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How to invest in the stock market is a common question among Brazilians who want to invest in this market. After all, in order to achieve good results in this business, you need to understand how it works. Check it out below. 

How to invest in the stock market

To start investing in the stock market, you need to understand the main fundamentals of the stock market. In short, there are a multitude of ways, methods and strategies to get started in the business, some recommended for beginners and others not. 

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Lately, the number of investors in Brazil has grown significantly. According to B3, between July 2021 and June 2022, more than 1 million new investors joined the stock market. However, even though the number is large, many have doubts about the subject. 

Among the main doubts Brazilians have is that of how to invest in the stock market. To get started in this market safely, some initial tips are important, especially to reduce the risks. 

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What is the Stock Exchange?

The Stock Exchange is an environment in which securities are traded, such as shares, fixed-income securities, commodities and so on. It also brings together investors interested in buying and selling assets. 

One of the main characteristics of the Stock Exchange is the establishment of trading guidelines. In other words, for the investment to be made safely and transparently, the parties involved in the negotiation must be aware of the whole scheme. 

In our country, there is only one stock exchange, known in the market as B3. The name refers to the following initials: Brasil, Bolsa e Balcão. During its history, this exchange has undergone several transformations. 

The history of the Brazilian Stock Exchange 

This capital market appeared in Brazil in 1843, when the Rio Stock Exchange was founded by the then Minister of Finance. Its main purpose was to trade in government bonds. However, in 1890, businessman Emílio Rangel Pestana founded Bolsa Livre. 

At this time, the securities on offer to investors were not just public ones. In other words, the market began to offer more products. A year after it opened, the Free Exchange was closed due to speculation about the market. 

In 1895, the Brazilian stock exchange was reopened and called the São Paulo Public Funds Exchange. In 1935, this market underwent some changes, one of which was the name: Bolsa de Valores de São Paulo, popularly known as Bovespa. 

Now, in 2017, the then BM&F Bovespa joined Cetip. Since then, it has been Brazil's new stock exchange. 

What are shares

The capital of companies is divided into thousands of parts, each of which is a share. The parts of these shares are divided among the entrepreneurs, as well as the partners. And, in some cases, they are shared on the stock exchange. 

When these shares are listed on the stock exchange, investors are able to buy and sell them. By buying a share in a public company, shareholders have an interest in sharing in the profits it makes. And this happens in two ways.

The first way is when companies distribute dividends, which are part of their results. In other words, they pay investors the proportional amount they have invested, based on the number of shares they own. 

Another way is when a share goes up on the stock exchange. This is because it is normal for share prices to fluctuate from time to time, especially when companies grow and move the economy forward. In this case, the shareholder who has invested large sums wins. 

What are the strategies for investing in the stock market?

As mentioned above, there is no single way to invest in the stock market. There are a number of techniques and strategies for those who want to get started in the market. The choice will depend on the investor's profile. 

1. Buy and Hold

Buy and hold is a stock market strategy in which investors buy and hold an asset for a long period of time. People who follow this strategy believe that long-term returns dilute the risk of market volatility. 

Investors who follow this strategy seek to invest in the stock markets of companies with good financial health. In this way, they hope to benefit from the appreciation of their shares.

In short, when investing in Buy and Hold, shareholders don't have to keep their shares forever. However, the main idea of this strategy is to keep it for a long period of time. 

2. Value Investing

Value Investing is another strategy for those who want to invest in the stock market, where discounted shares are prioritized. In this case, the shareholder has to evaluate companies and shares, and then identify which ones are priced lower than they really are. 

The main objective of this strategy is to extract as much profit as possible, especially when the stock returns to normal. In pursuing this purpose, shareholders also engage in long-term buying and selling. In any case, this strategy is divided into two formats:

  • Deep Value Investing - Considering the shares of companies in a delicate situation, such as in judicial reorganization;
  • High Quality Investing - This strategy gives preference to solid companies, but with shares that are down, at least temporarily. 

3. Day Trade

Day trading is another strategy for those who want to invest in the stock market. In this case, higher-risk speculations are considered. 

In short, it involves buying and selling shares on the same day. Shareholders who engage in this strategy seek to profit from short-term price fluctuations. 

Although there are risks involved in this strategy, Day Trade enables shareholders to achieve good profits in a short space of time, whether in minutes or hours. 

It's important to note that each action is based on a lot of analysis, which is usually done through charts and market data on the same day. 

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