEO, the company fell behind because it was too small compared to foreign competitors. Therefore, the company needed to grow significantly. In the 1970s and 1980s, Electrolux acquired many companies, and it became a globally recognized company.

Markets of Electrolux

The majority of its revenue, around 60%, comes from the sale of kitchen appliances. The sales of washing machines accounts for approximately 20% of its revenue.The company’s most important markets are Europe and North America, each accounting for 30% of total sales. Latin America, which accounts for 20% of total sales, is also an indispensable market.

Companies acquired by Electrolux

Zanussi and AEG are two companies that were acquired by Electrolux. The loss-making Italian company Zanussi was acquired in 1984, and in 1992, the household division of the German company AEG was acquired.In September 2014, Electrolux announced plans to acquire the household division of General Electric for over 2.5 billion euros. The acquisition would strengthen the company’s position in the North American market.However, there was resistance from regulators. The acquisition would lead to less competition in the household appliance market. Electrolux decided to cancel the acquisition in December 2015.

Vacuum cleaners made of recycled and reused materials

In 2020, Electrolux took a significant step towards circularity of household appliances. Together with Stena Recycling, the company developed a vacuum cleaner which was made of 100% recycled and reused materials. The parts are derived from used computers, hair dryers, and vacuum cleaners.Such sustainable appliances can have a positive impact on the company’s stock price, since investors increasingly prioritize sustainability.

Should you buy Electrolux shares?

Electrolux is a large international producer of household appliances, which can me it a potentially interesting investment. Before you consider an investment, it is wise to compare Electrolux with its competitors.Furthermore, keep a close eye on the financial performance of Electrolux. This way, you can determine whether Electrolux is an appealing investment for you.

How to buy GameStop shares (2024): invest in Gamestop

Are you considering investing in GameStop shares ? GameStop became known as a memestock, but is it still wise to buy GameStop shares? In this article, you can read an extensive analysis + you can consult the latest stock price.

How to buy GameStop shares?

Are you curious about which brokers you can buy GameStop shares from? In the overview below, you can see which brokers offer Gamestop stocks:

Brokers	Benefits	Register
	Buy Gamestop without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of Gamestop! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of Gamestop with a free demo!	Register

In the past, trading in GameStop shares was regularly halted. For example, Robinhood made it impossible for users to buy Gamestop shares. This shows how important it is to choose a reliable broker when investing in stocks.

What is the current stock price of GameStop?

Are you curious about the current stock price of GameStop shares? In the graph below, you can see how GameStop shares perform. With the buy and sell buttons, you can start trading GameStop shares directly.

Company data of GameStop

Below, you can find the most important company data of GameStop.

Analysis of GameStop

Before deciding whether to buy or sell GameStop, it is essential to analyse the stock thoroughly. In the overview below, you can see how GameStop has performed over the past period.

Stock prices of the last 5 days

In the table below, you can see the stock prices of GameStop of the last 5 days:

What will the GameStop price do in 2024?

Curious about what analysts think GameStop will do in 2024 and the years that follow? We have combined the predictions of analysts with data from Alpha Vantage. Remember that this number is just a prediction about the price trend of GameStop and that this prediction does not have to come true.

What are the biggest opportunities when investing in GameStop shares?

• Hype: Investors who have achieved good results with investments in GameStop have kept a close eye on the hype. Reddit’s investors strongly influence the price.
• Well-known brand: GameStop is a recognizable brand in the video gaming industry.
• Diverse products: GameStop offers various gaming products, including used games and consoles.
• Expansions: GameStop can expand into new markets and improve its results.

What risks should you consider when buying GameStop stocks?

• Dependence on physical stores: GameStop is dependent on physical stores, while more and more people shop online.
• Competition: GameStop is facing intense competition from other (online) video game retailers. Moreover, an increasing number of people are buying their games directly digitally through platforms such as Steam and Epic Games.
• Volatility: the stock price of GameStop is very volatile because it has become a meme stock.
• Limited innovation: GameStop is struggling to build a digital presence.

What are the biggest competitors of GameStop?

• Best Buy
• Walmart
• Amazon
• Target
• Game

The explosion of GameStop in 2021

Most people know GameStop mainly because the company skyrocketed in value on the stock markets in a very short period of time. This happened in January 2021, when small investors continued to buy GameStop shares.Users on Twitter and Reddit discovered that hedge funds had built up large short positions. They decided to collectively buy massive amounts of GameStop stocks. As a result, the hedge funds were obliged to buy back the stocks and a short squeeze occurred.The stock price then rose from $20 to $480 in a short period of time. The price of the stock eventually declined, in part because many brokers blocked trading in the stock. Ultimately, the situation surrounding the GameStop stock showed how much power retail investors can have when they join forces.

How to invest in GameStop stocks?

1. First, open an account with a reliable stockbroker.
2. Deposit money into your brokerage account.
3. Select the GameStop stock and enter the amount you want to invest.
4. Press buy to send the order to the stock market.
5. Regularly evaluate your investment.

About the company GameStop

GameStop is an American retail chain in the field of video games and other forms of consumer electronics. Gamestop also sells merchandise from famous games. The company was founded in Grapevine, Texas and has branches in the United States, Canada, Australia, New Zealand, and some countries in Europe.GameStop mainly sells consoles and video games from major providers such as Xbox, PlayStation, and Nintendo. They sell their products from almost 5,900 stores worldwide, some of which consist of subsidiaries such as Micromania, EB Games, and ThickGeek. GameStop also offers games and merchandise through online channels.

GameStop as a publicly traded company

GameStop has a long history on the stock market. The company was founded in 1984 and has been doing business on the stock market since 1988. At that time, the company was still known under the name Babbage’s.Only when the founders of the company started acquiring other companies in consumer electronics and entertainment, the name was changed to GameStop in 1999. The company has regularly acquired other stores during its existence.

Will GameStop’s value increase significantly again?

The enormous rise in GameStop’s stock price was not sustained. A month after reaching its highest price, the stock price had already dropped significantly. The chance of GameStop’s stock price achieving a similarly high level again is small.In the long run, stocks are valued based on their performance. If you want to invest in GameStop stocks, it is therefore recommended to check the latest business results.

Should you buy GameStop stocks?

It is questionable whether GameStop is an interesting long-term investment. The majority of GameStop’s profits come from its physical stores. However, the trend has been clear for years; people increasingly buy their games online through a service like Steam.GameStop is struggling to strengthen its digital presence. It is therefore questionable whether GameStop can compete with its competitors. Therefore, it is advisable to carefully study the business results before buying GameStop stocks.

How to buy Roblox stocks (2024) – invest in Roblox

Do you want to invest in Roblox shares? The company is capitalizing on an active trend and could therefore be a good investment. In this article, we discuss how to buy Roblox stocks.

How to buy Roblox shares?

Do you have confidence in Roblox’s future plans? Then it may be attractive to buy the stocks for the long term. However, do your research first and determine if this is the best time to invest in Roblox stocks.Are you curious where you can buy Roblox shares at a low cost? The table below shows you which brokers you can trade Roblox shares with:

Brokers	Benefits	Register
	Buy Roblox without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of Roblox! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of Roblox with a free demo!	Register

What is the current stock price of Roblox?

Are you curious about the current stock price of Roblox shares? The chart below shows you how Roblox shares perform. Additionally, you can use the buy and sell buttons to start trading Roblox shares.

Company information of Roblox

Below are the key company details of Roblox.

Analysis of Roblox

Before deciding whether to buy or sell Roblox stocks, it is important to thoroughly analyse the share. In the overview below, you can see how Roblox has developed over the past period.

Stock prices of the last 5 days

The table below shows you the stock prices of Roblox for the last 5 days:

What will Roblox’s stock do in 2024?

Curious about what analysts think Roblox will do in 2024 and the years that follow? We have combined the predictions of analysts with Alpha Vantage data. Keep in mind that this figure is only a prediction about the future stock performance of Roblox and that this prediction may not come true.

Why could it be smart to buy Roblox shares?

• Growing market: the online gaming and user-generated content market is still growing rapidly.
• Many users: Roblox attracts many young users, which creates strong communities of developers, further accelerating the growth of the platform.
• User-generated content: because users create their own content, a diverse range of experiences can be offered. This keeps users engaged, which is positive for Roblox.
• Revenue: the company offers developers various ways to make money, such as virtual currencies and in-game purchases. This allows Roblox to monetize their platform.
• Innovation: Roblox is known for its high level of innovation in development tools and support.
• Virtual currency: most of the revenue comes from in-game purchases made with virtual currency.
• Blockchain integration: Roblox is experimenting with NFTs, which could be a smart move given the hype around crypto.

What are the risks of investing in Roblox stocks?

• Dependency on key developers: If important developers decide to leave Roblox, it could put pressure on the company’s results.
• Supervision: It can be a challenge to supervise user-generated content. In the case of safety problems, Roblox can face negative publicity or even fines. Additionally, most users are young, which makes moderation even more important.
• Competition: Roblox faces a lot of competition from other gaming platforms.
• US focus: Roblox is mainly known within the US and has little market share abroad.
• Trends: Young users often switch to a new trend quickly. This is a big risk for the future results of Roblox.
• Declining sales: After the pandemic, people spend less time on their computers, which is not good for Roblox’s results.

What are the biggest competitors of Roblox?

• Minecraft: With Minecraft, players can build a virtual world. This game has a loyal user base.
• GameMaker Studio: Developers can create games for different platforms with this tool.
• Unity: With this game engine, developers can create and share games across multiple platforms.
• Fortnite: This battle royale game is popular among a young audience and attracts large numbers of players.

What should you look out for when investing in Roblox stocks?

When buying stocks, it’s important to thoroughly research the situation first. For example, study whether the company operates in a growth market: is there a good chance that the company’s activities will increase in value in the future? In the case of Roblox, the answer is likely yes: gaming becomes increasingly popular, and the target audience is also becoming broader.Of course, there are many companies active in the gaming industry. Therefore, before buying Roblox stocks, it’s essential to research if the company can keep up with the competition. Roblox seems to keep up with the competition by offering a certain level of accessibility. This allows people with little gaming experience to get started as well. Additionally, the platform is offered for free, which makes further growth possible.Good timing is key when buying Roblox stocks. Your investment results can fluctuate greatly depending on your strategy. The price of Roblox stocks doubled after the IPO in 2021, only to decline by more than 70% afterwards.

About Roblox

Roblox is a platform for playing platform games where players go on adventures and try to reach higher levels. Users can create their own levels, but they can also try the worlds of other users. This means that Roblox is not only a gaming system for playing games, but also for creating games and meeting new people.Because Roblox is a fairly accessible game, the company can easily attract new players. Gaming is becoming increasingly popular and is no longer just for nerds. Investing in Roblox can therefore capitalize on a growing trend.

A free platform with lucrative earnings

Roblox is a gaming system that is free to use for players. All you have to do is create an account, where you indicate your username, date of birth, and optionally your gender.Within the game there are different themes that can be used to build worlds, from fantasy to action and from fighting to scavenger hunts. All of this is done with simple and recognizable characters.Roblox makes money from advertising revenue and in-game purchases. The game uses fictional money in the form of Robux. This revenue model is proven effective: the popular game Fortnite developed by Tencent also operates on this model. This could make it interesting to invest in a company like Roblox.

The target audience of Roblox

In the past, video games were mainly intended for children, but nowadays, many age groups like to game.With over 200 million active users per month on the platform, it’s not surprising that many types of people use the platform.

How to invest in Roblox?

1. Step 1: Open an account with a reliable stockbroker, so you can start trading stocks right away.
2. Step 2: Deposit money from your bank account to your stockbroker account.
3. Step 3: Select the Roblox share and enter the amount you want to invest. Then press buy to send the order to the stock market.

Should you buy Roblox stocks?

Gaming is a growth market, but there is also a lot of competition. The young target audience often switches to a new trend, which can cause Roblox to lose many users in a short period of time. This makes an investment in Roblox shares quite risky. Therefore, consider whether an investment in Roblox fits your risk tolerance.

How to Buy Bitcoin with Intesa Sanpaolo (2024)

Are you interested in buying crypto with your Intesa Sanpaolo bank account but unsure how to do it? In this comprehensive guide, we will explore how you can buy Bitcoin with Intesa Sanpaolo, one of the largest banking groups in Italy. We will cover the necessary steps to connect your Intesa Sanpaolo account with a crypto exchange and the bank’s stance on cryptocurrencies.

How to Buy Bitcoin with Intesa Sanpaolo?

To buy Bitcoin with Intesa Sanpaolo, you need to connect your bank account with a cryptocurrency exchange that supports Intesa Sanpaolo transactions.

Brokers	Information	Register
	Speculate in popular crypto products with eToro! Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more	Register
	Speculate on increasing & decreasing crypto prices with the CFD provider Plus500 using a demo account. 82% of retail CFD accounts lose money.	Register

Here are the steps to buy Bitcoin with Intesa Sanpaolo:

1. Choose a reputable crypto exchange and open an account.
2. Verify your identity by providing the necessary documents.
3. Deposit funds from your Intesa Sanpaolo account to the crypto exchange.
4. Select Bitcoin in the trading platform.
5. Enter the amount of Bitcoin you want to buy and click on “Open Position.”

What is the Crypto Policy of Intesa Sanpaolo?

Intesa Sanpaolo has not explicitly banned cryptocurrency transactions, but it is essential to be aware of the bank’s policies and any potential restrictions. As regulations around cryptocurrencies continue to evolve, Intesa Sanpaolo may update its stance on crypto transactions. It is crucial to stay informed about any changes in the bank’s policies that could impact your ability to buy Bitcoin with Intesa Sanpaolo.

About Intesa Sanpaolo

Intesa Sanpaolo is one of the largest banking groups in Italy and a leading European financial institution. With a strong presence in Central and Eastern Europe, the Middle East, and North Africa, Intesa Sanpaolo offers a wide range of banking and financial services. The bank aims to provide innovative solutions to its customers while maintaining a strong commitment to sustainability and social responsibility.

How Can You Buy Crypto Safely with Intesa Sanpaolo?

To ensure a secure experience when buying crypto with Intesa Sanpaolo, follow these safety tips:

1. Choose a reputable and regulated crypto exchange.
2. Enable two-factor authentication (2FA) on your exchange account.
3. Monitor your bank account for any suspicious activity.
4. Be cautious of phishing attempts and scams.
5. Keep your private keys and passwords secure.

What is Bitcoin?

Bitcoin is the first and most well-known cryptocurrency, created in 2009 by an anonymous person or group known as Satoshi Nakamoto. However, it operates on a decentralized network called blockchain, allowing for secure and transparent transactions without the need for intermediaries like banks. Bitcoin has gained widespread adoption as a digital asset and is considered a pioneer in the world of cryptocurrencies.

What is Crypto?

Crypto, short for cryptocurrency, refers to digital or virtual currencies that use cryptography for security. Cryptocurrencies are decentralized and operate on blockchain technology, which enables secure, transparent, and tamper-proof transactions. Some popular cryptocurrencies include Bitcoin, Ethereum, Litecoin, and Ripple.

What are the Risks of Buying Crypto with Intesa Sanpaolo?

When buying crypto with Intesa Sanpaolo, it is essential to be aware of the risks associated with cryptocurrency trading. These risks include:

1. Market volatility: First of all, Cryptocurrency price fluctuations are very high, which can lead to significant losses or gains.
2. Regulatory risks: Governments and financial institutions may impose new regulations or restrictions on cryptocurrencies, affecting their value and usability.
3. Security risks: Cybercriminals may target your crypto exchange account or personal information, leading to loss of funds or identity theft.
4. Liquidity risks: Some cryptocurrencies may have limited liquidity, making it difficult to buy or sell them at desired prices.

Conclusion: Can You Buy Crypto with Intesa Sanpaolo?

Yes, you can buy crypto with Intesa Sanpaolo by connecting your bank account with a reputable crypto exchange. However, it is essential to stay informed about the bank’s crypto policy, follow safety tips, and understand the risks associated with cryptocurrency trading. By doing so, you can confidently buy Bitcoin with Intesa Sanpaolo and explore the world of cryptocurrencies.

Bitvavo fees: how much does it cost to trade at Bitvavo?

Before you start trading cryptos with Bitvavo, you probably want to know how much it costs. In this article, we will discuss how much you will pay when investing in bitcoin and other cryptocurrencies at Bitvavo.Tip: click here to open an account with Bitvavo & pay no transaction fee on your first € 1000!

How much does trading with Bitvavo cost?

How much you pay in fees at Bitvavo depends on how you trade. There is a distinction between people who take the market and people who make the market.

Taker fee

If you buy or sell a crypto directly, you will be charged higher fees. Because the crypto market is decentralized, Bitvavo has to create its own market. When everyone wants to buy a crypto directly, this can be more challenging.

Maker fee

If you want to trade against lower fees, you can also place an order. With an order you create a market, since Bitvavo can see how many people want to buy and sell a crypto at a certain price. The costs for people who create a market are therefore much lower.

Discount for high trading volume

Bitvavo also looks at your trading volume when determining the amount of fees you pay. If you trade a large amount of crypto in a 30-day period, you will get a substantial discount. If you trade a lot, Bitvavo is even willing to give you money!

What are the costs at Bitvavo?

In the table below, you can immediately see what the fees are at Bitvavo:

Volume 30 days	Taker fee	Maker fee
€0+	0,25%	0,15%
€100.000+	0,2%	0,1%
€250.000+	0,16%	0,08%
€500.000+	0,12%	0,06%
€1.000.000+	0,10%	0,05%
€2.500.000+	0,08%	0,04%
€5.000.000+	0,06%	0,04%
€10.000.000	0,05%	0,03%
€25.000.000	0,04%	0,03%

If you buy €10,000 worth of Bitcoin in a month, you will pay a 0.25% transaction fee. Remember that you pay transaction fees both when buying and selling cryptocurrencies. This means that when you sell your crypto again, you pay another 0.25% transaction fee.

Is Bitvavo cheap?

Bitvavos fees are low compared to other crypto providers. At many other providers, you sometimes pay more than 1%, which is of course a huge difference. This makes trading with Bitvavo attractive: you will never pay more than 0.25% over the traded amount.

How much does it cost to deposit money with Bitvavo?

Depositing money is free at Bitvavo when using iDEAL, SEPA credit transfer and Bancontact. You can also use EPS Überweisung (1.75% fee) and Giropay (1.75% fee).

Are the costs important?

Many novice investors misjudge the importance of transaction costs. In the long run, a difference of 0.25% or 0.5% can make a huge difference. This is due to the principle of compound interest.When you trade cryptos regularly, you always lose a small percentage in transaction fees. If your return on a crypto transaction is 100%, and you pay 1% in transaction fees, you also lose 1% in return on each transaction. It is therefore worthwhile to carefully compare the costs of different crypto platforms. By doing so, you avoid wasting a lot of money, and you can optimize your returns.

Watch out for the spread

Finally, it is important to keep a close eye on the spread. The spread is the difference between the buying and selling price of a crypto. When supply and demand are not well-balanced, the spread can (temporarily) rise sharply. Your transaction will then suddenly become considerably more expensive.This often happens when there is high volatility, for example, when many more people want to sell than buy. It is advisable to wait awhile before executing the transaction if the spread is high. By doing so, you avoid losing a substantial amount of money due to bad timing.

FAQ about Bitvavo’s costs

How to deposit money at Bitvavo?

Do you want to start trading cryptos at Bitvavo? Follow the simple steps in this short guide… before you know it, you’ll be trading bitcoin and other cryptocurrencies!

