Trading in the Financial Markets

What You Need to Know Before Starting to Invest in Financial Markets Part II - Terms and Concepts

O que Precisa Saber antes de Começar a Investir nos Mercados Financeiros II - Termos e Conceitos

In the previous article we talked about the psychological aspects to take into account before starting to invest in the financial markets. In this article I'm going to talk to you about terms and concepts whose knowledge is necessary for those who want to invest.

First of all, how is it processed? How do you invest anyway? How does it work? These are the first questions that arise for anyone looking to get started in the world of investing in financial markets.

I will now explain in a general way, the ways of investing that are available to us, common mortal cybernauts.

So basically, investing in financial markets consists of placing the money we intend to invest in a certain site that provides us with a platform, software or application (app) where we can monitor the prices of our assets in real time and where we can then issue our orders. buy and sell.

These sites are called brokers and there are thousands all over the internet. Let me inform you right away, that not all of them are reliable and yes, it is another risk we are going to take when investing, but unfortunately it is the only way that is available to us, ordinary mortal cybernauts, although you can always go to your bank, but note that interest and fees may not be that attractive (oh, and remember BES, for example, where people lost large savings. And it wasn't because of the risk of the markets. It was really due to the corruption of bankers, so there will always be risks, as in any business. As the saying goes, “nothing ventured, nothing gained”.

And so yes, we need a broker. We will always depend on a broker. The advantage of using a broker, for now, is that you will have much more autonomy and control over your money, namely over where you are going to invest it. You will choose the assets yourself and not just any supposedly accredited banker. The only thing the broker will do is keep your money in an account and keep it available to make the investments you want, being able to withdraw your money whenever you want, without, for example, having to wait a year to enjoy interest. You can withdraw your money whenever you want. Yes. Whenever you want. Even by weekends. Cool, huh? Long live electronics or not?

Broker? This sounds a bit like a bookmaker, you might think. Okay, the concept is more or less the same, but I assure you the risk is not that high. Even because financial market brokers (the legitimate ones) are constantly subject to strong regulations by the competent authorities (such as the Real Estate Securities Commission). Therefore, when choosing your broker, do it with a lot of research and prudence. I will write an article about brokers soon.

Why did I mention the broker first? Because it's really what we need to start investing and nothing else. Investing is just you and the broker app. Open the app, deposit money, allocate it to the assets you want and watch your money grow, or not. But I'm talking about a passive income. The true passive income. The risk is up to you. But it wasn't always like this.

Fortunately, there are currently at our disposal (on legitimate brokers) very good tools to manage and mitigate risks. Don't be scared at the start. The prospects are very good. Investing in financial markets is good, and recommended.

Of course there will always be skeptics. Those who think they're going to lose all their money and that this is just another risky gamble, not unlike the scoreboard or scratch cards or the EuroMillions. The same skeptics who never stop buying that same scratchcard or that same EuroMillions, or when the soccer club of their heart plays, go put a coin on the Placard. Anyway. If you're a skeptic, of course I won't be able to do much for you at the outset, as nothing I say here on this blog will change your beliefs.

I'm here to help those who want to invest in the financial markets, not to change the minds of those looking for just one more reason not to invest.

These are usually the ones who don't even like to leave the money at the bank. It's better to be under the mattress, or in a small safe hidden at home, as they think that this way they have greater control over it. “MB Way? Bank app? No, no. I don't use any of this! That's just scams all the time in the news.”

Well. When you later arrive at the only ATM in your area (which is my case) just to withdraw money, because you have already made your payments and transfers in the app, there are 10 people in front of you. Yes. Those who have to go to the ATM make payments and transfers because they don't want to have anything to do with the apps.

So, what do you think is on the ATM screen? Not an app? Luckily, physical money (which still comes in handy despite everything) is not coming out of the cell phone, or I would rather, than having to wait for 10 “skeptics” to hurry up.

Once again, drawing attention to the need for money to be invested and not just standing in the bank or under the mattress, as I said in the previous article. Hello Inflation. And more do not say. Look, I've already received the email (yes, email, it wasn't by letter) informing me that the prices of natural gas and electricity were going to be “updated”. Something tells me that it is not to reduce, but to increase. This is inflation. Sorry for the question, will your salary be increased as well? So. Invest. Investing is the solution.

Going back to terms and concepts you really need to know. Currently (a few years ago), brokers are required to validate our application through a small eliminatory “interview”.

This interview consists of an online form that we have to fill in by answering questions regarding investments, precisely. The purpose of this interview is to assess your investor profile, that is, your risk aversion.

Of course that, here between us, it's just a way for them to relieve themselves of any responsibility if you lose all your money, but ok, the interview is there and we have to get over it if we want to open an account. Because if we fail the key questions, the account is not opened and we are “confined” to a demo account to “practice”. Which is not bad if you want to start learning to invest without risking your money. But you can still do it if you pass the interview.

You won't be able to open a real money account if you don't pass. At least with the email you used. That is, if you fail the interview, you will have to try to pass it on later, but with another email. Only then will you will be able to open your account.

This article is quite extensive, and I still have a lot to tell you about terms and concepts when it comes to investing in the financial markets (and how to pass the interview), but once again, the article is already long, let's leave that to Part III.

In the next article, we are going to “get your hands dirty” and learn the jargon used by most investors and what each term and concept means, of course. Don't miss the next article. Come back here frequently, and I'll publish more things for you.

Grateful to have you there.

L. R. Neves

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