How to calculate how much money you can earn in the stock market

How to calculate how much money you can earn in the stock market

Let’s see what factors can increase your profits or lead to considerable losses.

Why do you invest in the stock market? It sounds like an absurd question, but to answer it, you need to be clear about your investment options. In other words, what alternatives do you have to make your savings grow: real estate purchases, gold, savings accounts, other investment options of bonds or government bills, etc. Not all options are the same. The more you know about the stock market and its alternatives, the better off you will be.

How much are you going to invest in the stock market? To control unnecessary risks, what you invest should be an amount that you will not need in the short term. In general, investments in the stock market are safer if they are spread over time; in the long term there are usually returns and in the short term there is much more volatility, which may mean losing the amount invested.

  • What is your investment strategy?
  • What is your investment objective?
  • What product do you want to invest in? Are they shares of a Spanish multinational or is it an investment fund?
  • Are you looking for a fixed-rate return or a variable-rate return?
  • What is the level of risk you want to assume? We will see this point more closely in the next section.
  • Will you invest in the short, medium or long term?
  • Are you going to diversify your investment, i.e. invest in several sites?
  • What is the time and economic context like?

Not every moment is ideal for investing in the stock market. If the interest rate that financial institutions pay you for your savings is low, then it may be a good time to invest in the Stock Exchange since there the return will be higher. Although this argument may seem easy, it’s not really like that. You have to take into account the risk you want to assume with the investment. In the stock market the return is variable, which means that you don’t know what return you are going to obtain. And we’re not talking about whether we’ll get 3% or 12%, but the return can be negative, that is, your investment can lose value. Also, if an investment “promises” very high returns, its risk will be high and that can mean high losses. How to balance return, risk and opportunity cost of the investment (what would give us that money invested in another option) is something difficult that should not be improvised.

What is your experience and level of training on the stock exchange?

The stock exchange is a very demanding market. In it, there are many competitors, agents, and brokers who are very well trained. You will be able to compete with them if you are thoroughly trained and up to date in terms of the stock market. Look at the best brokers and how they have done it to be at the top for a long time.

What’s your dedication going to be?

If we want to have positive and significant returns, it is not enough to choose the investment to be made. We must follow its evolution closely. And we must do it systematically over time. With this information, over time we must be able to determine when to maintain the investment, when to sell it or when to expand it. Investing in the stock market takes time.

 If you answer all the questions positively, you will surely have a good future on the stock market. That is to say, you will have long term profits. Keep in mind that:

Whoever promises you very high profits in a short time will surely be a charlatan. Very high yields can be obtained punctually, but it will not be systematic or sustained over time.

Bet on long-lasting investments. That is the key to positive returns. The volatility of the market will benefit you sometimes and harm you at other times. If the investment is long term, some will compensate with others and, if you have followed the advice of this post, will earn positive returns.

Be cautious in your profit expectations. If you want to earn a lot and very quickly, surely this desire will make you bet on risky products that can lead you to ruin sooner rather than later.

The best investors in the world, who are and have been for a long time, obtain returns of around 20-25%. Therefore, an optimistic scenario is to obtain 10%. Imagining yields close to 50% or 100% is practically bread for today, hunger for tomorrow.

The five best and simplest tips for investing in the stock market and obtaining good results are:

  • Don’t be in a hurry.
  • Be prudent and humble.
  • Diversify your portfolio.
  • Look at the best.
  • Learn more about it.

 Encourage yourself to form into a bag. It is a complex world, but also exciting and with many professional possibilities.

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