Step 1: open an account with Bitvavo

Before you can deposit money to Bitvavo, you need to open an account. Don’t have an account at Bitvavo yet? Then use the button below to open an account and pay no fees over your first € 1000 of transactions:

Step 2: Choose the desired payment method

Within your account, click on Deposit to deposit an amount to your account. You can only use bank account numbers that are linked to your account. You can link a bank account by transferring a small amount of money. It is important that the account is in the same name as your Bitvavo account. You can deposit money with Bitvavo using the following methods:

• SEPA transfer
• iDEAL
• Bancontact
• EPS Uberweisung
• Giropay

Step 3: Enter the amount of money you wish to deposit

You can then choose the amount you want to deposit to your account. The screen below shows how this works if you want to add €100 to your account via bank transfer.

Step 4: Start trading!

After the money has been added to your account, you can start trading immediately. Read the following articles if you need some help with this:

• In the Bitvavo manual, I discuss the platform
• In the article investing in bitcoins I discuss how to buy bitcoins

How can you deposit cryptocurrencies such as Bitcoin at Bitvavo?

It is also possible to deposit crypto from an external platform to Bitvavo. To achieve this, first navigate to the crypto you wish to deposit. Then press the deposit button to discover your wallet address. It is important to copy this wallet address without mistakes. If you make a mistake here, you could lose your crypto permanently!

Frequently asked questions

What is Bitvavo?

Are you not sure what Bitvavo is? Then you’ve come to the right place! Here you can what Bitvavo is & how you can trade on this exchange yourself.

What is Bitvavo?

Bitvavo is the largest and cheapest crypto exchange based in the Netherlands. Bitvavo is active in the entire European Union and accepts international customers as well.A crypto exchange is a place where you can exchange fiat money into cryptocurrencies such as Bitcoin or Ethereum. Opening an account with Bitvavo is completely free. When you open an account with Bitvavo using the button below, you will also pay absolutely no transaction fees on your first € 1000:

What can you do at Bitvavo?

You can use Bitvavo to quickly buy cryptocurrencies. At Bitvavo it is possible to add money to your account using bank transfer or iDEAL. You can then convert your hard-earned euros to any of the over 150 cryptocurrencies offered.One of the advantages of Bitvavo are the low costs: these are never higher than 0.25%!

All in one solution

A big advantage of Bitvavo is that it is an all-in-one solution for cryptocurrencies. In a way, you can consider Bitvavo to be your bank, but exclusively for cryptocurrencies.You can use your account at Bitvavo for trading cryptocurrencies. It is also possible to store your cryptos at Bitvavo and keep a balance there.The Bitvavo platform is reliable: they do everything they can to make the exchange as secure as possible. Click here to read how Bitvavo ensures its reliability.

Who are behind Bitvavo?

Bitvavo was founded in 2017 by Jelle de Boer and Tim Baardse. Meanwhile, the company has grown considerably and its headquarters can be found at Herengracht 250. Would you like to get in touch with Bitvavo? Then you can send an email to [email protected].

Would you like to know more about Bitvavo?

On Trading.info you can find several articles that can help you on your way with Bitvavo:

• In the Bitvavo review you will discover the strenghts & weaknesses of this exchange.
• In the Bitvavo manual, we discuss how to trade cryptos
• Click here to examine Bitvavo’s fee structure

Frequently asked questions about Bitvavo

How to buy Gazprom Energy stocks (2024)?

Gazprom Energy is a large Russian company that exports natural gas to Europe and China. Despite the politically unstable situation, it may be interesting to invest in Gazprom stocks. In this article, we discuss how and where to buy Gazprom shares.

How to buy Gazprom shares?

Are you curious about which brokers are the best for trading Gazprom shares? Then check out the overview below with the best brokers for trading Gazprom:

Brokers	Benefits	Register
	Buy Gazprom without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of Gazprom! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of Gazprom with a free demo!	Register

Why can it be interesting to invest in Gazprom shares?

• Large reserves: Gazprom has the largest natural gas reserves in the world.
• Diverse portfolio: Gazprom has a diverse range of gas fields and pipelines in different countries.
• Market leader: Gazprom is the market leader in the natural gas industry and has built a strong position, especially in Europe.
• New projects: Gazprom has built the Nord Stream 2 and has also established new connections with Asia.

What risks should you consider when buying Gazprom stocks?

• Political risk: Gazprom is owned by the Russian state. The position of Gazprom has been significantly worsened by the war in Ukraine.
• Environment: Natural gas has a negative impact on the environment.
• Volatility: Fluctuating prices of natural gas can affect the company’s results.
• Transition: Natural gas is increasingly being replaced by environmentally friendly alternatives.

What are Gazprom’s biggest competitors?

• Royal Dutch Shell
• ExxonMobil
• BP
• Chevron
• TotalEnergies

Invasion of Ukraine by Russia

Due to Russia’s invasion of Ukraine, the stock price of Gazprom is under strong pressure. Sanctions make it increasingly difficult for the company to make a profit. Moreover, the Russian rubble has taken a nosedive, further weakening Gazprom’s competitive position. Even with the sharply rising natural gas price, the stock price of Gazprom has declined significantly.Did you know that it is also possible to take a short position on platforms like eToro? This means that you are speculating on a declining stock price.If you already own Gazprom shares, remember that Gazprom is the largest supplier of natural gas to Europe. Due to all the uncertainty, the stock is currently trading at less than 2 times its earnings. Do you trust in a positive outcome of the conflict? Then there is a chance that the stock price will rise again in the future.At the same time, there is fear that Russia will seize all foreign investors’ assets in response to the sanctions. For example, foreigners currently cannot sell Russian stocks. Therefore, be careful with investments in Russian shares: these investments are very risky!

What is the current Gazprom stock price?

Are you curious about the current price of the Gazprom stock? Below, you can see at what price you can buy Gazprom shares:

Company data of Gazprom

Below, you can see the most important company data of Gazprom.

Stock prices of Gazprom over the last 5 days

In the table below, you can see the stock prices of Gazprom of the last 5 days:

How to invest in Gazprom stocks?

An investment in Gazprom shares can be interesting: the company controls a large part of the world’s natural gas reserves. But how can you invest in Gazprom shares?

Step 1: open an account with a broker

As a private investor, you can invest in Gazprom shares through your broker. Due to the political tensions, the Gazprom stock may not be tradable with every broker. Therefore, conduct research on the different brokers when you specifically want to buy Gazprom shares. Click here to compare brokers.

Step 2: do research

Study Gazprom’s competitive position and financial situation. The natural gas price strongly determines the stock price of Gazprom. In addition, the political situation in Russia is also very critical for the stock price of this share.

Step 3: determine a strategy

Some investors actively speculate on the price development of Gazprom. This offers the advantage that you can react actively to the latest market developments. At the same time, it is difficult to beat the market, which increases the chance of losses. As an alternative, you can buy Gazprom stocks for the long term and apply doller cost averaging.

Step 4: buy Gazprom shares

When you have decided that you want to invest in Gazprom stocks, you can place an order. You can choose between a market order and a limit order. With a market order, you buy the Gazprom shares at the current price, and with a limit order, you set a price that you wish to pay for the shares.

Is it wise to invest in Gazprom stocks?

Power of the Russian government

Not all investors welcome Gazprom with open arms. This is because Gazprom is controlled by the Russian government: the government holds the majority of the shares.They also regularly use gas access as a political weapon. When the government cuts off supplies to certain countries, this is bad for Gazprom’s business results. It is, therefore, important to keep an eye on the Russian government when considering an investment in Gazprom stocks.

High dividend

However, there are also plenty of reasons why an investment in Gazprom shares can be interesting. For example, the company pays out a high dividend percentage: the Russian company wants to pay out 50% of net profit.

New pipeline to China

The newly constructed pipeline to China also ensures that the company has become less dependent on Europe. An investment in Gazprom stocks can, therefore, certainly pay off: it is essential to keep a close eye on the political and economic situation in Russia.

Competition

Don’t forget about the competition, like Novatek and Rosneft. The price of Gazprom shares correlates strongly with the oil price; it is, therefore, advisable to keep a close eye on the oil price when you consider an investment in Gazprom.

About Gazprom

Gazprom is one of the largest gas suppliers worldwide, with a 15% share. In 2005, the Russian government acquired a majority stake with 50.0002% of the shares. The gas company supplies natural gas to many countries in Europe, especially to former Soviet states and Central and Eastern European countries. European energy companies such as Essent and Nuon have received natural gas from Gazprom for decades.In May 2007, Gazprom EP International B.V. was established in Amsterdam. This is a special branch of Gazprom outside Russia and the former Soviet states. The company holds a 51% stake in the Nord Stream gas pipeline through the Baltic Sea.Gazprom also has a 9% stake in the BBL pipeline, which connects the Netherlands with Great Britain.

History of Gazprom

In the 1980s, Soviet President Mikhail Gorbachev merged the ministries of oil and gas as part of his economic reform program. This led to the creation of the Russian state-owned company Gazprom on August 8, 1989. This state-owned company was responsible for the production, distribution, and sale of gas.The company was privatized in November 1992. The transformation of the state-owned company into a national corporation was achieved by selling vouchers. The sale of these vouchers was subject to strict conditions and limited the percentage of foreign shareholders to 9%.The privatized Gazprom signed its first partner agreements with foreign companies in 1993. Partnership agreements were then signed with Finnish Neste and French Gaz de France.

Gazprom supplies gas to China

In 2014, Russia and China signed a mega-contract. Gazprom, on behalf of Russia, will supply natural gas to China for 30 years. With China, Russia has gained a second major foreign customer after Europe. This contract has an estimated value of 400 billion dollars.To enable the delivery of natural gas, the “Power of Siberia” pipeline must be constructed. The construction of this connection requires an investment of approximately 55 billion dollars.Since China is a new customer of Gazprom, the company is now less dependent on its political relationship with Europe. The increased tensions are a threat to Gazprom, and this new cooperation strengthens the company’s position. This can be a good reason to invest in Gazprom by buying shares.

Should you buy Gazprom stocks?

After Russia’s invasion of Ukraine, it has become difficult for foreign investors to invest in Russian companies. There is a lot of uncertainty: Russia can confiscate foreign assets at any time. Investing in Gazprom stocks, therefore, carries significant risks.Despite all the political problems, Gazprom still achieves good results. Energy prices have risen sharply, which increases the profit margin.

What are the best stocks to invest in for 2021?

After what seemed like ages, 2020 is finally over. For all those who survived, congratulations. The worst might already be behind us.

All of us faced several trials in one way or another, be it personal, professional, financial and while things might not be OK on all fronts, lessons were definitely learnt. One such lesson that a lot of us experienced was the need for investments. Investments into assets that will help generate income as well as appreciate in value to help tide us over the tough times. We here at trading.info have got just the recommendations for you to begin your investment journey in 2021. Here is a list of the best shares of 2021

What is the best place to buy shares?

Before you start buying the best shares of 2021, you might be interested to know the best broker for buying & selling shares in 2021. When you press the button, you can immediately compare the best brokers for buying & selling shares:

Qudian (Ticker: QD)

We begin the list with what some believe is the source of all happiness and for others the root cause of all evil: Money. The holiday season has just passed us by. Time of giving and gifting. Often one finds themselves short on cash while buying gifts. Credit cards to tend to be maxed out around this time. This pinch was felt harder this year as compared to the rest.

Banks and financial institutions take too long or are often unwilling to extend credit often due to credit report issues or small loan size. Let me introduce you to a little known company called Qudian (Ticker: QD). Qudian aims to fill the gap by offering credit on the go. It is a Chinese microfinance app found in 2014 that provides small size loans from 150-215 USD[1].

It has displayed strong revenue growth with stellar profits and continuously strong profit margins (32%-45%)[2].

The world facing an economic recession has proved to be a boon for the company as people need that small credit to pay the bills and run their house. Its margins have not been impacted throughout the pandemic.

Its share price has seen a significant hit due to the fears surrounding the Chinese governments crack down on micro lending firms but that has been overhyped and stretched too far. The governments stance has been clear about cracking down on unlicensed firms and licensed firms shall not be affected. Qudian which was backed by Alibaba’s Ant Financial faces no such qualms and had even announced a buyback[3].

This recent regulatory scare, however, has reinforced the need for Qudian to diversify its business. While its earlier ventures of car purchase financing and e-learning might not have been very successful, its new venture Wanlimu launched in tie up with Secoo (Asia’s largest online integrated upscale products and services platform)[4] is set to become a roaring success.

Wanlimu is a luxury e-tailer app catering to luxury products and services for both men and women. It offers a wide selection of brands from Versace, Gucci, and Burberry to Prada and Michael Kors among others with its product lines including perfumes, apparels, fashion accessories and bags. A combination of a shopping app along with in built credit offering has a synergy to it that resonates across the board.

At its current price, Qudian trades at a Price/Sales of 0.2 and P/E of 0.7x 2019 earnings and 2.5x and 3.7x of Sep 2020 Quarter earnings respectively which is rock bottom as compared to global peers who trade at P/E between 5x-38x.  With the crackdown out of the way, revenue while down but having faced no long term significant damage, world economies coming back to track and a diversification in business which is set to experience rocket growth, not to mention the unleashing of pent-up demand among consumers that will see a rise in demand for small credit as well, an earnings as well as multiples expansion cannot be ruled out.

All these ingredients combined in synergy with an improving global scenario have resulted in an opportunity for a lucrative investment.

Tattooed Chef (Ticker: TTCF)

We all love our meat (I know what you are thinking you naughty boy, but I am referring to actual consumable meat) but if there is one thing we learnt in 2020, it is that all it took to shut the world down was one little unknown person in some remote corner of the world eating meat that he/she was not supposed to.

There is an increasing awareness across the world about the health effects of meat consumption and that coupled with a growing rise of veganism means the world has begun to move away from meat consumption. Although no one is saying that meat consumption will stop and one had better walk away from those that spout this lest one gets considered to be a part of that tribe, meat consumption will decrease as those that cannot consume it for health or lifestyle reason will migrate to plant-based alternatives

Additionally, there is just not enough livestock to feed a growing population which is expected to get to 10 billion by 2050. Veganism is also on the rise in the USA and although initially catering only to the elite and upper middle class, technology advancements and increased competition among suppliers in this segment, one can see prices coming down as well which would increase its appeal among the masses as well. One such player striving to make its product cost-effective and comparable to its traditional meat counterparts is Tattooed Chef.

Tattooed Chef manufactures, distributes and retails plant-based alternatives to traditional meals all in a frozen ready to cook variety. It grows its own raw material in Italy, imports them to its plant in California where it processes them and manufactures and packages frozen meals with plant-based alternatives, for e.g. cauliflower pizza, Mexican style street corn, veggie hemp bowl, zucchini spirals with basil pesto (pasta alternative), organic acai bowl etc., all priced at competitive prices to traditional alternatives and accessible at retail stores like Walmart.

Given a choice between a healthy meal and not so healthy one at the same price and people are likely to choose the healthier option as the most common excuse for not choosing healthy foods is their high prices.

Revenue has grown from 2.1 million USD in 2009 to 148 million USD in 2020[5]. The company operates in the frozen food segment. The global frozen plant-based food segment currently valued at 2.8 billion USD and the US market for the same at 914 million USD is poised to experience a strong growth with more and more families having both spouses working and a frozen alternative to traditional meal makes it easy and quick to cook.

There are apprehensions as is in all new things regarding frozen foods, but as history has shown, convenience always trumps apprehensions and at the end, this will be no different. Tattooed Chef, however, is not content with only prepared and meat based frozen foods but is also eyeing the traditional dessert market where it seeks to compete with traditional egg based as well as frozen desserts.

As the world population balloons and the demand for alternate food sources emerge, the world will turn to a plant-based diet. It is possible and is practised by India today where 40% of the population (one of the largest in the world) follows a vegetarian only diet[6]. Disruptions are a norm in today’s fast-moving world and the livestock industry is no exception. Protein alternatives especially when made to proper taste have the potential to disrupt a major economic sector. While originally confined to high and upper middle income class countries and groups, efforts by companies like Tattooed Chef and others have ensured that even the masses can access it.

Government favour and intervention and improved technology can accelerate the change. After all, if a traditional macaroni and a healthy macaroni both cost the same and taste the same, who will eat the traditional one?

Phillips 66 (Ticker: PSX)

The best investments are often found when they are down in the dump. The best shares that one can ever find will be among the filth, one just needs the fortitude to wade through it and the ability to take the risk for it. One whole sector that has taken a massive beating so far this year has been Energy, especially oil. The recent Wonder Woman film WW64 while had its fair share of criticism, but what it did bring to light is the oil boom of the 1980s. Black Gold was the theme of the first part. While all sheen is now lost from the black gold as energy stocks hit all-time lows, it now seems to have hit rock bottom. After all there is a limit to which oil will go down, it will obviously not come for free.

Most of the beating of low demand for oil due to COVID-19 has been borne by the exploration and upstream companies (i.e. oil producers). However, just by the virtue of their association with the oil sector, a lot of midstream and downstream companies (i.e. refining, pipelines, oil marketing and petrochemicals) have taken a beating as well. What investors often don’t understand that these companies often have the luxury of price rise pass through. It means that any rise in crude oil prices are passed right along to the end customer without affecting their margins. One such company down in the dumps is Phillips 66.

You must have seen the iconic Phillips 66 gas stations along the route. The company deals in midstream, refining, pipelines, petrochemicals and marketing specialities. With the energy sector, especially crude taking a beating due to low demand, PSX has also taken one (down 37% for the year) alongside its oil producing counterparts like Chevron. However what has escaped notice is that copper prices are hitting a 7-year high on unprecedented demand[7]. This is looking to be the beginning of a commodity super cycle and the next to follow will be steel and crude. It means that we are looking at the bottom of a cycle, one where one should be accumulating and waiting for the super cycle to begin. Phillips 66 might not only be able to maintain its margins, it will be able to raise them as well once the demand of crude shoots up and prices begin to go up.

The company has already begun preparations to participate in this anticipated demand. It has begun buyback of its shares and taking on long-term debt to finance its capital expenditure. This is known as gearing and the company is taking on leverage to improve its operational efficiency which will come to fruition when the prices begin to rise[8]. With the stock down as it is, it is a perfect time to begin accumulating. Like a coiled spring storing potential energy on suppression, ready to unleash it when the pressure is let go, the stock will explode upwards once the selling pressure is gone and the crude demand sees a rise along with the price.

Roblox

The next best share to invest in 2021 that we have has not yet become public but is planning to do so this year. While many companies and industries suffered during the pandemic, one industry went from success to success expanding and even hiring new people. That is gaming. With people cut off from physical contact and an enforced lockdown, online multiplayer games picked up steam. One such gaming company is Roblox Corporation.

Roblox is an online game platform and game creation system where users can play games created by other users. The creators get a cut of the in game money spent by players. Real currency is converted to in game currency and then used to purchase skins, weapons and stuff for gameplay improvement. So while the games are free to play, to make progress one needs to pay and this forms the revenue of the company[9]

The amount of money being spent by users has kept on increasing and while the figures for 2020 are not out yet due to it being a private company, the company has announced a developer payout of $250 million USD which at a 25% cut projects its revenue to $1 billion USD[10]. The nature of the platform is such that anyone can create games and publish and anyone can play them free thus leading to hundreds of thousands of games. One can come online each day to find a different game to play. This element of never-ending discovery entices users for repeated visits thus ensuring stickiness of customers.

With the pandemic raging on and newer strains emerging, the kids if not the world will definitely be spending more time inside and with the desire to meet and hang out with friends, what better place to do so than an online gaming platform with an endless supply of games.

Tech Sector

The next investment we have for you is not a conventional one. It is more of a short play and should only be undertaken by those who can understand and absorb the risk. Warning: The potential for loss is unlimited in shorting stocks and only experienced investors and traders should pursue this.

One of the biggest beneficiaries of this pandemic were the tech companies. The ability to work unhindered during the lockdown and the increased demand for remote connectivity and other work from home solutions has seen the fortunes of tech companies soaring. The S&P 500 IT Index has reached an all-time high[11]

It has even outshone its well-known parent index the S&P 500[12].

This has now reached dangerous proportions. In market as in life, all things tend to reverse to the mean. This phenomenon is known as mean reversion and markets are no different.

