I. What is the Stock Market?
The Stock Market is part of the Capital Markets, which is the means through which an economy allocates and distributes resources, risks and related information in a way that savings can be transferred into an investment.
The Stock Market is a liaison between people who need resources and the people who are willing to render them hoping for a return.
II. Who can invest in the Stock Market?
Anybody can invest in the Stock Market. In order to do so, the interested party must be in contact with a stockbroker or intermediary, who will be able to help you determine the products that you may invest in, depending on the risk profile and on each client’s needs.
III. What is the best investment option for me?
This decision depends upon the individual needs. The best investment option must adapt to the desired investment period, the expected return, and the level of risk the individual is willing to assume, among other factors.
To have a better understanding of which is the best investment option, some aspects must be defined beforehand:
Objective of the Investment: The first question to be answered is the objective we would like to achieve through the investment. For example, the money can be used towards buying a house, retirement, vacations, or as inheritance. Answering to this question will allow us to establish the time the investment must last.
Investment Period: There must be a direct relationship between the investment period and our objective. For instance:
- -If the purpose is to invest towards a retirement fund, and we still have many years to go before being eligible to retire, we could commit to a long-term investment. On the other hand, if you are eligible to retire within a short period of time, then probably it would best to invest in a short-term financial instrument that represents a lower risk.
- -If we are planning on going on a family vacation, we may need to have disposal of our money within a short period of time. Therefore, the best option would be a short-term investment.
Risk Profile: This term refers to the different aspects that determine the level or degree of risk that we are willing to assume with our financial resources or investments.
IV. What is a stock brokerage firm?
It is a liaison between investors and the stock market. Its main objective is the buying and selling of securities on its own and on behalf of its clients in the national and international stock market. Moreover, it provides investment counseling services.
V. What is a bond?
These are corporate liability financial instruments with different characteristics such as expiration date, currency, interest rate, and a varying level of risk, depending on the issuing company.
Bonds issuance is an alternative financing option for companies that differs from loans. The issuing company acquires the duty of returning the amount of the investment to the bondholder after a specific period of time, plus another amount as part of the interests due.