Investing in stock markets can seem overwhelming, but understanding the various asset classes and market features will provide you with the basis for making sound decisions. Each market offers unique opportunities, tailored to different risk profiles and personal preferences. Here we explore some top options for you to determine which ones best align with your financial goals.
What are the functions of the stock market?
The stock market is not only a place where we can invest money, but it also fulfills multiple essential functions that facilitate personal and corporate financial management:
- Saving for the future: It allows us to accumulate and generate profitability for personal goals such as retirement or children's education.
- Raising and borrowing capital: Companies and governments can use the stock market to obtain financing without incurring high bank interest rates.
- Risk management: Offers the ability to choose between high or conservative risks, according to your needs and profile.
- Asset Trading: Enables both the purchase and sale of assets with immediate or future delivery, depending on your investment strategies.
- Information exchange: Provides real-time data on asset prices and economic situation of companies and governments, vital to understand market trends.
What types of assets exist in the stock markets?
Stocks and stock indexes
Stocks represent partial ownership of a company. In addition, stock indexes compile groups of stocks with a specific investment thesis, such as:
- Dow Jones: Groups the 30 most liquid U.S. industrial companies.
- Standard & Poor's 500: Includes the 500 most significant publicly traded companies.
- Nasdaq: Brings together the top 100 technology companies.
The indexes allow you to diversify by investing in multiple companies at the same time.
Commodities
The commodities market is classified into three broad categories:
- Agricultural: From wheat to coffee, including the possibility of trading futures on products such as orange juice.
- Energy: Commodities such as oil and natural gas.
- Metals: Gold and silver are the most recognized, but any metal in demand can be traded.
Bonds
Bonds can be sovereign or corporate:
- Sovereign bonds: Issued by governments to finance projects. They offer a fixed return.
- Corporate bonds: Companies that meet specific requirements can issue them, also promising a fixed return.
These are characterized by belonging to the fixed income market, offering greater security on the expected return.
Forex and cryptocurrencies
The Forex market and cryptocurrencies operate mainly on digital platforms:
- Forex: Involves the trading of currency pairs, such as the euro and the Japanese yen.
- Cryptocurrencies: include Bitcoin and Ethereum, in addition to other altcoins and stablecoins.
Exchange-traded funds (ETFs) and global market.
- ETFs: Funds that invest in indexes, commodities or bonds, providing lower risk and more diversification.
- Global market: Allows international investment from your local stock exchange, with the advantage of operating in your currency and without cumbersome procedures.
It is essential to explore your options and consider which of these assets align with your risk management capabilities and return expectations.
What additional resources can supplement your financial education?
In terms of additional education, platforms such as Platzi offer detailed courses on the various asset classes and in-depth investment strategies. Consider joining to enrich your investing knowledge and skills. As Alexander Elder used to say, focus on making the best trades: the money will come as a result.
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