The S&P 500 IT Index is 20% above its 200-day moving average. That is the potential distance it has to go for mean reversion. The whole sector is levitating at dangerous heights. If we were to drill down a bit, let us look at Apple. It is now larger than 96% of all countries in the world (GDP size) and at such a large size, it is just not possible to grow at the rates that the market expects. Not only that, the top 4 companies leading the tech revolution are all larger than 92% of the countries in the world. This serves to highlight the excessive valuations accorded to the tech sector on the basis of projected growth rates unrealistic to achieve[13].

As much as the case is made for shorting, in shorting timing is the most crucial part. As John Maynard Keynes stated “markets can remain irrational for longer than you can stay solvent”. It is difficult to accurately predict when the tech sector will correct. But correct it must and hence it is advisable to deploy strategies that can be put on and can stay valid for a longer-term period to take advantage of the correction in that period. One such method is through purchase of LEAPS (Long Term Equity Anticipation Security). They are like options but with longer time to expiration. This gives one an advantage of fixed downside and unlimited upside. The Disadvantage is if the correction does not materialize before the LEAPS expire, the money paid for purchasing the LEAPS is lost.

Conclude: If there is one thing that this year has taught us, it is to gain control of one’s finances and manage it well. The above recommendations may help you achieve some portion of that control as well as build the wealth that will serve as a cushion

DISCLAIMER: your capital is at risk. This article is not meant as an investment advice, but merely as a commentary on the markets. Always conduct your own research and only invest with money that you can afford to lose.

References

[1] Average ticket size

[2] Qudian financials

[3] China crackdown on micro finance

[4] Tie up with Secoo

[5] Company Analyst Presentation

[6] Plant Based Meat Market 2020 by Arizton Advisory & Intelligence

[7] Commodity supercycle

[8] Phillips 66 Company Presentation

[9] Roblox revenue and mobile spending

[10] Roblox will pay out 250 million to developers in 2020

[11] S&P 500 IT Index Price Chart

[12] S&P 500 IT Index outshines S&P 500 index

[13] IMF GDP Data

Gambling on the stock exchange

Not everyone understands how investing works: as a result, many people believe that investing is the same as gambling. However, by investing smartly, you can achieve consistently good results on the stock market. On the stock exchange, you can trade shares, commodities and cryptocurrencies, among other things. Not everyone applies a clear system: by gambling you can of course, through pure luck, also make a profit on the stock market. But whether this is wise…

What is the best way to bet on the stock market?

When investing, you always have two options: you can buy a stock, commodity or index fund or short it. When you buy something, you get a positive result as soon as the price rises and when you sell something, you get a positive result when the price falls.

If you were to gamble and open investments entirely randomly, there is a 50% chance that the price will move in the predicted direction. However, you have to take the transaction costs into account: if you gamble and do not apply a smart strategy, you could lose money in the long run because of these costs.It is therefore not advisable to gamble on the price developments of stocks. It is wiser to investigate the stock you consider buying. In this way you can control the odds so that you can achieve a positive result sooner.Before you start gambling or investing, it is advisable to open a free demo. This makes it possible to discover that stock trading is more than just gambling. Would you like to know where you can try investing for free with a demo? Then take a look at our overview of best brokers:

How do you make a good bet?

If you really prefer to open an investment blindly without a strategy, it is best to do so when important news comes out. When the SNS Bank went bankrupt many people went short on SNS stocks. As a result of the bankruptcy, the stock was suddenly valued at a value of $0, which meant that everyone who went short on this share earned an enormous amount.

Without leverage, the return would have been 100%, but if you had used a leverage of one in five it would have given you a return of 500%. Speculation can be quite profitable, but do not forget that this type of gamble is also extremely risky. Had you bought the stock you would have lost 100% on the position!Opening a short position: You can make money when the price of a stock falls.The extent to which someone gambles on the stock market varies: there are few people who buy and sell stocks at random. Speculators buy shares in the hope that something at least slightly likely will come true. During the coronary pandemic, for example, you saw many investors buying shares in the companies that developed vaccines. At that time, it was not yet certain which companies would succeed in delivering a successful vaccine. If they do, however, it would boost the stock price.Speculating or taking a deliberate gamble on a stock can therefore be sensible in some cases. However, you must understand the risks involved. With this type of investment, you can easily lose your entire investment.

Beware of a gambling addiction!

Beware of a gambling addiction when you start betting on the stock exchange. There have been many cases of people becoming addicted to making investments, and they have lost a lot of money doing this. It is important to keep in mind that it is impossible to win consistently by gambling. Therefore, only gamble with money you can afford to lose!If you want to achieve consistently good results, you will still have to apply certain selection criteria. Investing on its own is not a game of chance. By analysing the charts with technical indicators, you can predict the direction of the stock price. If you can handle risks well, it is possible to achieve good results.

Is investing in shares the same as gambling?

Investing in stocks does not have to be the same as gambling. However, there are certainly some similarities: for example, in both activities you have to make a choice that involves risk. Also, both gamblers and investors apply risk analysis. Reducing risk as much as possible to maximize profits plays a role in both activities.

However, there are also clear differences: gamblers take the risk of losing their entire investment, whereas this is generally not the case with investments. With an investment, you can limit your maximum loss by using a stop loss.Moreover, the emphasis when investing in shares is more on the long term; this can easily be many years. If you invest money in the stock market on a staggered and regular basis, there is a good chance that you will achieve a positive return over a long period of time. However, if you only gamble, you will only lose more money in the long term.Finally, an important difference between trading stocks and gambling is the setting. Gambling is considered as a form of entertainment, while investing is a more serious activity. The bells and music are therefore left out when you start investing with a broker.

Why is it better to invest?

When you have to choose between investing and gambling, it is better to opt for investing. When you invest, you run a lower risk than when you gamble. For example, you can spread your risks over different investment products, and you can limit your maximum loss by using a stop loss. As a result, your losses will increase a lot less quickly when you invest than when you gamble.

Another advantage of investing is the lower amount of stress you experience. When you gamble, the tension around the outcome causes a lot of stress. When investing, this tension is much less present, as the emphasis is more on the future.A final argument in favour of investing is that you have much more control when you start investing. You can decide for yourself how your money you invest. In the casino you have no influence at all: you have to choose from a limited number of games, and you have to abide by the rules of the casino.

Is gambling on the stock exchange a bad thing?

There are many concerns about people gambling on the stock exchange. This is because some people may not realize that you can lose a lot of money by investing money. If many people gamble on the stock market but believe that they are smart and are going to make a lot of money, it can be a bad thing. It is therefore important that brokers inform customers sufficiently about the risks of investing.

Do you really want to learn how to invest well?

Do you really want to learn how to invest well? Then it is important to immerse yourself in the various analyses. You can make use of fundamental analysis and technical analysis. In fundamental analysis, you mainly look at the financial figures of a company. With technical analysis, you try to predict the future price development of a stock by looking at the chart.

Do you want to learn how to be more successful with trading? Do you want to change from a gambler to a real trader? Then use the button below to learn how to trade better:

What is a stock split?

Companies can choose to go for a stock split. An organization always has a good reason for splitting its stocks. Most companies that proceed to a stock split do so to improve the marketability of the stocks.Stock splits are becoming less and less common. This is because more and more investors are trading shares online, with online brokers such as Plus500. When trading shares online, it is possible to invest in smaller packages of stocks. This is why stock splits are not always necessary.

What is a stock split?

In the case of a stock split, the old stocks are replaced by a number of new shares. This is done according to a fixed ratio. If you, as a shareholder, are confronted with a stock split, you will receive more stocks with a lower nominal value per stock. The total value of your investment remain the same.

As a shareholder, you will be informed in writing of any stock split. In the letter you will receive, you will read exactly what the share split entails. As mentioned earlier, the total value of your investment will always remain the same. You will simply receive more shares with a lower nominal value.

An example of a stock split

Suppose company X has issued 1000 stocks with a value of 50 pounds. The total value of the stocks of company X is 50,000 pounds. Now the company decides to split the shares. Shares are no longer worth 50 pounds each, but 25 pounds each. This means that every shareholder with one share now receives two shares. The total value of the shares remains the same, but the number of shares doubles.

Why would a company split its stocks?

Most companies that decide to carry out a stock split do so to increase the tradability of the stocks. This means that the group of investors on which a company can focus in the sale of shares increases. Investors with a small budget often prefer to buy shares at a lower price. In this way, the marketability of a share has a direct influence on its price. After all, when more people (can) buy the share, the price rises.

If you carry out a stock split as in this example, then your share suddenly becomes an interesting investment for a larger group of people. You can not only target investors with a budget of 50 pounds per stock, but also investors with a budget of 25 pounds per stock. This means that the marketability of your share will increase, which will hopefully have a positive effect on the stock price.Due to the increased tradability of the stock, market liquidity normally also increases. This means that it is easier to buy and sell shares.

The effect of a stock split on the price

A stock split does not affect the direct value of a company. The total value of the stocks remains the same. However, the organization may become worth more in the immediate future. If the share price rises as a result of a stock split, the value of the organization will increase. However, this is not always the case. Most companies benefit from a higher share price as a result of a stock split, but this is no guarantee.

What is a reverse split?

A company can also proceed to a reverse split or a reverse stock split. This can happen when a share has fallen sharply in value. If you own 2 shares with a value of $25 and the company decides to reverse split with a ratio of 2:1, you will receive one stock with a value of $50. In this case, too, the value of the company will not change.

Companies often reverse-split to counter extreme exchange rate fluctuations. When a share is quoted at one cent, the price can quickly rise 100%. Many stock exchanges prohibit this type of small stock because it would incite speculation. Companies can then proceed to a reverse split to maintain their listing on the stock exchange.A reverse split is often not a positive signal for the investor. Although the reverse split does not directly affect the value of your shares, it does give a negative signal. Investors often react emotionally, as a result of which the price may fall further after the announcement.In rare cases, a reserve split can also be used to reduce the number of shareholders. Investors who hold too few stocks receive money instead of a new stock.

Do companies always split their shares?

Not all companies split their stock price. The shares of the Berkshire Hathaway investment company, for example, are not split. The shares of the Warren Buffett stock market fund are therefore worth tens of thousands of dollars. He later decided to put B shares on the market, making it easier for private investors to buy the stocks as well.The most expensive fund on the Dutch stock exchange used to be Moeara Enim, which was the holding company for Koninklijke Olie. The share traded at approximately 100,000 guilders.

How is a stock split carried out?

A stock split is carried out by exchanging old shares for new stocks. A share split cannot be carried out without an amendment to the articles of association and a shareholders’ meeting. An official notice must also be issued via the press. The exchange of shares normally takes place automatically, unless you still own them physically. In that case, you have to bring the stocks to a bank to make the exchange possible.

Short positions and a share split

Even short positions are not affected by an equity split: the number of short positions simply increases, so that on balance nothing changes.

What are preferred stocks?

Preference shares or preferred stock are shares that give the shareholder additional rights. In this article, we will discuss the meaning of preferred stock: what advantages do preference shares give you?

What are preferred stocks?

Preference shares or preferred stocks are shares with additional rights. The holders of preference shares have priority in the payment of dividends. The holder of a preferred stock receives a fixed, stable dividend percentage on an annual basis. This percentage is not related to the profitability of the company. Even if the company goes bankrupt, holders of preference shares have priority. Some preferred stocks give the shareholder even more advantages.

In exchange for these extra benefits, the party who buy the preference shares often cannot sell them within a certain period.

What do preferred stocks offer?

Holders of preference shares (preferred shareholders) usually receive the right to preferential treatment regarding dividends. This means that the holder of a preference share receives dividends earlier than the holder of ordinary shares. Only when there is money left after this payment, the other shareholders may receive dividends.

In most cases, the holder of a preference share receives a fixed amount of dividend. In some cases, however, the dividend depends on an external indicator. This can be an interest rate index such as the LIBORI.In short, preference shares offer shareholders, among other things, guaranteed dividends. Besides this, there are other possible rights the holder of preferred stock can enjoy in some cases.

Other possible rights

Holders of preference shares may sometimes enjoy other benefits. For example, some preference shares give the holder priority in the event of a liquidation. This means that if a company goes bankrupt, the holder of a preferred stock will receive part of his money back sooner. Bondholders, however, get their money back before the holders of preference shares do.In some cases, the holder of preference shares also receives special voting rights. They can then have a say in special cases. This may be the case when another company can be acquired or when the company wants to issue new shares.

What is the main types of preferred stock?

Companies often issue preferred shares with two goals. They want to finance the company, or they want to protect the company.

The financing preferred stock are shares issued to finance the company. This type of share pays a fixed return that does not depend on the operating result. In some cases, however, the payout may be related to market interest rates. This type of share is used as an alternative to issuing a loan.The other type is the protection preferred stock. These shares are there to protect the company against a hostile takeover. It is possible to offer these shares to the parties that are on the side of the company. This dilutes the interest of the hostile shareholder and thus reduces his or her voting rights.

Different types of preference shares

There are different types of preferred stock. Below you will find the different types of preference shares and their meaning.

Cumulative preference shares

A company may incur a loss. In the case of cumulative preference shares, unpaid but promised dividends are recorded.When the company returns to profitability in the future, the dividends recorded will be paid to the holders of cumulative preference shares. Holders of non-cumulative shares do not benefit from this arrangement. They only receive dividends after all the recorded dividends are paid to the holders of the preferred shares.

Callable shares

The majority of the preference shares are redeemable, giving the issuer the right to repurchase the shares on a specified date and for a specified price. Shareholders are often tied to the callable shares for a certain period.When interest rates fall, the company may recall the preference shares. The company can then issue new shares at a lower fixed dividend payment.

Prior preferred stock

This is the highest ranking type of preferred share. If there is only enough money available to pay the dividend for the holders of these shares, other shareholders will be skipped.

Preference preferred stocks

Holders of preference preferred stocks receive their dividend after the holders of the prior preferred stocks, but before the holders of all the other types of shares. Sometimes a company issues preference stocks several times. When this is the case, the holders of the longest existing shares are first in line when dividends are paid out.

Convertible preferred stock

The holder of this type of preference share may at any time exchange their share for a fixed quantity of ordinary shares. This can only be done in one direction. As soon as you make use of this, you cannot exchange your shares back to preferred stocks.An alternative form of this is the anti-dilutive convertible preferred in which the investor receives a fixed dollar amount of shares instead of a fixed number of shares.

Participating preferred stock

The holder of these shares will receive his normal dividend. In addition to the normal dividend, the holder also receives an additional dividend when certain targets are achieved within the company. This can be achieving a certain profit or achieving a certain number of sales.

Perpetual preferred stock

With this type of share, the invested capital is not repaid at a fixed time. This is the case for the vast majority of preference shares.

What are the advantages of preferred stock?

Preferred shares offer you the necessary advantages as an investor. With a preference share, you receive a fixed dividend percentage. Even when the profitability of the company is not going so well, you will receive this fixed amount. This gives you a nice, predictable result.

You also have a more favourable position with a preference share when the company goes bankrupt. As a shareholder, there is a good chance that you will lose your money in the event of bankruptcy. After all, creditors have priority over the owners of shares. If there is money left after all the creditors have been paid, you have priority over the normal shareholders.

What are the disadvantages of preferred stock?

Preference shares have the necessary advantages. However, there are also disadvantages associated with preferred shares. For example, a fixed dividend percentage can be disadvantageous. When the profitability of the company increases, you do not receive a higher return.

Another disadvantage of a preferred stock is that you do not have the right to vote. With a preference share, you cannot vote at the annual shareholders meeting.Preference shares are also fairly scarce in many European countries. In America, however, you can easily buy preferred stocks. 

Who buys preferred stock?

Preferred stocks are purchased by individual investors or large organizations. Large institutions are the most common buyers of preferred shares. This is because they have many fiscal and legal advantages that do not exist for individual investors.

Because these institutional investors invest with large amounts of capital, preferred stocks can be an attractive vehicle for businesses to attract investments. For this reason, public companies like to issue large amounts of preferred shares. It is a quick and safe way to get the necessary cash.

What are institutional investors?

Institutional investors are (often huge) organizations that invest in shares on a large scale. Think of funds, 401 ks (the American pension funds) and hedge funds.

These are all large organizations that invest many billions in shares in one fell swoop. These institutions often have a big impact on the price developments of shares. Such bulk investments allow stocks to rise immediately. After all, these are large sums of money that are invested in one fell swoop in the share.

Why do companies issue shares?

When an organization is founded, the internal shares are often divided among the founders. They become the shareholders of the company. These can be one or more people. Each shareholder usually has an equal number of shares and therefore an equal amount of control.An organization can then choose to offer part of the shares publicly. The reasons for this vary. Shares can be issued to prevent bankruptcy. In other cases, the money raised with the IPO is used to make new investments.

The IPO

A company like Tesla survived because of the shareholders until recently. Without the sale of public shares they would have never been able to establish such an innovative company. An IPO (initial public offering) is the moment when an organization sells part of its shares through the stock market.Often an organization joins a specific stock exchange. This can be, for example, the LSE. In many cases, the share is also available at other exchanges.The new shareholders also have a say in the organization, and they can propose changes. As the owner of shares purchased through the stock exchange, you generally have very limited control over the organization. The reason for this is simply that you do not own enough shares to be seen as a ’major shareholder’. Nevertheless, your vote at the shareholders’ meeting does count.However, there is a risk that a large party will buy many shares. They will then have a larger voting right and will therefore be able to make changes within the company. The founders do not always agree with these changes.

Preference shares and ordinary shares

When an organization engages in a ‘public sale’ of shares, they do not want certain parties to gain too much power within the company. That is why, first of all, there is often already a maximum of shares that a party can buy in one go. As a result, there will never be a huge majority with one party.Besides this, companies ensure that two types of shares are available. This ensures that they are protected. These are the preferred stocks and the normal shares (common stock). There are different classes of shares. In most cases, you see this classification back in the letters A and B.Often the A-class shares are not visible through the standard stock exchange. All shares you can buy at that moment are automatically all B shares. However, some companies offer both shares on the market, but you can only buy them if you are a professional investor. This is a prestigious title given to you by the SEC (Securities Exchange Commission) on Wall Street. Whether you get this title depends on your assets, papers, financial background and other specifications.

The advantages of preferred stock for companies

Companies often issue preferred stocks to raise money for investments. A major advantage of preference shares is that the risk of this form of capital is low. After all, when things go badly, a company does not have to pay out a dividend. When the company would have borrowed the money through a loan, they would still have to pay interest. Moreover, the buyers of this type of share often do not have voting rights, which means that the companies still retain control over their company.Preference shares are sometimes also used to prevent a hostile takeover. More shares are then issued to dilute the percentage of the party trying to take over the company.

How to buy Saudi Aramco stocks (2024)?

Saudi Aramco is the largest oil company in the world. But how can you actually buy shares in Saudi Aramco? In this article, you will learn everything you need to know about investing in Saudi Aramco stocks!

How to buy Saudi Aramco stocks?

You can buy Saudi Aramco shares from a reputable stockbroker. In the overview below, you can see which brokers offer the ability to invest in Saudi Aramco shares:

Brokers	Benefits	Register
	Buy Saudi Aramco without commissions. Your capital is at risk. Other fees may apply.	Register
	Speculate with CFD's on increasing & decreasing prices of Saudi Aramco! 82% of retail CFD accounts lose money.	Register
	Benefit from low fees, an innovative platform & high security!	Register
	Speculate on price increases and decreases of Saudi Aramco with a free demo!	Register

Why can it be interesting to buy Saudi Aramco shares?

• Large reserves: Saudi Aramco has one of the largest oil reserves in the world, which makes it one of the largest companies in the world.
• Diversification: Saudi Aramco is involved in multiple steps of the production process, which gives the company more control over the process.
• Low production costs: Due to low production costs, Saudi Aramco can achieve higher profits.
• Strong financial results: Saudi Aramco has consistently delivered strong financial results lately.
• Collaborations: Saudi Aramco collaborates with companies such as Total and Reliance Industries.
• Government: Saudi Aramco has the full support of the government of Saudi Arabia, which can contribute to the company’s stable situation.

What are the risks of investing in Saudi Aramco shares?

Investing in Saudi Aramco stocks is not without risks. In this section of the article, we discuss the main risks of investing in this stock.

Dependence on oil prices

As with other oil companies, as a shareholder of a company like Saudi Aramco, you are highly dependent on oil prices. According to estimates from Bernstein, the company’s profits increase by $1.5 billion for every $1 increase in oil prices.The price of oil increases when the economy performs well. Planes and machines consume oil and when there is a lot of production, the demand for the black gold naturally increases. When you invest in a company like Saudi Aramco, you are therefore highly dependent on the global economy.

Lack of control

As a shareholder in Saudi Aramco, you have no control. Normally, as a shareholder, you have a vote and can participate in decisions about the future of the company. In this case, however, the government is the majority shareholder of the company.As a shareholder, you are therefore completely dependent on the decisions made by the government. You may ask yourself whether you have enough confidence in the Saudi Arabian government before buying the shares.

Human rights

If you believe it is important to invest in companies that engage in socially responsible practices, then you should probably avoid Saudi Aramco. The country does not take human rights very seriously, and buying Saudi Aramco stocks directly supports the regime.

Limitations on dividend

The promised dividend payouts of the Saudi Aramco stock are lower than those of a company like Shell. If you invest for income, it’s better to buy a stock with a higher dividend payout.

Political instability

Political instability is a significant risk of investing in an exotic region like Saudi Arabia. When you invest in America or Europe, you know your rights as a shareholder. However, investing in Saudi Arabia is less certain.The region as a whole is also quite unstable. Not long ago, for example, the oil fields of Saudi Aramco were attacked by drones, causing large fires and a significant drop in production capacity. The company has managed to rebuild this capacity, but this instability brings uncertainty to investors.

Limited diversification

A final risk of investing in Saudi Aramco is the limited risk diversification. Many oil companies have oil fields in different regions, but Saudi Aramco’s oil fields are only located in Saudi Arabia. If something goes wrong in this region, the stock’s value will drop immediately.

What are the biggest competitors of Saudi Aramco?

• ExxonMobil
• Royal Dutch Shell
• BP
• Chevron
• Total

How to invest in Saudi Aramco stocks?

1. First, open an account with a professional stockbroker.
2. Take the time to activate your investment account.
3. Next, deposit sufficient funds into your stock account.
4. Select the Saudi Aramco stock within the investment software.
5. Enter the amount you want to invest and press the buy button.
6. Regularly evaluate your investment for the best results.

What does the company Saudi Aramco do?

Saudi Aramco is primarily engaged in the exploitation of the large oil fields in Saudi Arabia. In 1948, the largest oil field in the world was discovered in this country. Initially, various foreign companies were involved in exploiting these fields. However, the state wanted more control over these oil fields and decided to buy out the other parties. Nowadays, the government of Saudi Arabia owns this company.In total, Saudi Aramco claims that the stock of reserves amounts to as much as 260 billion barrels. The accuracy of these reserves is not entirely clear. The country produces over 3 billion barrels of oil annually, but the reserves have never been adjusted. It could, therefore, be the case that these reserves are lower in practice.Saudi Aramco is currently responsible for the production of 10% of the world’s oil. A large part of the oil is exported to other countries. 65% of the oil goes to other countries in the Middle East, and 15% goes to America. The country is currently heavily dependent on oil production: more than half of the total domestic product comes from the sale of oil.

Why did the company go public?

Saudi Aramco went public to raise more money for other investments. The future of oil is uncertain: with sustainability becoming increasingly important, oil is becoming less popular. Saudi Arabia, therefore, wants to become less dependent on this market.With the modest IPO of Saudi Aramco, the government has not even brought 2% of all shares to the market. They raised $25 billion, which they can use to invest in other sectors.

Should you buy Saudi Aramco stocks?

You may be wondering if it is wise to buy Saudi Aramco shares. Despite the fact that oil is becoming less popular, global economies are still heavily dependent on this commodity. Saudi Aramco has access to large reserves, which means that the company can almost guarantee large profits in the future. Moreover, the company produces at low costs, which further improves the profitability of the company.However, it is essential to keep a close eye on the oil price: Saudi Aramco’s profitability depends on the price it can charge for its product. The competition from sustainable energy sources will also increase in the future. When economies switch to alternative energy sources in the future, the profitability of the company may come under pressure.It is also important to realize that the government of Saudi Arabia controls the company. Therefore, the interests of the shareholder are not always a priority. It is critical to take these risks into account before investing in Saudi Aramco stocks.

Taking quarterly figures into account

When a company is listed on an exchange and sells stocks, is required to report the quarterly figures to the stockholders every three months. You can take these figures into account when investing in stocks. It is possible to respond to this immediately after the announcement. For people who invest in CFDs, this is mainly about estimating how the market will react to the company’s published quarterly figures.

Expectations and projections

The publication of quarterly figures of companies is something that every investor looks forward to. Especially people who wish to invest in stocks in the long term should pay attention to these. From the figures on the revenue and profit of the past quarter, you can see if the company is doing well. Before the publication is actually made, however, there will be all kinds of ideas about what exactly will be made known. Before the publication, many involved parties will present their forecasts and expectations.The expectations and forecasts that people have before the quarterly figures are announced are in most cases quite accurate. After all, during the year many companies already know what they have been doing in the past period. Are they, for example, working on an expansion in a certain part of the world because turnover is growing rapidly here? Or has another company been taken over to be active in a broader market?

Publication of quarterly figures

As an investor in stocks, you can already capitalize on the expectations and forecasts. If you do this, you can often achieve the highest profits. There is a higher risk involved because the final figures are not yet clear. For full certainty about the quarterly figures, you have to wait for the official announcement. At that moment you have to react quickly to the quarterly figures to take advantage of them.When the quarterly figures of a company show that their profit or revenue has increased enormously in the last three months, in many cases this means that there will be an increase in the stock price. This is also the case if the figures are higher than expected in the forecasts. A smart move is at that time to invest in CFDs that capitalize on an increase in the sock price. Investors will react to the favourable figures and the stocks will thereby become more popular.

Capitalizing on the results

If the opposite result is announced in the financial presentation of the company, you can also expect a different response from investors. Disappointing results ensure that people will prefer to sell their stocks. They no longer find it attractive because of the potentially bad future of the company. The result is a decline in the price and in this situation you can also earn by investing in CFDs. After all, you can go short in stocks, and then you earn money if the price falls.Incidentally, negative quarterly figures are not guaranteed to have such a predictable effect. It is mainly about what the stockholders expect to hear from the company. Should the revenue and profit figures disappoint, this does not necessarily mean that the company is not on course for their future plans.Some companies do not aim to make big profits in their first few years on the stock market. After all, a company’s IPO is usually focused on raising money to make investments. In that case, all the money raised is invested to realize goals in the future. The quarterly figures are mostly negative for these companies, but this is entirely in line with the expectations of investors.

Why do stock prices rise & fall?

If you can estimate when stocks are going to rise or fall, you can make a nice profit on the stock market. A fall or rise in the value of shares can have many causes. In this article we discuss the various reasons that can make a share rise or fall in value.

Why do shares change in value?

Stock prices are constantly rising and falling: this is due to the constant game of supply and demand. When more investors want a share, the price rises. At the same time, you see that the price of a share falls when many people sell it. If you want to achieve good results with investments in shares, it is important to make predictions about the future demand for a certain share.

Profit forecast and quarterly results

Expectations of the amount of profit that a company will make influence the stock price. If there is a very positive profit expectation, then this gives a company share a good future perspective. As a result, more investors will want to buy a share. A negative profit forecast, on the other hand, obviously has the opposite effect.The expectations that are expressed about a company’s figures are interesting because they allow you to predict increases and decreases in the future. However, you only get certainty after the quarterly figures are announced. At that moment, shareholders will know for sure what results have been achieved and will act accordingly.The strongest movements can be seen when the realized figures deviate strongly from expectations. On the stock exchange you see that expectations are often already incorporated in the price. If the figures are disappointing, the price of a stock can suddenly fall sharply while positive results can lead to a sharp rise.

Social and economic developments

Developments taking place in the world also have an effect on the stock market. If, for example, there is an uncertain political climate in a certain part of the world or a threat of war, the shares of companies in this region will fall. Natural disasters are also a cause of sudden changes in the price of stocks.Incidentally, negative developments in the world do not always negatively influence the value of stocks. For example, a threat of war in one part of the world may increase the value of shares in another part. The competitive position of companies in the ‘safe areas’ then improves. When the uncertainty on the stock market increases, you see that investments that are regarded as safe increase in value: examples of this are gold and silver.A good example of a political situation that can have a major impact on stock prices is the trade war between America and China in 2020. As both countries increased tariffs on products, trade between them decreased, which is bad for business results. The extra measures taken against Huawei, for example, have put considerable pressure on the results of the company.Therefore, if you want to invest in specific regions, it is certainly worth investigating what is going on. That way, you can better predict whether share prices will rise or fall in the future.

Inflation and interest rates

The inflation and interest rates set by the Central Bank also influence the share price. Inflation is the rise in the price level of products in a region. For bonds, inflation is bad news: future payments are worth less. Stocks are slightly less affected by inflation: companies can increase the cost of their products. However, the materials they have to buy also cost more. As a result, a company does not really benefit from inflation: only real growth in profits has a positive effect on the share price.The interest rate does have a clear effect on the price of shares. A low-interest rate creates a favourable climate for companies, as they can arrange financing at low cost. At the same time, you see that consumers are also buying more products: after all, it is less attractive to save money and taking out consumer credit is cheaper. These developments contribute to the (future) profitability of the company, allowing stock prices to rise further.Moreover, with lower interest rates you see more money flowing to the stock markets. This happens because it is not possible to achieve a positive return elsewhere. When a lot of money is available, it is also easier for banks to invest. When more shares are bought, you see that share prices rise.Is the interest rate rising? Then it is important to be vigilant! A rising interest rate can put pressure on the share price, since it can adversely influence business results.

Dividend policy

A changed dividend policy can also cause the price of a stock to rise or fall sharply. When a company starts to pay out more dividend, you see that the stock price often rises. On the contrary, a decrease in the dividend can put pressure on the stock price. This is certainly the case with shares that have always been known as stable dividend shares.A good example of this can be seen in Shell’s share price in 2020. This company is known to pay out a stable dividend. Under the influence of the corona pandemic, they were unable to pay the recurring dividend, which meant that the dividend had to be reduced considerably: as a result, many investors sold their shares, causing the stock price to fall significantly.In the long term, however, you have to be careful when a company increases the dividend payments. When a company pays a dividend, this money cannot be invested in new projects in the future. On the contrary, profitable projects can contribute to a rising stock price in the future. When a company pays out too much dividend, this can put pressure on profitability and the share price in the future.It is also important to remember that the stock price drops temporarily after dividends have been paid out. If the company pays out $1 per stock, the share price will fall by $1. This makes sense: after the dividend payment there will be $1 less per share in the company.

Takeover rumours

Takeover rumours are almost always positive for shareholders. When a company expresses interest, the stock price rises sharply. The other company often pays a premium when the takeover goes ahead. When the takeover is eventually called off, you see that the stock price drops back to its old level.

Stock market trend

When investing in stocks, it is wise to determine the general trend. Sometimes the stock market is clearly in an uptrend or a downtrend. In a downtrend you will see that the shares mainly decrease in value and investor confidence is then low. Extreme cases of this can be seen during a crisis: think, for example, of the credit crisis or the debt crisis. In a downtrend, you can look for good times to buy back shares.In an uptrend, stock prices mainly move upwards. This is, of course, a good thing when you own many shares. A sharp rise can be a good time to sell some of your shares and take a stock price gain.

Stock split

A stock split also causes the price of a share to fall. However, a stock split does not reduce the value of your shares: the stock price is deliberately lowered. A company can do this to make shares more accessible to retail investors. If more retail investors buy the shares, the stock price may rise over time.With a stock split, the value of a share is reduced: for example, your share is then worth $5 instead of $10. For each stock you own, you receive two, so that on balance nothing changes.

Shorters & short squeeze

As an investor, you can bet on a fall in the stock price by shorting. With a short position, you promise to deliver a share in the future at a certain price. If the share price subsequently falls, you can buy the stock cheaper and sell it at the higher price.A short position carries risks: when the price rises sharply, investors want to buy back the shares quickly. This can happen, for example, when a company publishes unexpectedly good figures. The short sellers then try to buy back the stocks quickly to meet their delivery obligation. If the shorters buy the stocks en masse, the share price may rise further. We also call this a short squeeze.In rare cases, there may even be a phenomenon called cornering. When a company has a limited number of shares outstanding, a smart fund can apply this strategy. If, for example, a million shares exist and investors open short positions for 1.1 million shares, then all the shares cannot simply be delivered. The fund can then decide to buy all the stocks. In this way, the investors with the short positions are cornered, as they have to bid against each other to be able to deliver the shares. As a result, the share price can suddenly rise sharply.

Exchange rates

The exchange rates of currencies can also influence stock prices. As a result of globalization, companies are increasingly selling their products to other regions. When a European company sells products in America, they receive dollars for their products. If a European company sells products in America, they receive dollars for their products. When the value of the euro rises sharply, the competitive position of European companies is weakened because the products are relatively expensive for other countries. Fluctuations in exchange rates therefore affect the results of companies operating internationally.Your investment results are also directly influenced by exchange rates. When you buy American shares with pounds, you can lose money when the dollar becomes worth much more against the pound. You will then receive fewer pounds back when you eventually sell your investment again.

Are shares going to rise?

Many investors want to know whether stocks are going to rise in the coming days, weeks or even months. Unfortunately, there is seldom a clear answer to this: stock markets are unpredictable and a rising price can simply turn into a falling one.In the longer term, you can make better predictions. Over 30 years time there is a good chance that share prices will rise. In the past, share prices have grown in the long term. This is logical when you consider that productivity increases over the long term.However, it is difficult to determine whether stock prices will rise tomorrow. That is why it is wise to take a staggered approach: by buying stocks periodically, you avoid entering the market at the wrong time.Do you want to know the best method for investing in stocks? In our stock buying guide you will learn everything you need to know:

What do you do when stock prices fall?

Don’t panic an important piece of advice. Many inexperienced investors sell their stocks when prices fall, which is a shame. In the long run, you see that stock prices recover.It is therefore wise, above all, to keep aloof. Bear in mind that the motto no pain, no gain certainly applies to investing: you sometimes have to bleed a little to achieve a higher return in the long term. After all, when you put the money into a savings account, you know for sure that your money will be worth less.Especially when the prices drop, you can also look for great opportunities & bargains. When stocks have fallen sufficiently, you can often buy them at a favourable rate. You can then achieve a high return in a short period of time.

What do you do with the news?

In the news you often only read headlines that relate to the short term; the stock market is crashing or new records are achieved. If you want to invest well, it is best to avoid these mainstream media as much as possible. The aim of the media is to keep your attention with fierce headlines. Bear in mind that an investor has time as a best friend; therefore you should not focus too much on the short term.

Which shares should you buy right now?

In this article we look at how you can determine which stocks to buy. After all, when buying shares, it is important to make the right decisions; in this article we will briefly look at how to buy shares, and then we will look at which stocks to select.

How to buy stocks?

You can buy stocks with an online broker. A broker makes it possible to buy or sell stocks with just a few clicks. It is essential to make the right decision. Which broker you choose will ultimately determine how much return you get by buying shares; the transaction costs vary greatly from broker to broker.

Would you like to know at which broker you can best invest in shares? Then take a look at our overview of best brokers:

Which stocks are the best to buy?

Shares that are in line with today’s trends are often the best choice. But what should you pay attention to when you want to invest in a share? We discuss a few important factors.

Low stock price

It is sensible to buy stocks relatively cheaply. Therefore, it is smart to look for bargains on the stock exchange: a bargain is a company that trades relatively low but has a lot of potential.You can then, for example, look at the price/earnings ratio. The price/earnings ratio indicates how many times the profit is traded. Compare this figure of the company with the figures of comparable companies to determine whether it is smart to invest in the company.By analysing the company properly, you can determine whether the company is traded below its intrinsic value. If this is the case, it can certainly be smart to buy the share.

Business model focused on the future

A low valuation alone is not enough reason to buy a share. It is also important that the company has a business model that will continue to work well in the future. If this is not the case, the profitability and therefore the intrinsic value of the company may fall in the future.Therefore, investigate whether the company has a clear vision for the future. A company like Ahold, for example, responds cleverly to the latest developments. With the supermarket Albert Heijn they serve people in the traditional way, while with the webshop Bol.com they also sell products on the internet. Albert Heijn is a Dutch supermarket and Bol.com is a Dutch Amazon type of website.This kind of distribution is in any case an attractive point for a stock. When a company does not put all its money on one idea, you are better protected against unexpected developments.

A role for sustainability

The climate is getting higher and higher on the agenda and this seems to apply to investors too. Therefore, investigate whether the company you want to invest in pays attention to making business processes more sustainable. In the future, governments are likely to push this more and more: companies that lag behind will be faced with higher costs. Moreover, climate-conscious investors are more likely to ignore stocks in environmentally polluting companies, which of course puts pressure on the price.

7 things to pay attention to when selecting shares

When you select a stock, you can at least pay attention to the following:

Growth

See if the company’s revenues grow over a longer period of time. Growth is ultimately needed to increase the value of a share. To determine whether a growth trend continues, you can research the products and services that are offered. See how these products fit into the competitive landscape and determine whether the company is strong internationally.

Competition

Competition can kill a company: when you select a share, it is therefore crucial to look closely at the competition. Determine how the company stands out from the competition and check whether its market share is growing or falling. Don’t invest in a Myspace or Nokia: these kinds of companies will eventually compete against the more innovative Facebook and Apple.

Debt / equity ratio

Debts are not necessarily bad: when a company achieves a positive result with the debts, it even contributes to the operating result. However, debts are also dangerous: if the performance is lacking, a company may even go bankrupt. Therefore, investigate whether there is a high ratio of debt to equity. In some sectors, this ratio is higher: think, for example, of construction. Compare the figure with comparable companies to see how the company performs at that level.

P/E of price-earnings ratio

With this figure, you can determine at a glance how the company is doing in relation to its profits. With the P/E value you can determine whether a company is under- or overvalued. The ratio is especially useful for comparing companies in the same sector.

Dividend policy

The dividend policy can also be an important factor when deciding which shares to invest in. If the company periodically pays out a stable dividend, this is a good indication that the company has built up a stable position. However, beware of companies that pay very high dividends: these types of companies may not invest enough money in their growth.When a company suddenly does not pay out a dividend, this does not have to be dramatic news: sometimes the company needs the money for a new project or to survive an economic crisis.

Leadership

Effective leadership is essential for a company: a company without a good helmsman goes under. Therefore, investigate whether the current leadership manages the company in a sensible way. Don’t you trust the people at the head of the company? Then it’s better to select a different share.

Stability

Some shares are very volatile: they move up and down constantly, so it seems that the market cannot determine the value of a share. When you select a stock for the long term, it is better to choose a stable stock. Go for a company with nice, stable growth and a strong vision for the future. This way you can benefit from your investment in the long term!

Growth shares or stable shares?

When you decide in which shares you want to invest, you can choose between growth shares or stable shares. Growth shares are shares in companies that often still have to prove themselves. These shares are traded at a very high price: the future expected growth is already included in the share. In some cases, the company is still loss-making, but investors are still enthusiastic because of the large annual increase in turnover. In this category you will find many technology shares: think of Uber or Tesla, for example.

Stable shares are shares in companies that have already proven themselves. You will find established names such as Wal-Mart or Shell, for example. These types of companies often don’t grow enormously anymore, and you won’t achieve a substantial return with an investment in a similar company. Instead, you can expect a stable but slow return. These types of companies often also pay out an annual dividend, which allows you to build up a small income as an investor.When selecting shares, you have to ask yourself what you think is more important. Do you want to achieve a high return and are you prepared to take high risks? Then a growth share can be an interesting option. Would you prefer a stable capital structure? Then select a basket of stable shares.

Which shares do professionals select?

You can also see on various websites which share analysts select. They then advise you to buy or sell certain shares. Sometimes they also advise you to hold a share.

For the layman, it can certainly be interesting to see which shares select professionals. However, it is important to decide for yourself which shares are interesting for you. The professional can apply an entirely different strategy: if the advisor prefers to invest in exciting companies, and you are looking for a stable fund, it is better to ignore his advice.

Have shares selected

Do you have little time or no interest in the financial markets? Then it may be wise to outsource the selection of shares. The best way to do this is to invest in an ETF. An ETF is a fund that invests in a basket of shares. But in which shares does the fund actually invest? This varies widely: some funds invest in global equities while others follow an index such as the AEX.An investment in an ETF has the advantage that your money is nicely spread over different investment categories. In addition, the management costs on an ETF are low, so that you can still achieve a good return.A good party for buying and selling ETFs is DEGIRO. At DEGIRO you pay no transaction costs when you buy funds from the core selection. Use the button to directly open an account with DEGIRO:

Are you investing in the short or long term?

Before you can properly determine which share to buy, it is wise to determine whether you are going to invest for the short or long term. This decision is important because it will completely change your strategy.

Some people have a smaller time horizon of a few days to several weeks. When buying shares in the short term you should choose a broker with low transaction costs. It is also important to pay attention to recent news reports. Think for example of the news that a new product is being released by a technology company; this can give the price of a share a temporary boost.In the long term, it is actually even more important to determine which share you choose. After all, you then build up a portfolio and in doing so, it is essential to select the right shares. You keep the stocks in your portfolio for a longer period of time, and it is therefore even more important to choose stable, profitable companies. The shares you buy must then meet these conditions.

How do you decide what share to buy?

It is important to carry out an analysis before deciding which share to buy. It is possible to conduct fundamental analysis where you look at the news and the underlying figures. Furthermore, it is also possible to select a share on the basis of technical analysis: you then look for certain patterns within a chart.

In the short term, technical analysis plays a more important role. In the longer term, the fundamental value of a company needs to be looked at in detail. Subsequently, it is important to determine what the value of a share is. This allows you to determine for yourself whether you think a share is undervalued or overvalued.If a share is undervalued, buy it and hold on to it. However, a share can also be overvalued; if this is the case, you can still make a profit. It is possible to open a short position, in which case you benefit from a falling price. If you cannot determine whether there is undervaluation or overvaluation, it is better to leave the share alone.

A few more important tips

It is important to get down to practical work. Many people get stuck endlessly reading annual reports or news items, but that way you don’t develop a feeling for them. Many brokers offer the opportunity to try investing in stocks by means of a demo. With a demo, you can try out the possibilities and discover which stocks work best, click here to open a demo >>In addition, of course, knowledge is power. Before deciding which shares to buy, it is important to have a clear picture of the company’s weaknesses and strengths. Analyse the company’s data and make a selection of the shares you would like to invest in. Then, you can make a final choice and start buying shares.

The perfect share

Ultimately, it is important to remember that the perfect share does not exist. However, it is still possible to invest profitably in shares by deciding which shares to buy. Here it is important to study and learn a lot so that you understand the underlying mechanisms.So, don’t expect to get rich any time soon; no, use your common sense and don’t follow the crowd like a sheep. Find your path to success and spread your risks over several shares. Keep in mind that it is also possible to invest in other securities such as bonds and Forex; by spreading more, your chances of making good investment decisions eventually increase!

Warren Buffet’s shares Investment strategy

Warren Buffet and his company Berkshire Hathaway  have been successful investing in shares for over 50  years. His investments made him one of the richest people on the planet. According to business magazine Forbes, in 2019 Warren Buffett’s capital was a whopping $85.9 billion. Therefore, it is not surprising that many investors would like to learn Warren Buffett’s investment strategy. In this article, we will discuss how Warren Buffett got so rich.

Who is Warren Buffett?

Warren Buffett is my personal hero. This American investor is enormously successful. He is the major shareholder of the investment company Berkshire Hathaway. If you had only invested $1,000 in this company in the 1960s, you would have had over ten million dollars today!

The great thing about Warren Buffett is that, despite his enormous success, he has remained very down-to-earth. His personal wealth is estimated at over $40 billion, yet he still lives in the first house he ever bought for $31,500 in Omaha.He bought his first share at age 11. When he was 13, he filed his first tax return. Since 2010, he has been committed to the Giving Pledge,  asking other millionaires to give half of their wealth to charity.

Warren Buffett’s very modest home

Graham as Buffett’s teacher

No baby is born a genius investor. Buffett got a lot of his stock market wisdom from Graham. When he was young, he worked in Graham’s company. But what exactly did he learn from Graham?Both investors believe that you only buy shares when the intrinsic value of the company exceeds the value on the market. Therefore, they don’t look for speculative shares that can make a huge amount in one fell swoop. The focus is rather on looking for shares that are undervalued.Buffett learned from Graham to be very patient. It is important to study the company you want to buy. And it is even more important to only take the next step when there is a good reason for doing so. The best investors are very patient and sometimes do nothing for years. This method of investing is also called value investing.Still, Buffett has further optimized Graham’s strategy. Buffett never actually aims to sell the shares of the companies he invests in. Graham regularly sold his share with a profit to look for new investment opportunities. Buffett is however really looking for companies that he fully trusts and when he does, he holds on to the shares. As long as he thinks the company has a good vision for the future, he won’t just sell the stock.

Which stocks should you buy according to Warren Buffett?

Buffett has several rules he uses to determine whether you should buy a share. These are the rules Buffett applies when he considers buying a stock:

• Invest in shares that are predictable. When the future of a company is uncertain, it’s better not to acquire shares in it.
• Invest in businesses you understand. Buffett prefers to invest in ice cream rather than complex technology companies.
• Do not invest in shares with large research or capital costs. The future prospects op these companies are too uncertain according to Warren Buffett.
• Buy shares in companies that can absorb increases in costs with higher profit margins. To do this, the company must be able to raise prices.
• Warren Buffett invests only in companies with a strong and stable management team.

Furthermore, Warren Buffett has some specific rules. For example, he will sell his shares when a company has a negative cash flows or when high levels of investments are needed to remain profitable.When a company buys its shares, he views this as a positive signal. After all, a company will only do this when it has confidence in the future. The company also clearly believes that the shares are underpriced. And who has a better idea of what’s going on within the company than its management?

Selection criteria

When Warren Buffett prepares to make a new investment, he utilizes fundamental analysis. Fundamental analysis looks at a company’s figures and growth potential. Below we cover the criteria he uses to rate a share:

• The stock must have positive earnings per share
• Profits must have grown slow and steady over the past 10 years
• The long-term debt is ideally below 2X earnings and never more than 5X earnings
• The return on total assets is 12%
• The ROE (return on equity) is 15%
• The company’s free cash flow is positive
• The company should not be dependent on large capital expenditures

Warren Buffett’s strategy

According to the investor himself, you do not need an exceptional IQ to be successful with stock investments. What you do need is a plan of action. It is important that your plan is not affected by your emotions. For that reason, Warren Buffett’s investment strategy consists of a number of fundamental concepts. On this page we discuss some of them.

Invest in yourself too

You are not going to suddenly wake up rich. You need a good plan and a sound mindset to get results. To achieve your goals, you will have to keep learning. You do this through practice and by constantly striving to improve your results.Do you want to practice with investing? Then it is wise to start a free demo. Through a demo you can test the possibilities of investing completely without risk. Click the button to try out the best demo accounts:

Compounding

Another important aspect of Buffett’s strategy is the so-called snowball effect. His quote sums this up nicely: ‘Life is like a snowball. The important thing is finding wet snow and a really long hill.’  When you start off with a snowflake, you will have a snowball at the end of the ride. That is also how investing work.Any small investment can grow into a large one given enough time. This is because you also receive interest on interest. When you reinvest returns, your total investments grow exponentially. For that reason, it is wise to invest a fixed amount every month. Every bit can help you achieve your ultimate goal.

Diversifying investments

It can happen that a sector suddenly performs less well. Warren Buffett stresses that it is important to spread your investments as much as possible. This way, your loss in one sector or region can be absorbed by a success in another sector or region.When you want to achieve good results, it is important to buy shares in companies across different countries. After all, countries can introduce unfavourable legislation that makes companies less well off. Also, one country’s economy can collapse while another country’s economy flourishes.But with that your strategy is not yet complete. It is also important to spread your investments across different sectors. After all, the banking sector could be performing poorly in the coming years, while the tourism sector performs optimally. By diversifying your investments across different sectors, you ensure that you are not vulnerable to problems with one type of company.Warren Buffett advises many novice investors to invest in an index fund. After all, with an index fund, you benefit from maximum diversification. Even with smaller amounts, you can invest in different regions and sectors. Do you want to know where you can invest in index funds? Use the button below to compare the best brokers:

See stocks for what they are

In Warren Buffett’s investment strategy, he first wants people to understand what stocks are before they buy them. A share is a part of a company that you can buy. It is also necessary to determine what kinds of companies will continue to grow in the long term. These are the types of companies that Warren Buffett would like to buy shares of.

Only invest in things that you understand

If a company is active in a business that you do not understand, it is not smart to invest in it. Warren Buffett recommends to only invest in things you understand. In the time leading to the financial crisis of 2008, many people invested in complex financial bonds. Many people invested their savings to be able to enjoy these returns without understanding exactly what they had invested in. We now know that these products were mortgages and loans that were resold several times and could never be redeemed by the borrowers. This was the cause of the last financial crisis in which many people lost their invested savings.

Invest for the long term

Warren Buffett is a great advocate for investing in the long term. When he buys stocks, he plans to keep them for a long time. He therefore only invests in strong companies with a good future perspective. Investing in the long term means that you will not suddenly start selling the stocks if the price suddenly drops.After all, this investment strategy is based on the idea that sudden drops and increases will automatically correct themselves over time. In the long term, the company invested in will grow and the return will increase with it.

Avoiding unnecessary costs

Another investment tip from Warren Buffett is to avoid unnecessary costs. However, the definition of unnecessary costs is rather vague. An example of unnecessary costs is racking up expenses with a credit card. Spending money you don’t actually have is never a good idea.When you start investing, you have to eliminate costs as much as possible. When the costs on your investment account are high, you get a much lower return. We’ve listed the cheapest brokers for you so you can learn how to avoid unnecessary costs. Use the button below for personal advice:

Buy your shares at the right time

According to Warren Buffett, investors should not fear sudden declines in the stock price. On the contrary, as an investor, you should welcome them. After all, it is the right time to buy shares of a particular company. Buy your shares if the price is lower than the value of the company and take your profit over the long term.Based on the aforementioned guidelines, Warren Buffett has several strong companies in mind in which he wants to invest. With his strategy, however, he does not immediately buy the shares of these companies. To make as much profit as possible, he has to wait for the moment that the price reaches an attractive level

What are good books about Warren Buffett?

Several books have been written about my personal hero. A great book to read is ‘The Snowball’ by Alice Schroeder. This book clearly describes Buffett’s investment philosophy and investment strategy. The advice can easily be applied to your investments.

What are shares?

Many people wonder what shares are. When you buy a share, you immediately become a co-owner of the company. You can then trade your share on the stock exchange. But how does the price of a stock change? How can you trade in price developments on shares yourself? And what is the origin of the share? On this page you will find everything you need to know about stocks!

What is a share?

A share is a proof of ownership in another company. When you buy a share, you become co-owner of the company. A company often issues shares to raise more capital. When a company issues shares, it is also called an equity offering.

Why should you own shares?

The simple answer is that it can generate a lot of money. Shares on average yield about 7 to 8 percent yearly. This means that after inflation the yield has been around 5% since 1900.When you leave the money in your savings account, the real return you receive on it will be negative. This is the case because inflation is higher than the interest you receive on your savings account.5 percent may not seem extremely exciting, but the strength of the compounding effect allows your shares to increase in value quickly. When you repeatedly invest your returns, you will also receive returns on your returns. If you invest $1,000 annually for 30 years at 7%, at the end you will own $101,073. Even with small amounts, it certainly pays to invest.

How to make a profit with shares?

It is now clear what share are, but how can you make a profit with shares? There are two methods you use make a profit with shares: with price gains  and dividends.

Method 1: price gains

Shares are tradable on the stock exchange and that is where a price is created by the interaction of supply and demand. The price of the stock indicates for how much you can buy or sell it. When you hold a share for a while and the price rises, you obtain a positive return.

Method 2: dividend

However, this is not the only way you can make money from shares. Many companies also pay dividends on a regular basis. Dividend  is a profit distribution. The company can determine the percentage of profit to be paid as a dividend. Some companies never pay dividends, while there are also companies that pay out multiple percent of dividends on an annual basis.Do you want to know more about dividends? In our special on the subject you can read everything you need to know:

How to trade in shares yourself?

Now that you know what stocks are, you can actively trade in stocks. There are two ways you can trade in stocks.

Buying stocks for the long term

The first option is trading shares in the long term. This is when you buy up shares because you believe they will be worth more money in the future. When people buy shares, they often do so with an eye on the future.Do you want to know how and where to buy shares? In our article on buying shares, you can read everything you need to know:

Active trading of shares

Other investors choose to speculate actively on the share prices. The share prices may rise or fall by several percent in one day. By responding wisely to this, you can achieve a good return.The basic strategy for trading shares is clear: when you expect the shares to go up you buy the stock and when you expect a fall you sell the stock. You can take advantage of falling prices by taking a short position. With a short position, you benefit from a falling price.Do you want to try speculating in shares risk-free with a free demo? Use the button below to open a free demo for stock trading:

How to invest in stocks?

Now that you understand the meaning of stocks, you want to know how to invest in stocks yourself. You can invest in shares with an online broker. A broker is a party that allows you to trade in various investment products.

Nowadays, anyone can open an account with a broker. Do you want to know which broker you can invest with? Use the button below to open an account directly with a broker:

What influences the price of a stock?

The price of a share is entirely determined by the number of buyers and sellers. When more people want to buy a share, the price goes up. When people dump the stock, the price drops. Expectations about a share’s prospects can have a strong impact on a share price. Let us explain this with two examples.

In the first example, you want to invest in a biomedical company. When a news report comes out that this company has discovered a special drug, it is wise to buy the stock. The likelihood of an increase in demand is surely high.However, the opposite is also possible. Suppose you are considering investing in retail chains. When a news report comes out saying that the retail market is collapsing due to the rise of online shopping, then it is wise to sell.Do you want to learn how to better invest in stocks? Then it is important to learn how to analyse the stock markets. In our articles on fundamental and technical analysis, you will learn how to do this:

• Fundamental analysis: using financial figures to make predictions
• Technical analysis: make predictions with patterns

What are the risks of stock trading?

Of course, trading shares involves the necessary risks. However, now that you know what stocks are, you are already one step ahead and the chances that you will eventually be successful are a lot higher.

Risk of a lower exchange rate

One risk of equities is the so-called price risk: there is a chance that the share you buy today will be worth less tomorrow. In that case, you will achieve a loss when you sell the stock again.In some cases, the entire market may perform poorly. This is also called the market risk.

Risk of bankruptcy

In addition to this risk, there is a chance that the company will go bankrupt; when a company goes bankrupt you often only receive a fraction of the value of the share back.

Lack of liquidity

When you buy a stock with a low trading volume, there is a chance that nobody wants to buy your shares. It can then be difficult to sell your shares because there is no market. With the large shares listed on the Dow Jones or S&P 500, this is very unlikely to happen.

Why do companies issue shares?

Issuing shares can be an attractive way for companies to raise more money. The money obtained by issuing shares is permanent capital and therefore the company does not have to pay interest on this.

The money raised with a share issue is often used to grow further. Without the capital raised from the issue, the company would be less able to expand.

What rights do you have as a shareholder?

On paper, you are then co-owner of the company. Unfortunately, this does not mean that you get a parking space on the property and that you can walk in and out of the director’s room. Nevertheless, as a shareholder, you do get quite a few extra rights.

As a shareholder, you may attend the shareholders’ meeting. At this meeting, all shareholders can vote on the company’s policy. As a shareholder, you are also entitled to a share of the profit distribution. Not all companies distribute their profits to the shareholders.There are also special shares. For example, preferred stock give the owner special privileges and founder shares are non-voting shares.

What kinds of shares exist?

The definition of what shares are is 100% clear. However, this definition covers many types of shares. For example, you can invest in bank shares as well as in tourism shares.

It is advisable to spread your investments across different sectors as much as possible. There is always a risk that one sector will not do well. You can then absorb the negative returns in that sector with the positive return from another sector.

Are stocks for you?

After this explanation you understand the meaning of shares. However, before you invest, you must decide whether investing in stocks is really for you. Trading shares is attractive if you want to benefit from the positive results of  companies. At the same time, you must realize that you can lose part or even all of your investments.

If you want to invest in shares, you can do this with as little as $100. If you want to build a serious portfolio, it is advisable to do so with a minimum of $5,000. When you invest with smaller amounts, spreading your risks is difficult. In addition, you will have to deal with relatively high transaction fees.

What is the difference between stocks and mutual funds?

You can buy both shares and units in investment funds from a broker. It is important that you understand the differences between these two investment products. When you buy a share, you do it of your accord. Therefore, you choose which company you want to invest in. When you buy a unit in a fund, it is different.

A fund determines for you in which shares you invest. You deposit a certain amount of money and with that, you automatically invest in a bundle of shares. Consequently, you have less influence on the composition of your investments. However, you can choose from funds with different styles. An Asia fund will not invest your money in Europe.

What is the difference between bonds and stocks?

Not everyone understands the difference between bonds and stocks. Let us explain this briefly. With a share, you become co-owner of the company and indirectly share in the results. When you buy a bond, you do not become the owner of the company.

A bond is a debt. With a bond, you have the right to monthly interest payments. When the company unexpectedly goes bankrupt, you have priority over the shareholders. However, you are never entitled to more than the interest payments. Do you want to know more about bonds? Click the button below:

What are the advantages and disadvantages of shares?

Investing in shares brings advantages and disadvantages. A big advantage of stocks is the higher expected return. Over the past 100 years, shares have performed a lot better than other investment products. There is currently no reason to expect that this will be different for the next 100 years.

However, there are also disadvantages associated with shares. For example, investing in shares is risky: you never know if you will achieve a positive result in the short term. You will also need to spend a significant amount of time to decide in which shares you want to invest.Finally, investing in shares can be expensive for investors with a small amount to invest. The costs are then relatively high. If you want to trade in shares with small amounts, you can consider an investment fund.

Where do stocks come from?

Stocks originate from the Netherlands. The VOC, which was founded in 1602, was quickly looking for new funds that allowed them to carry out numerous long journeys. They needed a lot of capital for this, and to obtain it they decided to issue shares. Additionally, these shares did not entitle the holder to a dividend, but to goods acquired during the trip.

Would you like to know more about the history of stocks? In our article on the history of investing, you will learn more about this:

Concluding: what are shares?

• Shares are deeds on a company
• You can actively invest in shares by buying & selling them.
• You can make a profit with shares through price increases & dividends.
• The price of shares is created by demand and supply.
• As an investor, you run a price risk & the risk of bankruptcy.

Stock FAQ

In the last part of the article we deal with frequently asked questions about shares. This can help you to understand the meaning of shares better.

Do shares have fixed maturity?

Shares have no fixed maturity. Your shares will not simply expire, and they are in theory permanently valid. Only when the company goes bankrupt can you lose your shares.

Who are stocks suitable for?

Stocks are suitable for people who are willing to take risks. It is advisable to invest only in shares with money that you can miss for the foreseeable future. In the long run you can achieve good results with shares, but in the short term this is not certain.

Are stocks always in name?

Not all shares are in name. The big companies that are traded on the stock exchange are not registered. You can trade the shares freely with a broker and there is usually no clear register where you can see who owns which shares.

When you open a private company with some family members, the shares are often registered. You will know exactly who the shareholders are.

How many shares are there?

A company can decide for itself how many shares they issue and at what price. It is wise to compare companies based on market capitalization. The market capitalization indicates the total value of all outstanding shares.

What are preferred shares?

Preferred shares give shareholders some preferential rights. For example, they receive a fixed dividend for the other shareholders. Do you want to know more about preferred shares? Read this article.

What are value shares?

Value shares are shares of companies that have often been in existence for a long time. The shares habitually pay a stable dividend and have a low price-to-earnings ratio. Examples of these types of shares are Shell and Heineken.

What are ETF stocks?

ETF stocks are shares that are acquired within a fund. With an ETF, you can directly monitor a bundle of funds. ETF stands for exchange-traded fund.

What are CFD stocks?

When you trade in CFDs, you do not directly invest in the stock itself. CFDs do follow the price of the stock. Do you want to know more about CFDs? Read this article.

What are cyclical stocks?

Cyclical stocks are shares that move along with the economy. When the economy is doing well, prices rise and when things go bad, prices fall. Do you want to know more about cyclical stocks? Read this article.

What is a share certificate?

You can also invest indirectly in the value of a share through a share certificate. A certificate is a security that follows the exact value and returns of a share. The product is similar to an investment fund, but specifically focused on one share.

What are bearer shares?

Bearer shares are shares that do not name the owner. Most of the shares that are traded are bearer shares. After all, you trade on the stock exchange in shares that are not in the name of an owner.

What are the costs of selling shares?

You normally pay a so-called spread when buying and selling shares. This is the difference between the purchase and the sale price. In addition, you also pay a fixed commission at many brokers. In our article about the costs of investing you can see exactly how much investing in the shares costs.

What are registered shares?

Registered shares are the counterpart of bearer shares. Registered shares cannot simply be sold to someone else. They are specifically given to you, and therefore you own a part of the company. For example, you see a lot of this type of share within family businesses.

What are treasury stocks?

Companies may decide to buy back some shares. A company can do this when, for example, its share price has fallen sharply. Buying your own shares can stimulate the price. The shares that are repurchased are also called treasury shares and can be sold on the stock exchange at any time.

What are gold stocks?

A gold stock is a share with a special right of veto. For example, a government may command a golden share from some essential companies. This can prevent a takeover or the reduction of services.

What are large cap stocks?

A large cap stock is a stock with a high market capitalization. Large cap therefore stands for large market capitalization. Companies worth more than 10 billion dollars or pounds are often referred to as large cap stocks.

What are the best stocks?

The simple answer to this question is: the best stocks are the ones that perform best. This is, of course, a simplified vision. Today’s best-performing stock may no longer exist tomorrow due to bankruptcy. Moreover, not all shares fit within everyone’s investment strategy. It is therefore important to do your research.

What are blue-chip stocks?

A blue-chip stock is a high-rated stock. Blue-chip stocks have a reputation for high quality and reliability. People have a lot of faith in the future of this company.

What are Class A shares?

Class A shares have more votes per share. This allows management to remain in control of the company. If all shares had equal voting rights, an external party would be able to take control more easily. The Class B shares have fewer voting rights.

What are FTSE shares?

FTSE shares are shares listed on the London stock exchange. The FTSE is an index containing the 100 largest UK companies. Companies can regularly join and disappear from the FTSE, as stock prices are constantly changing.

What is short selling stocks?

When you take a short position, you bet on a price drop. When we talk about a short selling stock, we often mean a short position on the share.

What is the face value of a share?

The nominal value of the stock is the price at which it was originally launched at the stock exchange. Face value is not relevant when you invest in a stock. After all, the price of a share changes constantly. A share will therefore not be traded at face value for a long time.

What is the intrinsic value of an asset?

You can calculate the intrinsic value of a share by deducting the company’s debts from the assets. Then you divide the amount that remains by the number of shares. On its own this figure gives little information. It is also important to investigate the company’s future expectations.

What is a defensive share?

Defensive shares are less sensitive to the development of the economy. When you include defensive shares in the portfolio, your returns will fall less quickly when the overall economy falters. An example of a defensive share is a supermarket share.

What is a dividend?

A dividend is a payment of a part of the company’s profit to their shareholders. The objective of distributing revenues or a dividend to investors, is to attract new investors. The dividend can be considered a reward for people who dare to invest on the long-term by holding their shares. This article will tell you all about the impact of a dividend on your investments.

What is a dividend?

Publicly listed companies can decide to issue part of their profit to their shareholders. The dividend announcement often results in a proportional stock price increase while the actual dividend payments results in a share price decrease.

The rest of the article will provide you some more details on how a dividend influences your investments. Feel free to use the below overview to directly navigate to the appropriate chapter:

How does the distribution of dividend work?

Issuing a dividend always follows the same step-by-step process: the announcement, the ex-dividend date, record date and the payment date. Let’s take a closer look at each of those steps.

Announcement

When a company decides to issue a dividend, it all starts with an announcement. The announcement is the moment a company announces the dividend ratio and on what date it will be issued; the payment date. The stock will rise in price by the value of the announced dividend. When a share is traded at $10 and a $1 dividend is issued, the share price increases by $1 too.

Ex-dividend date

An important date next in line is the so-called ex-dividend date. The ex-dividend date is the moment at which it is determined who is entitled to receive a dividend. All people who own stocks of the company prior to the ex-dividend date, will receive the dividend. You are not entitled to receive a dividend if you buy a stock on or after the ex-dividend date.On the ex-dividend date, the stock will drop in price by the value of the dividend. The stock value logically decreases: after all you will not receive any additional profit payment. When for example the stock price is $10 and the dividend is $1, the stock price will drop to $9.

Record date

The record date is the date on which the company determines who is entitled to receive a dividend. Shares are continuously changing owners and are a free-trade product. Therefore, the company needs to determine who is eligible to receive part of the profit. The record date is usually one business day after the ex-dividend date.Would you like to be eligible to receive a dividend? In that case, you must buy the share at least two days before the record date.

Payment date

The payment date is the date when dividend checks are credited to investors who are eligible to receive the dividend. When you have bought the share on the ex-dividend date or even later, you are not eligible to receive a dividend. It can take a month before the actual payment takes place (= the payment date).It can be interesting to keep a close eye on the stock price on the payment date. The stock price may fall on the payment day when investors fear the company in fact cannot really miss the money.A €3 dividend was paid on the HeadFirst Source G stock. On the ex-dividend date (24th of December) the stock logically dropped in price by €3.

What types of dividends are there?

Companies can choose to issue the dividend in cash (cash dividend) and in stocks (stock dividend). Let’s take a closer look at the definition of the cash dividend and the stock dividend.

What is a cash dividend?

Cash dividends are by far the most common dividend type. The company will pay part of the profits in cash. Let’s look at an example.

Imagine having 1000 stocks which value $10 per stock and therefore have an overall stock value of $10.000. If the dividend percentage equals 5%, you will be paid $500 cash dividend.

What is a stock dividend?

Sometimes a company can choose to distribute its profits by issuing shares. This payment option is also known as a stock dividend. Let’s look at an example.

Imagine having 1000 stocks which value $10 per stock and therefore have an overall stock value of $10.000. If the dividend percentage equals 5%, you will be paid $500 stock dividend. Considering a $10 stock price, you receive 50 new additional stocks.

Why do companies issue dividends?

Companies might have various underlying reasons to issue dividends. Below we discuss some reasons why companies can decide to distribute part of their profits by issuing a dividend.

Confidence reward

Shareholders are co-owners of the company. As a reward to the investors who have decided to invest part of their money in the company to become co-owner, the company can decide to distribute part of its profits by issuing a dividend. This way, they reward their loyal shareholders for putting their confidence in the company.

Lack of interesting alternatives

A company can generate more profits in the future by investing their income in new projects. When a company has no plans to start new projects, the company can choose to distribute part of its profits to the shareholders.

Fear prevention

When a company has consequently issued dividends, the elimination or decrease in the dividend amount can lead to fear. If a dividend amount reduces, the investors can suddenly start selling the stocks resulting in a stock price fall. A perfect example is the Shell dividend. Shell cut its dividend for the first time since World War II during the corona crisis in 2020 after which the stock price crashed.Nevertheless, decreasing or completely removing the dividend isn’t automatically a bad omen. The company can also have started an interesting new project or investment which can generate even more profit in the future. It is therefore of crucial importance to thoroughly investigate the underlying reason of the dividend decrease.

Sales prevention

For many companies frequently issuing a dividend is essential. Dividends attract investors and often even long-term ones. When no dividends are issued, investors can decide to sell their stocks resulting in a stock price decrease.

When do companies issue dividends?

A company can use different strategies when paying out dividends. Below we discuss how a company’s management can determine how much dividend will be paid:

No fixed policy

When a company doesn’t have a fixed dividend policy, the management is free to determine when and if a dividend is issued. This strategy means less certainty for the shareholder. Stocks with a variable dividend policy might therefore fluctuate more compared to stocks with a fixed dividend policy.

Fixed percentage of profits dividend

Some companies pay out a fixed percentage of their profits as dividend. This approach offers the shareholders more freedom. On the other hand, there is always a risk the company will issue more dividend than appropriate. The percentage can also be on the low side for the shareholder.

Fixed or growing dividend

Choosing for a fixed dividend policy, there is no increasing dividend and the shareholders will receive the same payout, month after month and year after year. A dividend growth means the dividend will increase periodically. A clear risk is the fact there is never a 100% certainty the company will be able to live up to the shareholders’ expectations. When a company decides to issue less dividend, the stock price can drastically fall.

Be careful with dividend payments

Don’t be blinded by the dividend alone. When companies issue a dividend, it can have a negative impact on the company’s position. Do your research by for example using the payout ratio to determine whether a company is capable of issuing dividends.Besides, it’s important to take into consideration how the company issues dividends. Sometimes companies issue new shares, which are then used to issue their dividend. Somehow it will lower the value of your company shares, and it could also lower your future return on investment.Issuing dividends can also limit the growth of a company. The company has less money available to invest in the future and therefore risks becoming less competitive.An alternative for issuing dividends, is purchasing stocks. Some companies use their profits to repurchase their own publicly listed stocks. It will result in the reduction of shares and logically also in the increase in earnings per share for the shareholder. The shareholder is granted a more favourable position.

Which companies issue high dividends?

The dividend amount differs from one company to another. Companies which have a mature status (have been around for a long time) and which make big, predictable profits are more likely to pay out profits. Examples of these types of companies include:

• Oil and gas companies
• Banks and financial institutions
• Pharmaceutical companies
• Utility companies

New start-ups and companies which experience a strong growth often issue no or little dividend. These companies often face high costs or even losses. Think about companies like Uber and Google. This type of companies prefers to invest their money in new projects and developments to create more future value for their shareholders.As a shareholder, there are two ways to benefit from shares: by dividend and by stock price increases. When a company reinvests its profits in a smart way, it can benefit the profitability and overall growth of the company. In that case, nevertheless, it is important the return on new investments is higher than the return achieved by simply repurchasing the own stocks.

Utility companies often issue high dividends

Does a company always issue a dividend?

There are companies which will never issue a dividend. Some major companies do not see the necessity to issue a dividend, because their share price drastically increases year after year. Think about companies like Apple and Google. Therefore, investing in a stock which doesn’t issue a dividend can still prove to be profitable. A increasing stock price will also increase your return on investment!

Even companies which regularly issue a dividend, can decide to skip the dividend once. There might be various reasons for skipping a dividend or part of a dividend; think about new investments or for example an acquisition. In the long run this might lead to an even higher return on investment.Being a shareholder, the dividend amount you receive also depends on the type of stock:  preferred stocks or common stocks might have different dividend percentages.

Dividend investments

By holding your stocks, dividend is another alternative to realize a profit. Even when the stock price is falling, a positive return on stock investment can still be made by receiving a dividend. Especially when investing in stocks in the long term (read several years), a dividend will help you to achieve a positive return on investment.Investing in dividends is often a quite stable and less risky type of investment. Dividend investments are considered to be a relatively safe haven because many companies which issue a dividend have a stable basis and background. When you focus on dividends, the stock price is of minor importance. A perfect example of a stable stock which has been issuing dividends for years is the Shell stock. By investing in stocks with a fixed dividend payout, you can realize a stable stock income.

How do you know when a company is paying dividends?

Companies normally clearly announce the date and time when a dividend will be issued. Based on these announcements online brokers can present clear overviews containing all dividend dates. Besides, there are handy online calendars which displays all dates on which dividends will be issued. A perfect example is the dividend calendar of thestreet.com.

The dividend calendar tells you when a dividend will be issued.

What is an interim dividend?

Most companies issue a dividend once a year. There are some companies though which also pay out interim profits. This is a part of the final to be determined dividend for the whole financial year. At the end of the financial year it is then determined how much dividend still had to be paid out. Companies can decide to issue a dividend quarterly or biannually.

You can consult the interim-dividend per period on the Shell website

Why reinvesting in a dividend is a good idea

Many investors use their dividend as an additional income: they for example use it to book their well-deserved holiday. Nevertheless, reinvesting your dividend might result in much better investment results in the long term. It all has to do with the wonderful mechanism of exponential growth. The one and only Einstein called compound interest the eight wonder of the world.If you keep on reinvesting the dividend, you receive interest on the reinvested amount too. That’s what we also call interest-on-interest or compound interest. In the long-term compound interest can lead to major profits. Let’s take the below example whereby we invest $10.000 a year at an average interest rate of 8%.

• Upon 10 years of investing, we have invested $ 100,000 and we have $ 156,000 (X1,5).
• Upon 30 years of investing, we have invested $ 300,000 and we have gained $1.223.458 (X4).
• Upon 50 years of investing, we have invested $ 500,000 and we have gained $6.196.717 (X12).

How do you calculate the dividend yield?

It is pretty easy to calculate the dividend return on investment on a share. You just take the total market capitalization (the total value of the issued stocks) and you divide it by the total dividend.

Another way to calculate the dividend yield is by dividing the dividend per share by the price per share. When a share for example costs $10 and the return on investment is $1, you receive a dividend return of one percent.

Other dividend formulas

The dividend yield nevertheless is only part of the story. You should also consider the dividend payout ratio. The dividend payout ratio is calculated by dividing the dividend yield by the profit. This way you can determine how much of the profit the company pays out in dividends.You can also try to find out how much of the free cash flow is paid out as a dividend. The free cash flow is the cash a company generates and can spend afterwards. The ratio is calculated by dividing the issued dividend by the free cash flow.These formulas can help you to determine the security of a dividend payment. When companies take serious risks to satisfy their shareholders, it can have a negative effect on the company’s results in the long term.

The effects of a dividend on your mindset

A dividend can have a serious influence on the mindset of each investor. It will give a moral boost. When someone is continuously receiving dividend payments, it can boost their confidence in the company. Moreover, a dividend is a great protection against inflation.You should take into account though that high dividend payouts endanger future growth of the dividend. High dividend payouts result in less available money for investing and consequently less growth, expansion, and innovation of the company.

How do funds issue dividends?

Investment funds can also issue a dividend. When you invest in a fund or ETF, you become a fund participant. Being a participant, you become the owner of a part of the investments of the fund. The fund invests the money of all the participants in for example stock and bond baskets.Some funds then distribute interest payments on bonds and dividends on stocks to those people who participate in the fund. This amount is then paid via a dividend. Other funds might choose to automatically reinvest the dividend. It is therefore of crucial importance to carefully read the general conditions of the fund to avoid future  surprises.

What are the rules and regulation regarding a dividend?

Companies must adhere to certain rules and regulations when they decide to issue a dividend. The intention of a dividend is to distribute profit. It is therefore only permitted to distribute dividends from profit or profit reserves. A company is not allowed to issue a dividend from its mandatory legal reserves or from its capital.Under certain circumstances a company is allowed to borrow money to issue a dividend. This process is possible when the company has sufficient reserves but insufficient cash. Keep this in mind though: the company will have to pay financing costs which might negatively affect the profitability of the company.The shareholders have the decisive authority to determine the dividend. At the shareholders’ meeting, shareholders can therefore vote on the dividend policy.

What is the impact of an acquisition?

There are some special situations in which a dividend can play an important role. A company can for example decide to sell part of the company. In this case, the company will receive an acquisition price. This amount is then paid out as a dividend to the shareholders. Depending on what has been agreed, the shareholders will receive their dividend as cash dividend or as stock dividend.

The dividend history

The dividend is a Dutch invention. The first exchanges were established in the Netherlands; they were established in 1602 together with the establishment of the VOC (the Dutch East India Company). The VOC needed huge amounts of money to invest in their expensive expeditions all around the world. Therefore, they made a promise to their investors: the investors received shares in return, and they were promised a profit distribution on these shares. They paid over 18% of the value of the stocks. They followed this ‘dividend’ policy until 1800. In those days you would have achieved wonderful results by investing in VOC stocks!

Virtual investing in stocks & currencies

Have you never invested before, but would like to do so? In that case, virtual stock exchange investing might be the solution for you! Nowadays, you can try online virtual trading without any risk. But how does virtual trading work?

What is virtual investing?

With virtual trading, you use an online trading programme. With a virtual programme, you can try out the possibilities without any risk. The stock market is simulated, and you can trade in, for example, stocks, commodities, Forex and options.

How can you make virtual active investments?

You can trade virtually using the free software of a broker such as eToro. eToro offers CFD trading on popular securities. You can open an account by leaving your email and a password. Then you can begin trading financial securities immediately.

Do you want to give it a go? Use the button below to create your own virtual account at eToro immediately.

Why virtual trading?

Everything is 100% virtual. This means that there is no risk of losing money. Yet, you can also choose to invest with real money. Within the software you can easily switch to a real money account.

The virtual account is perfect for training your skills. By trading virtually, you become familiar with the software and discover how trading works.

Virtual Trading at Plus500. Illustrative prices.

Can anyone trade shares virtually?

Trading in shares used to take place physically, with stockbrokers travelling to the stock exchange to buy and sell stocks on the trading floor. However, with the rapid developments in the field of communication, more and more is possible. Nowadays, anyone can trade shares virtually, and because the market is becoming more and more digital, the costs of doing so have dropped enormously.

At eToro, for example, you can virtually trade stocks without paying fixed commissions on your transactions. Use the button below to immediately open a free virtual demo account at eToro:

Did you know that all this is possible?

• Anyone can short sell: you then bet on a falling price!
• You can trade in shares from as little as one hundred pounds.
• You pay no commissions when trading CFDs.
• You will simply receive a dividend at the time of payment.
• You can try investing in stocks 100% free with a demo!

Do you want to try virtual trading for yourself? Then use the button below to open a free demo:

What should you look out for in shares?

Stocks generally move more erratically than currency pairs. Because the market for shares is smaller, an article in a reputable daily newspaper can already have a great influence on the share price. By keeping a close eye on the news, you can profit from these sudden movements, as you can quickly buy and sell stocks virtually.When you buy a stock, you are actually indicating that you expect the stock to rise. If this is the case, the money you earn will be credited to your account. You can also indicate that you think that the share is going to fall, in which case you will earn money when the price drops.Do you want to learn more about predicting the price of a stock? The following articles can help you:

• Technical analysis course: learn how to recognize patterns.
• Fundamental analysis course: learn to understand company figures.

Better results with virtual investing

There are two reasons why virtual investing can be more profitable than the old-fashioned way of buying up shares. The first reason is the fact that you can use leverage. By using leverage, you can also buy up a considerable number of stocks with a relatively low amount and thereby profit from the entire price movement. It is important to remember, however, that a leverage instrument also involves risks: you could lose your entire deposit more quickly as a result.A second reason that virtual stock market investing can help you make more profitable investments is that you learn practical lessons that you can apply to your real money investments. By keeping track of the mistakes you make, you can prevent making them again. In this way, you can ensure that you achieve better investment results over time.

What is the best way to understand shares?

Investing in shares can be a bit overwhelming in the beginning: the options are endless! You can trade in shares quoted on the FTSE, but also in shares that are traded in Greece, for instance. I myself started by following some specific stocks: by doing so, you will automatically learn to recognize patterns, and you can increase the chance of achieving profitable results.Ultimately, practice is the best way to learn how to make money with stocks. At a broker, you can easily open a virtual account with which you can try out stock trading completely without risk. By opening positions on your account, you’ll find out if you can trade profitably too!Do you want to compare brokers where you can open a virtual account? Use the button below to compare the best brokers.

How do you buy shares online?

In this article you can read how you can buy and sell shares by using the internet. We will discuss where you can invest in stocks against low fees. After that, we teach you everything you need to know before you start buying shares online.

How to buy shares online?

Years ago, buying and selling stocks was a cumbersome affair. To buy and sell shares, you often had to physically go to a bank, which charged high transaction costs. Fortunately, this is no longer necessary!Nowadays, via an online broker, it is possible to invest in all well-known shares. With an online broker, you can quickly buy or sell a stock within minutes. The best broker for buying shares is currently eToro; with this broker, you can buy and shell shares without paying set commissions. Use the button below to open an account directly:

How can you actively trade in CFD shares?

Do you want to actively trade shares using CFD’s? By actively trading the share markets you can react to economic developments. A good broker to trade in shares by using CFD’s is Plus500. Plus500 charges no commission on your trades, and you can try the options for free with an unlimited demo of $40.000. A big advantage of trading with Plus500 is that you can also place trades on falling prices (besides buying). Use the button below to directly open a free demo account at Plus500:

Buy & sell CFD shares at Plus500. Illustrative prices

Buying shares: learn how to buy shares in 5 steps

Before you can buy shares, you have to go through a few steps. Below we take a look at what you have to do before you can start investing.

Step 1: Open a broker account

To buy shares, you first need to have an account with an online broker. A broker is a party that makes it possible for individuals to buy and sell shares. When selecting a broker, it is important to pay attention to the following:

• What are the transaction costs on (foreign) shares?
• How much support do you get from the broker
• Which shares can you trade with the broker?
• What additional functions does the broker offer you?

Do you want to know where you can invest in stocks? On our brokers compare page you can see the best brokers to start investing:

Step 2: decide first which share you want to buy

After opening an account with a broker, you can get started. First you need to determine what stock you want to buy. You can search for a company that you want to co-own. It is smart to start with a few companies that you know well.Then it’s important to dig a little deeper. Don’t buy shares just because you think it’s a great company. Look at the annual figures to see how the company has performed in the past period. Also research the vision of the company and analyse whether it is likely that the company will continue to grow in the future.

Step 3: determine how many shares you want to buy

The next step is to determine how many shares you want to buy. Especially in the beginning it is advisable to invest only with a small amount. Take your time to learn how the stock markets function. It is only smart to get started with larger amounts once you understand this market. You can even try buying and selling shares without risk with a demo account.

Step 4: select the type of order

When you go to buy shares, you also have to choose the type of order. When you buy shares, you first see the ask and the bid price. The ask price is the price at which sellers want to sell a share. The bid price is the price at which buyers want to buy a share. There is always a difference between this price. We also call this the spread.When you buy shares, you can use different types of orders:

Market order

The market order is an order in which the shares are bought directly at the market price. The price can be more expensive with this type of order. Share prices fluctuate constantly. A market order is suitable for the investor who wants to hold shares for a long time. A few cents difference is less important when this is your strategy.You have to be careful with market orders. When you place a market order outside the trading session, your investment can be a lot more expensive. The price of a share can increase considerably outside the trading session.

Placing a market order on a stock at eToro

Limit order

A limit order is only executed when a certain price is reached. This is useful if you are an active trader. It can also be useful to use a limit order in less volatile markets. In markets with little activity, the price can suddenly make strange jumps.With a limit order, you are not certain that your (full) order will be executed. Are you sure you want to buy a certain stock? Then it can be smarter to use a market order. There are also specific type of limit orders. An all or none order is only executed when all shares are available at your limit price. A good for day order is removed if it is not executed before the end of the trading day.

Step 5: continue to optimize your equity portfolio

After you buy shares, the work doesn’t stop! Constantly ask yourself whether the shares in your portfolio still fit in well with your strategy. By doing so, you avoid losing a lot of money on shares that no longer fit perfectly with your current strategy.

Successfully buying shares: what should you pay attention to?

Buying and selling shares by chance is often not a good idea. When you want to achieve good results, you have to consider various factors. With these tips you can make more money by buying and selling shares.

Spread within your investment

It is important to spread your investments sufficiently. Don’t just buy one type of stock. It is possible that a sector performs poorly compared to other sectors. A company can always go bankrupt. By buying shares in different companies you reduce the risk of a huge loss.On the other hand, it is useful to remember that by spreading over different sectors you are not protected against economic setbacks. However, you can also handle this smartly. It’s wise to periodically buy shares for a fixed amount. Predicting the peaks and troughs is very difficult, but by  buying shares at different times, you avoid entering the highest point.

Compound interest

Companies regularly pay dividends. Dividend is a profit sharing. Of course, you have the option to transfer this dividend to your savings account, but you can also choose to invest the dividend again. This can be a wise decision.This is due to the principle of “compound interest”. When you reinvest the dividend in shares, you will also receive dividend on this amount. This increases your return in the long term exponentially. In five years’ time, you can quickly achieve ten percent extra return. So be smart and reinvest that return!

Watch your risk: reward ratio

Good investors always take the risks of their investment into account. The basic rule is simple: make sure your potential profit is higher than your potential loss. You must prepare a good plan before you buy a share. Consider at what price you take your loss and at what price you take your profit.Suppose you buy a stock for an amount of $10. You expect the price to rise to $15. Your potential profit is then $5 per share. The price of a share can also drop to $9, which means that the potential loss is $1. Your ratio between risk and return is then 1: 5.With this investment, you can earn five times more than you would lose. It is always wise to take positions with a favourable ratio between risk and return.

Control your emotions

One last important tip when buying shares is to control your emotions. In practice, we see that many investors leave lossy investments open for too long and cut profitable investments. This is because people are afraid of losing.This is obviously not a wise investment strategy. Do you also want to fight against this instinct? Then prepare a plan in advance. That way you prevent your emotions from influencing your investment decisions too much.

What are the risks of buying shares?

When you buy shares in a company, you face various risks. Below we briefly discuss what to beware of.

Company specific risks

A company can do business remarkably badly. This happens, for example, when a company commits fraud or publishes a risk warning. You can protect yourself against this risk by buying many shares.

Sector-specific risks

Sometimes a particular sector can do badly as well. A drop in oil prices for example, means that oil companies are doing less well. You can protect yourself against sector-specific risks by spreading your investments over different sectors.

Market risks

Sometimes the entire economy goes down. This happened, for example, during the credit crisis of 2008. Make sure you don’t invest all your money in stocks at once. That way you avoid getting in on top. It is also important that you don’t immediately need the money that you invest. This gives you time to wait for the markets to recover.

Currency risks

When you buy foreign shares, you also have to consider the currency risks. When you buy shares in a foreign currency, there is a risk of losing money because your currency decreases in value. You can cover this risk by using derivatives.

How to buy shares? Two methods

There are two strategies you can apply when you are going to buy shares. We will discuss both methods below.

Long term: buy shares

Many people buy stocks and hold them for a longer period of time. You can do this with a securities account at a traditional broker. When you buy shares in the long term, it is important to research the companies carefully. It is wise to verify whether the company will remain profitable in the long term.

Short term: speculate on stocks

You can also actively trade in shares. By speculating you can place orders on short-term rises and falls. It is best to use a derivative such as the CFD for this purpose. With CFD’s you can respond to rapid price increases and price drops.

• You can buy and sell CFD stocks with as little as $100.
• You can apply leverage which makes it possible to trade with bigger amounts.
• You can speculate on falling prices by going short.
• With orders, you can automate your trading activities.

Tip: do you want to know how CFD's work? Read this article for more information.

What you should know before buying stocks

Before you buy stocks, you must understand how stocks work. In this section we answer frequently asked questions about shares.

What are stocks?

A stock is a kind of document of ownership. If you own stock in a company, you are a co-owner of the company. You will therefore often be paid a share of the company’s profits in the form of dividends. Most people, however, also own stocks because they anticipate a change in price. This is also called market speculation Read here to learn more about stocks.

What are dividends?

When you buy stocks you should consider the importance of dividends. When a company makes a profit, the company may decide to distribute a portion of the profits to the shareholders in the form of dividends. Pay close attention to the dividend when you buy a stock. The dividend partially determines the result you achieve with your investments. Read here all about dividends.

How do you determine when you should buy a stock?

When you want to be successful in trading CFD stocks, it is important to time your trades well. There are two methods you can use to time your trading activities:

• Fundamental analysis: analyse the potential of the companies.
• Technical analysis: analyse the price patters of the stock.

Do you want to learn how to trade in stocks? Read our trading for beginners course:

Example: buy Apple shares

Using two examples, we show how buying shares can work.

Example: buying a share directly

When you physically buy a share from a broker, this share becomes yours. In this example you can buy the Apple share for an amount of $200. When the stock rises to $250 over a period of 5 years, you sell the share again. You then achieve a nice return of 25% or 5% on an annual basis.

Example: speculate on a share

You can also choose to speculate on a price drop of a stock using a CFD. By going short you can benefit from a decreasing stock price. When the price is $300 you decide to go short. The price of the share drops to $250 three days later. In this case, your profit would be $50.By using leverage you do not have to invest the full $300 to execute this investment. You can already make a similar investment with an amount of $30. Your return would rise to 50% if you apply a leverage of 1:10. Thus, with active speculation, both the potential return and the potential risk increase.

Trading stock using CFDs

You can trade stocks using CFDs. With CFD brokers, you pay a low fee that is dependent upon the size of your order. The costs start at a few pence, meaning you can also trade with relatively small amounts.Trading stock CFD’s also has other benefits. You can use leverage to magnify your results. However, it is important to remember that losses are also magnified using leverage. CFDs are contracts that stipulate an underlying value where the difference between the price you open and close a position determines your profit or loss.

Practice with a demo first!

Are you eager to start buying and selling stocks? Understandable! However, it is wise to start slowly. You can open a free demo account with various brokers. With a demo account, you can try trading shares without risk. Use the button below to open a free demo at a broker: 

The effect of interest rates on the stock market

Where many people with a saving account look forward to high-interest rates, high-interest rates on savings are rarely a cause for celebration for investors. When the European Bank announces that an interest rate increase is imminent, the stock prices drop immediately, but how is this possible?

What is the influence of interest on the stock market?

• An increase in interest rates makes borrowing more expensive.
• As a result, companies and consumers spend less money.
• This reduces the profitability of companies.
• As a result, share prices will fall with higher interest rates.
• Many investors switch from stocks to bonds.

When interest rates rise, borrowing money becomes more expensive

When interest rates rise, both consumers and businesses have to pay more to borrow money. Almost all companies borrow money from time to time, they do so to invest or to make a higher profit. Consumers also regularly borrow money to make purchases.

Companies invest less

Large companies borrow money regularly: they do this because they believe they can make a profit on their credit. When a company pays five percent interest over their loan and they achieve a return of seven percent on that, it means that they make a profit on their loan.However, when interest rates rise, this profit margin decreases. Companies then borrow less money, which reduces investments. This can reduce the profitability of the company.

Investments decrease at higher interest rates

Current financing costs

Rising interest rates not only affect a company’s future investments. It can also lead to the current financing of the company becoming more expensive. When the company suddenly faces higher interest charges, the profitability of the company can be put under immediate pressure.When earnings per share fall, shareholders are more likely to sell their shares, causing the price to fall.

Investors and borrowed money

Many investors make use of borrowed money within their portfolios. You can do this by applying leverage. When investors apply leverage, they invest on margin. The broker then deposits part of the investment. The investor has to pay interest when they use leverage.When interest rates rise, the cost of using the margin increases. This makes investing with leverage less attractive. When interest rates rise sharply, investors may even decide to sell their shares out of panic. This can lead to a sharply declining share price.

A Decrease in overall consumption

In the previous paragraph we briefly discussed that companies will invest less when interest rates rise. Money is needed for major expansions and innovations.When the interest rate on these investments increases, companies will postpone or cancel the less necessary investments altogether.

Decrease in employment

A direct consequence of the decrease in the number of investments is that companies spend less. When companies invest less, employment will decrease. After all, there are fewer projects for which people are needed. Lower employment in turn leads to less spending. The decrease in spending in turn leads to a decrease in sales. As a result, the profitability of the business sector decreases further, causing share prices to drop.

More expensive consumer credit

At the same time, consumers will spend less money because they will be able to purchase consumer goods on credit at a lower price. This also reduces spending. As a result, businesses will sell less and perform less well. This can also lead to falling share prices.

Investors withdraw their money from the stock market

Investors are always looking for an investment product with which they can achieve the highest return. When there is a higher interest rate, the return on savings accounts and bond loans is higher. At the same time, investors know that shares are less likely to do well.Shares have always been investment products with a riskier image. Investors want to be adequately compensated for this. When bonds or even the average savings account become more attractive, more and more investors will sell their shares. As a result, share prices may fall further.

What can you do when the interest rate rises?

When interest rates rise, share prices will often fall. At the same time, returns on savings accounts and bond loans increase. It may then be wise to withdraw part of your money from the stock market and choose one of these less risky options.

Incidentally, it is also perfectly possible to profit from a rise in interest rates. For example, you can short sell shares using CFD’s. You will receive money when the price of the share falls.You can also look for bargains. The higher interest doesn’t have to be permanent and in the future companies can achieve better results. When you want to buy shares, it is important to investigate carefully whether the company does not have huge debts on which they now pay much more interest.

How can you use the interest rate to predict economic recessions?

It is also possible to use interest rates to predict a future recession. Normally, the interest rates on short-term loans are lower than on long-term loans. Inflation causes the lender’s profitability to fall over a longer period. As a result of inflation, the same amount of money becomes worth less in the future. The lender, therefore, receives a smaller amount of real value back. Sometimes, however, there can be a reversed interest curve.

An inverse interest rate curve is a situation where the short-term interest rate is higher than the long-term interest rate. In the past, this was an indication of the start of a new recession. When this happens, it may be attractive to invest in short-term bonds. The interest rates on these bonds are then higher. In this situation, it is better to temporarily ignore shares.

On the Y as you see the interest rate and on the X as you see the number of years.

Note the real interest rate

It is important to pay attention to the real interest rate when analysing the market situation. How much the real interest rate rises depends on inflation. Inflation is the extent to which the average price level rises. When inflation increases, the value of the same amount of money decreases. When inflation is higher, the real interest rate increases less. A 1% increase in the interest rate at 1% inflation is stronger than a 1% increase in the interest rate at 3% inflation.A higher interest rate does not necessarily have to be bad for the stock market. When the economy is doing well, interest rates can rise a bit without having a negative impact on the economy.

What about bonds?

The price of the same bond decreases as interest rates rise. After all, a bond with a fixed interest payment of 2% is more attractive when the interest rate on savings accounts is 1% than when the interest rate is 3%.

On new bonds, however, interest rates will be higher. If you think that the interest rate will drop again in the future, it may be interesting to buy bonds.

Investing in real estate

When interest rates rise, investing in real estate may become less attractive. When interest rates rise, your mortgage costs increase. At the same time, fewer people will be able to take out mortgages. This reduces the number of people who want to buy a house. As a result, house prices may fall.

How is the interest rate set?

Interest rates within economic zones are strongly influenced by the Central Banks. In America, for example, it is the Fed or Federal Reserve that sets interest rates. They change interest rates regularly to ensure that there is no excessive inflation.

By changing the interest rate it becomes cheaper or more expensive to get money. This strongly influences the spending pattern within an economy.The effects of an interest rate increase or decrease can often be seen directly on the stock exchange. The actual effects on the economy can often only be seen a year later.

In the graph above you can see which interest rates the Fed has calculated over time

Which companies benefit most from low-interest rates?

When interest rates are very low, you see that companies that pay out high dividends often benefit the most: think of Shell, for example. Companies that have to finance many of their activities with borrowed money also benefit from low-interest rates: think of real estate companies.

Which companies benefit from high-interest rates?

Some shares perform better when interest rates rise. These are often the stocks in the financial sector. For example, banks may charge higher interest rates for lending money. This allows them to make a higher profit, which is of course good for the share price.

Expectations are key

Ultimately, it is the expectations that determine most of the effect of interest on the share price. The prices of shares are determined by the game of supply and demand. The expectations of millions of investors determine how share prices develop.If the majority expect the Fed to cut interest rates by 0.5%, but they do so by 0.25%, share prices may still fall. People had already bought the shares based on that expectation. They are then disappointed by the more limited fall and decide to sell their shares.It is therefore always important when investing in stocks to keep an eye on sentiment.

Day trading: make money trading shares

Day trading is one of the most interesting ways to make money through the internet. By day trading you can quickly buy and sell shares. If you make the right decisions, you can make a lot of money. But how does day trading in shares work? And how can you make sure you achieve a profitable result? In this article you learn everything you need to know to get started yourself!

Did you know this about day trading?

• You can do day trading 24/7: determine your own working hours!
• You can buy and sell shares within minutes.
• Even when a share performs poorly, you can make a profit.
• You can try day trading risk-free with a free demo.

Do you want to start trading stocks? Then it is wise to try it with a free demo first. Use the button below to see which brokers allow you to open a demo for free:

How can you make money trading stocks?

There are several ways you can make money trading shares. You can choose to invest actively in stocks as a day trader. Alternatively, you can choose to use shares to build an income long term.

Working as a day trader

As a day trader,  you buy and sell shares in the short term to take advantage of both rising and falling prices. Nowadays, you can short sell shares with any modern broker, which means you earn money as soon as the price drops. The option to short sell gives you more opportunities to achieve a high return than traditional investing.By using the ability to short sell, you can benefit from trading under all market conditions. The price of a stock can move both down and up in a single day, and you can make a profit in both cases. In traditional investing, you usually only make a profit when the price rises.

Making a living from shares

It is possible to build an income by trading shares. You do this by buying stocks with high potential. Companies with good profits regularly choose to pay dividends. A dividend is a payment of part of the profit to the shareholder.The smart, active trader does not just day trade. It may be wise to lock some of your profits into long-term stocks. By applying this strategy, you both build up wealth and an income. The trading tip of the day is not to bet all your money on one strategy. That way, you greatly increase your chance of success!

What are the basic principles of day trading?

In day trading, you trade shares with the aim of achieving price gains. You often keep the shares for a short time, and you try to achieve a high return in this time. This manner of investing is the opposite of building a portfolio, through which you invest with the aim to grow your wealth in the long term.

How can you start working as a day trader?

If you want to start trading shares as a day trader, it is wise to open a broker account. You can open both a demo and a live account with most brokers. With a demo account, you can use a fictitious amount to practice trading shares completely risk-free and with a live account, you can start trading immediately using real money.

Click here to compare the different brokers & open a free (demo) account >>

With a broker’s day trading software you can easily trade in different stocks!

What is the best way to get started?

A skilled equities’ trader should not only be able to deal with numbers: in fact, numbers only play a limited role. In the end, your mindset is the most important element within your trading strategy. Once you have developed a system that works and you start to make money, you have to keep following this system.

In fact, your trading system is just like your marriage partner: together, both in prosperity and adversity. Especially the latter can be tricky, but remember, a good trader cuts off losing trades early. Likewise, in prosperity people sometimes get disorganized and close their position on a share too quickly. By doing so they do not benefit from the full movement. It is therefore essential to always try to remain rational and decide in advance what your goal is!By setting your own rules  and complying with them, you can trade shares more rationally and successfully.

Some final stock tips

Of course, as a trader you want to achieve good results. It is important to invest in a smart way. An important tip is to follow the trend  as much as possible. When the markets have been rising for months, it can be very risky to bet on a decline.A second stock tip for the active trader is to always use a stop loss. With a stop loss, you can set a value where you automatically take your loss. This prevents you from losing your entire investment due to one bad investment.The third tip is not to consider yourself rich right away. Investing is a skill that needs to be learned, and the only way to really learn investing in stocks is by practicing a lot. You can learn how to invest by opening a free demo with a broker.The fourth tip is to remember that a higher profit often means a higher risk. If you use speculative investment products, you are more likely to lose a substantial amount. Therefore, only invest in a way that suits your personality. Will losing a lot of money with your shares keep you up at night? Then maybe you should do something else.Finally, it is important to understand the difference between the average return  and the total return.  On average, people who buy shares achieve a return of 8% on an annual basis. However, this does not mean that you achieve this return every year. One year you can get a return of 30% as an investor while you lose 20% in another year. Active investors therefore win in the long term.

Learn from my experiences

When I was young, I thought I was going to get rich trading stocks. I opened an account at a CFD broker and started trading with a few hundred dollars. I didn’t really have a strategy: I looked at the chart and randomly opened stock positions based on price patterns.Sometimes this went very well for me. When I was at school, I looked at my phone and saw that I had earned $800 with a stock position while I had only wagered $100. I used a multiplier that allowed me to take a bigger position. Other weeks, however, I also lost hundreds of dollars.For that reason it is important not to count yourself rich too quickly. You can certainly make a lot of money trading shares, but the risks are also significant. Therefore, only trade with money that you can really afford to lose. That way it will remain fun!

Mistakes that cause you to not make any profit by trading shares

No one is perfect. If you seriously want to make a profit from trading stocks, you need to avoid making these typical mistakes.

Waiting for safety

Investing in stocks is never safe. When you wait until it is safe, you miss out. Especially in times of crisis, you can make a lot of money by investing. However, it is important that you make good decisions. Fear is a strong emotion, but what has fear brought humanity? Nothing but loss!

Waiting for a lower price

The stingy investor does not buy a stock even when the price is very attractive. The fact of the matter is that no one can predict how the stock price will develop. Do you see an outside chance? Then now is the best time to buy. No one knows for certain whether the price will drop any further.

Trading in ‘funny’ shares

Amateurs only trade in fun stocks. Buying and selling shares because you like the brand is not a winning strategy. Consider if the company has potential to make a profit in the future. If this is the case, you may decide to buy the stock.

Investing in cyclical stocks

You can also achieve good results with cyclical stocks. But what are cyclical stocks? And how can you invest in cyclical stocks? You can read all about it on this page!

What are cyclical stocks?

Cyclical stocks are shares that move with the economy. When the economy is doing well, cyclical stocks often move up. When the economy is deteriorating, cyclical stocks often fall. But what is the best way to invest in cyclical stocks?

Where to invest in cyclical  stocks?

You can invest in cyclical stocks with a broker. You can choose to include cyclical shares in your portfolio for the long term. It is important that you can hold the shares long enough. When the market does not perform well, the stocks decrease in value. With cyclical stocks you can therefore obtain a negative result for a long period.

You can also choose to actively trade cyclical stocks. That way you can take full advantage of the price fluctuations of these shares. It is even possible to speculate on a price drop, so that you can also profit from it when the economy is not doing well.Do you want to know where to buy cyclical stocks? Use the button below to instantly compare the best stockbrokers:

Which stocks are cyclical?

Cyclical stocks are stocks that depend heavily on economic performance. One sector where you will find many of these stocks is the travel sector. People only go on holiday when they have sufficient income. When the economy is performing better, you will see that the prices of these shares often rise.

Stocks that deal with temporary workers are also very cyclical. After all, a company like Randstad earns its money from workers. Only when the economy is doing well will the demand for labour increase.Furniture stores, restaurants, and clothing stores are also often cyclical. Are you wondering if a stock is cyclical? Then consider whether it is primarily a luxury product. If consumers can cut back on the product or service when the economy is bad, then the business is likely to be cyclical.

Travel stocks are often very cyclical

Using bèta: Cyclical or not?

Bèta is often used for investments. With Bèta you can properly determine how the share moves with the market. The Bèta indicates the correlation with the market. We also refer to this value as the systematic risk of the investment.

For example, with a Bèta of 1.2, the stock price falls 12 percent for every 10 percent that the economy declines. A Bèta above 1 indicates that the stock moves strongly with the market and is therefore cyclical.With a Bèta of 0.8, the stock price drops only 8 percent for every 10 percent the economy declines. This share is therefore not very cyclical.

High beta stocks underperform in bad economic times.

Are defensive stocks better?

Some people choose to only invest in defensive stocks. Defensive stocks are not cyclical. Defensive stocks are often more stable and perform relatively well during a poor economic period. But what kind of shares are considered as defensive stocks?

Defensive stocks are shares of companies that provide services or products that are always in demand. Think of companies that produce food. Companies that produce stimulants such as alcohol and cigarettes often also fall under defensive stocks.Does this make defensive stocks a better choice than cyclical stocks? Not by definition! Defensive stocks offer a more predictable return. This is reflected in, among other things, stable dividend payments. Nevertheless, defensive stocks do not always perform better: this is partly because they have competition from bonds. For many people it can therefore be interesting to invest in a mix of cyclical and defensive stocks.

Cyclical or defensive investing?

If you want to get the best results, do not put too much emphasis on the type of investment. You can achieve good results in both cyclical and defensive stocks. With both types of shares, it is especially important to check whether the shares are being traded at a discount. After all, that is where you ultimately make the profit!

What are the advantages of cyclical  shares?

Cyclical stocks are very volatile. If you manage to time the purchase moment well, you can achieve a good result. By actively trading and by continuing to analyse the economy, you can achieve better results with cyclical stocks.

What are the disadvantages of cyclical stocks?

Obviously, this also comes with a downside. Are you not paying attention? Then you can just see a large part of your assets evaporate. When a recession starts, cyclical stocks often perform the worst. It is therefore wise to keep an extra close eye on the cyclical stocks in your portfolio.

Recognizing cyclical stocks

Do you want to recognize whether a stock is cyclical? Then put the graph of the share next to the graph of, for example, the NYSE. In this way you can see to what extent the share price moves with the average development of the market. When the stock price reacts more strongly to economic prosperity & disaster, you are probably dealing with a cyclical stock.

Demand moves in waves

The economy is not growing in one strong line: the economy will generally grow gradually with the necessary declines. During a favourable economic situation there is usually a high demand for certain products, this is also called a boom. When the economy deteriorates somewhat, the economy is in a recession.Cyclical stocks are stocks that are closely related to these waves in the economy. They are often more sensitive to economic developments and generally move up and down more strongly. With cyclical stocks, it can be difficult to maintain a stable stock portfolio: by using the right tricks you can still profit from these strong price movements.

Info: countercyclical stocks move against the economic trend.

How to benefit from an unstable stock price?

You can take advantage of an unstable stock price by using an online broker. With an online broker, it is possible to open both long and short positions. When you open a long position, you benefit from the rises in price and when you open a short position you earn from the price falls.

Because the transaction costs with online brokers are lower, you can quickly open and close positions on shares, so that you can take advantage of the strong movements that cyclical stocks usually make. It is important to time your trades well.

Strategy for cyclical stocks

Cyclical stocks can move strongly. Nevertheless, it is often also possible to make a good prediction of the future price for these shares. Long term, a cyclical share will mainly fall during an economic downturn and rise during an economic recovery.Short term, you can often spot fixed patterns within these movements. For example, the price of a stock moves down between certain values ​​and always finds resistance on the same line. By making smart use of orders, you can then make a profit by trading cyclical shares.Would you like to learn how to best profit from the patterns of cyclical stocks? In our technical analysis course, you will learn how best to time your investments. Use the button below to view the free course:

 Where can you best invest?

When you are going to invest in stocks that move strongly, it is wise not to do this physically. Constantly buying and selling shares can be expensive because of the transaction fees. However, by trading the shares through an online broker you can take advantage of both the upward and downward movements.

It is straightforward to start trading in CFD stocks with an online broker. Often you only need to enter a few details, and you can get started right away. My favourite broker to trade in CFD shares is still eToro because as a starter you immediately receive a risk-free demo of $100,000: with this you can immediately try out the possibilities of CFD trading in cyclical shares!Use the button below to create a demo account with eToro for free:

 Early and late cycle cyclical  stocks

We can divide cyclical stocks into early and late cycle cyclical stocks. Early cycle cyclical stocks move directly with the economic situation. When the stock markets fall, an early cycle cyclical stock will immediately fall in value. A late cycle cyclical share does not move with the economy until later. When the economy falls, it takes a while for the share price to fall.By analysing whether stocks are early or late cycle cyclical stocks, you can determine when it is smart to buy or sell the stock.

 Can you predict market movements?

Cyclical stocks move with the economy. You would therefore think that this makes it relatively easy to predict the price development of cyclical shares. In retrospect, this seems easy: the problem, however, is that it is difficult to predict whether the price will fall or rise further.

Therefore, it is smart for most investors to invest in an index fund. With an index fund, you can periodically invest in a basket of shares. That way, you do not have to predict whether the economy is at rock bottom or at a peak. Would you like to learn more about investing in index funds? Then consult our article about investing in index funds:

 Types of cyclical shares

You can divide cyclical stocks into three categories: durable goods, non-durable goods, and services.Durable cyclical companies produce goods with a long lifespan. An example of this is a car manufacturer. When people have less money to spend, they quickly cut back on this type of large expenditure.Another type of cyclical share are companies that sell non-durable goods: think of manufacturers of luxury sports shoes. When people have less money to spend, they are more likely to opt for cheaper alternatives.Lastly, there are also service cyclical stocks. Especially many companies that are active in the entertainment sector suffer from a bad economy. People then have less money to spend on fun outings such as a visit to the cinema or an amusement park.

Shares for dummies

Are you looking for a simple guide to buying and trading stocks for beginners? Then you’ve come to the right place! In the article stocks for dummies we explain everything about shares. With this explanation, you will learn what you need to make money on the stock market.

How can you start investing in shares?

You can start trading shares with an online broker. With online brokers, you can trade in every popular type of shares. These are the biggest benefits of trading shares through a broker:

• You can use orders to automatically open a stock position.
• Short selling ensures that you can earn even in the case of a price drop.
• Thanks to their user-friendly software, dummies can also buy shares.
• By using leverage, you can even invest with small amounts of money.
• You can get a free demo to try out stock trading.

The best way to get started with shares as a beginner is to open a free demo. Use the button below to instantly compare the best demo accounts:

Stocks for dummies: an explanation of the stock market

Big companies are not owned by one person. Big companies like Google and Shell are in the hands of shareholders. Shares are proofs of ownership. As soon as you buy a share, you co-own the company.  Many shares are traded on the stock exchange, where a price is created by supply and demand.Increased demand for certain shares in case of an equal supply, usually leads to an increase in the price of the share in question. When there are multiple buyers, you can ask more for the share. Ultimately, you can predict the price of a stock by remembering that supply and demand determine the final price:

• Do you think more people want the share? Then the price rises.
• Do you think more people want to sell their shares? Then the price drops.

How to buy your first share?

Before you start investing in stocks, you need to follow a few steps. Here we look at the steps you need to take before you can buy your first share.

Make sure you have enough money

Before you can start trading stocks, you must first have enough money. It’s important to invest only with money you can stand to lose. It is possible to trade in stock with as little as $100. However, with a smaller amount, it is more difficult to spread your risks, which lowers your chances of success.

Decide what kind of investor you want to be

Before you make your first stock purchase, it is important to decide what kind of investor you want to be. Do you want to speculate on the price of shares in the short term? Then it is best to use derivatives. With derivatives, you can speculate on changes in the price of a share in the short term.Would you rather make long-term stocks investments? Then it may be wise to buy the shares and hold them for a longer period of time. Of course, you can also combine both strategies.

Find a good broker

Buying a share is different from buying a vegetable in the supermarket. You can only trade shares with an official broker. A broker is a party which makes it possible to buy or sell shares. It is important to choose a broker with low transaction costs. One additional percent of transaction costs can quickly cost you tens of thousands in the long run.Do you want to know where you can buy shares as a beginner? Click the button below to compare the different providers:

Choose some stocks you want to buy

After you opened an account with a broker, you must select some stocks that fit you as a ‘dummy’. To do this, you first need to determine your risk profile.  Would you rather invest in risky stocks with a potentially high return, but also a potentially high loss? Or do you prefer stable but less profitable stocks?

Research the companies

Before you buy the share, it is important to examine the company behind the share carefully. You can perform fundamental analysis for this goal. By using fundamental analysis, you can investigate whether the value of the share corresponds to the intrinsic value of the company. If the shares are undervalued, it may be wise to buy them. This method is similar to Warren Buffet’s investment strategy.If you prefer to speculate on short-term price movements, then technical analysis is a better technique. With technical analysis, you look for patterns within a graph. Based on technical analysis, you can find good opportunities to enter the market.

How can you make money from stocks?

There are two ways in which you can make money from shares. In this brief explanation, we will discuss these methods:

Price gains

You can get a positive return on shares by selling them at a profit. You can do this by buying the shares relatively cheap. To discover cheap shares, you will have to research the company. You can analyse whether the company will be profitable in the future by applying fundamental analysis.When you use derivatives, you can also benefit from a price drop. You can benefit from a price drop by short selling the share. When you short a share, your potential loss is unlimited. In theory, the price of a share can rise indefinitely. However, in economically bad times you can achieve high returns by going short.

Dividend

The second way you can get a return on shares is by receiving a dividend. When a company makes a profit, the company can choose to pay out part of that profit in the form of dividends. Do you want to learn more about dividends? In our article ‘what is dividend’ you can read everything you need to know!

Predicting the share price for dummies

By paying close attention to the news,  you can predict the price of a stock. Keep in mind that there is no need for a logical connection.  Think like the masses and how they are likely to react to the news. Beginners often react with panic, which can cause a share price to collapse after negative news.In the case of a profit warning,  it is clear that the company is doing less well than expected and shareholders often panic. Because many people try to sell the stock at the same time, the price can sometimes fall more than five percent in a day. However, when a well-known CEO resigns, this can also have a negative impact on the share price.Aside from the news, it is also important to try to spot patterns. Prices often move in logical patterns. It is wise to first determine whether a share price is mainly decreasing or increasing. Once you have established the general trend,  you can determine at which point the price most often bounces back. Share prices often bounce back at the same level.Tip: have a look at our technical analysis course for more information on this topic!

Buying stocks for beginners

Are you still a dummy when it comes to stock trading? Then we would like to give you some tips that could help a beginner such as yourself.

Invest in things you understand

Many investors make the mistake of investing in things they find funny. Do you like weed, for example? Then you can randomly buy weed shares. However, this is not a winning strategy. Do you want to obtain good results as a beginner? Then choose a few shares and start studying the market carefully. Do not invest in a stock until you fully understand it.

Plan

Novice investors sometimes buy up shares at random. Buying Apple shares because you bought such a beautiful iPhone is not a good plan. Therefore, it is important to consider when and why want to buy certain shares. When you have a good plan, you can also start tracking the results. By tracking your progress, you can slowly start improving your trading strategy.

Take your profits

Profit is always great! Many beginner investors tend to beat themselves up when they see the value of a stock rise further after they sold it. That’s a shame! Every win is positive, and you can never predict with certainty what the top is.Sometimes it may be wise to remove the portion you invested with your money from your investment. Has a stock gone up enormously? Then take your winnings and maintain only a small portion of your investment. That way you can reuse the money thus freed up for new trades.

Do not panic

Many novice investors panic when share prices collapse. Dummies sell their shares en masse during these kinds of crashes. However, this is not a good strategy: it is precisely when the share markets fall that you can achieve huge profits.For example, you can make a profit by speculating on the falling share price. During a crash, you can buy new shares at advantageous prices. Short-term movements are rarely relevant to your long-term strategy.

Do not worry

A share loss is just a loss on paper. If your shares are worth 10 or 20 percent less, this is not final. You still own the same number of shares, and you can hold them for as long as you want. It is often wise to wait for better times when your portfolio is temporarily performing poorly.This also directly illustrates why it is so important for both beginners and advanced investors to only put money on the line that you can really miss. Only make investments that do not keep you up at night.

Diversification makes safe

It is advisable to diversify your investments as much as possible. Many novice stock investors make the mistake of investing most of their assets in a handful of stocks. When you do this, you increase the likelihood that you will lose a large part of your money on the investment. It is therefore smart to spread your equity investments as much as possible. There are several ways to spread your investments:

• Time: enter the market at different times.
• Sector: buy shares across multiple sectors.
• Region: buy shares from different regions.

Practice first

When you were learning to drive, you did not start driving a Ferrari. It is important to take some test drives first. Opening a free demo account is a good way to practice investing. You can also choose to keep fictional trades on paper. Either way, as a beginner, it is advisable to practice first. By doing so, you will prevent your first experience from turning into an expensive disaster.

From dummy to millionaire with shares?

I am not exaggerating when I say that everyone can eventually become a millionaire  by investing in stocks. This also applies to novice investors. The power of exponential growth allows you to build a huge amount of capital with a small, monthly investment.For example, if you invest $1000 every month for 10 years at a return of 8%, you already own $173,838 at the end of the journey. When you do this for 20 years you have $549,143 and after 30 years you own more than $1,359,398. Depending on how much money you can invest, you can quickly become a millionaire.But how can your returns accelerate? This is due to the principle of interest on interest. If you invest the money you earn with your share investments repeatedly, you receive interest on it again and again. In the beginning, this effect is limited, but over a long period of time the effect increases enormously.Over a period of 60 years, this amount even grows to $15,038,559 and over a period of 100 years to $329,814,188. Now you can easily understand why rich families often stay rich. All you need is time and when your assets have grown enough this effect just keeps growing.Regardless of your situation, it is smart to start investing. As long as you do this with money you can stand to lose and in a way that suits your personality, then this works better than putting all your money into a savings account. After all, in a savings account, you can be sure that you lose money. Inflation makes everything more expensive and the money in your savings account barely vests a return. So, every year you lose money on it!

Things to remember regarding the stock market

Both novice and advanced share investors regularly forget the most important lessons regarding the share market. Stocks are always risky investments. The return on shares is higher over the general line and investors expect to be compensated for that. For that reason, shares have the highest returns long-term. However, this does not mean that you will achieve good results with shares short-term.To build a large amount of capital with trading shares you need time.  When you spread your investments sufficiently and wait patiently, you always get good results in the long run. Make sure you handle crashes in a smart way, because they will always occur. If you follow these rules you can build up a good sum of money by trading shares.Ultimately, it is also important to remember that investing in the stock market can be fun.  When you view it as a fun activity with money that you can afford to lose, then the profit becomes an afterthought. And when you can study the market without too many negative emotions, this often only benefits your results.

Equities explained: important concepts

Let us discuss some important concepts before you invest in stocks.

What are shares?

Shares are prove of property. Thus, with a share, you become part owner of a company.

Who can trade in shares?

Anyone can trade in shares. As a beginner, you can buy and sell shares just as easily as a professional investor.

Can you always trade in stocks?

Stock markets have fixed opening hours. You can only buy and sell shares during the opening hours of the exchange.

How do you buy shares?

You buy shares from an online broker. Do you want to learn what the best parties are to buy and sell shares with? Press the button below and find out where to trade in stocks: