Buying stocks: 8 tips to get you started

When we think of investing in stocks, it’s impossible not to think of great investors such as Warren Buffett, , often referred to as the "Oracle of Omaha”. But he wasn’t always an expert. At the age of 11, he took his first steps into the market by buying three shares of Cities Service Preferred, investing just over $100. Without much experience, he followed his intuition and faced a dilemma familiar to many beginners: selling too early. After a small increase in value, he decided to sell and made a small profit, only to see the price skyrocket shortly afterwards.

It was a lesson the young Buffett never forgot. Decades later, he built a financial empire based on discipline, study and strategy, turning a modest beginning into one of the world's greatest fortunes.

If there is one thing we can learn from Buffet’s example is that all great investors started out in some way. The key is to take the first step, learn from each experience and prepare for the long term. Check out these 8 essential tips for getting started in the stock market.

1. Set clear investment goals

Are you investing for retirement, saving for a home or just exploring the market? Your goals will determine your strategy. If you’re looking to invest for the long term, you may want to consider stable shares in companies that are already established in the market. Conversely, short-term goals may involve riskier investments but with higher potential returns. Tailor your investment strategy according to your time horizon (short, medium or long term) and your risk tolerance.

2. Understand how stocks work

While you do not need an advanced degree to start investing in stocks, understanding and mastering the basic concepts can make all the difference when it comes to making more informed and strategic decisions. One example is the distinction between growth stocks (companies with high potential for future appreciation, but with greater volatility) and value stocks (stable, dividend-paying companies).

Understanding your investor profile – conservative, moderate ou aggressive – is also crucial as it allows you to match your objectives with the level of risk that you are prepared to take. You should also familiarise yourself with key ratios such as the Price-to-Earnings Ratio (P/E), , which measures whether a stock is expensive or cheap in relation to the company’s earnings.

Last but not least, you should diversify your portfolio to reduce the risk associated with putting all of your resources into a single asset. Follow financial news and read accessible investment books and use tools such as investment simulators to gain hands-on experience before investing with real money.

3. Choose a financial intermediary to invest with

To start investing, the first step is to open an account with a financial intermediary. When choosing an institution, you should consider the following factors:

• Intuitive platform and advanced tools: make sure the institution offers an easy-to-use and accessible platform with tools such as charts, market analysis and detailed reports to help you make decisions. With Banco Carregosa, you have access to the GoBulling trading platform, where you can consult transactions, follow the development of stocks and have access to expert advice;

• Expert support: whether you are a beginner or an experienced investor, you can rely on an experienced team to provide you with useful guidance and educational content. At Banco Carregosa, we have a team of highly qualified professionals to help you at every step of the way, including when you start investing;

• Solid track record: choose an institution with a proven track record of success and reliability in the market. Banco Carregosa has over 190 years of history and was the pioneer of online brokerage in Portugal;

• Access to different markets: make sure that the financial intermediary allows you to invest in different stock exchanges and products, such as international stocks, ETFs ou investment funds, so that you can diversify your investment portfolio;

• Educational resources: choose an organisation that offers webinars, tutorials or reports to help you better understand the stock market. At Banco Carregosa you can count on webinars and practical guides to help you with your investment decisions;

Keep in mind that the financial intermediary will be your partner throughout your investment journey. That’s why it is essential that you make the right choice to ensure a safe and successful experience.

4. Start small and build up gradually

Allocating small amounts is a prudent approach for those just starting out. This strategy allows you to try different options, manage risk more effectively and learn about the market without significantly compromising your capital.

A bolder alternative for beginners may be to invest in small caps. These are smaller, riskier companies that trade at lower valuations than large caps, offer upside potential and are less complex to analyse and understand than large multinationals with complex and diversified businesses. This means that you can invest less and gain exposure to the capital market and learn how it works.

Another solution to consider is diversified investments, such as ETFs. These instruments offer exposure to different sectors or markets in a practical and efficient way, helping you to understand market dynamics and cycles without having to worry about large fluctuations. This is a way for you to gain experience while building a more balanced portfolio that is ready to grow in a sustainable way over time.

5. Choose how you want to manage your investments

Before you start investing, it is important to decide how you want to manage your portfolio. You can delegate this responsibility to experts, or you can take full control by managing your investments yourself.

If convenience is important to you and you have little experience of the market, trusting an investment manager may be an excellent option. These experts have the knowledge and tools to build and manage a portfolio that is aligned with your risk profile and financial objectives, ensuring a strategic and informed approach.

On the other hand, if you already have some knowledge of the market or are prepared to monitor and analyse trends, then investing on your own using a trading platform to invest may be more suitable for you. This method gives you more control over your choices and can be an enriching experience, offering flexibility and personalisation in building your portfolio.

Whichever approach you choose, it is important that it matches your level of knowledge, your availability and your financial goals.

6. Do your homework before you buy

Before buying a stock, it is important to carry out a detailed analysis and evaluate the company’s fundamentals. Here are the most important aspects to consider:

• Financial reports: analyse financial statements such as the balance sheet, profit and loss account and cash flow statement. This information allows you to assess the financial health of the company;

• Debt levels: check the level of debt and compare it with the company’s assets and profits. If over-leveraged, this can pose a significant risk;

• Quality of management: research the company’s management team. Experienced managers with a positive track record can have a significant impact on future performance;

• Market position: assess the company’s competitive position in the industry. Does it have sustainable advantages or is it facing strong challenges from competitors?

• Growth history: analyse the growth rates of sales and profits in recent years. These metrics can indicate the company’s potential for expansion;

• Future projections: consider the prospects for the sector in which the company operates and assess the potential of its products and/or services;

• Dividends (if applicable): if the company pays dividends, check the consistency and history of these payments;

• External risks: consider macroeconomic, regulatory and other external factors that could affect the company’s performance.

7. Find the right investment vehicle

There are several ways to invest in stocks, and choosing the right investment vehicle will depend on your financial objectives and risk profile. Here are the most common ways:

• Direct purchase: suitable for investors who prefer to select specific companies and have the opportunity to research and monitor the market via a trading platform. It requires greater knowledge and continuous monitoring, but offers complete personalisation of the portfolio;

• Funds that track indices: these funds track the performance of benchmark indices such as the S&P 500 or the Euro Stoxx 50. They are a practical and affordable way of diversifying your investments and passively tracking the market;

• Thematic funds: these funds are ideal for those who want to invest in specific sectors or trends, such as technology, renewable energy or healthcare. They are managed by professionals who select companies in line with the fund’s theme, offering a focused approach;

• ETFs (Exchange Traded Funds): similar to investment funds, but traded on the stock exchange like shares. ETFs combine cost efficiency with instant diversification, making them a practical solution for investors of all levels.

8. Look beyond stocks

Investing in stocks is a great place to start, but it is only the first step in building a truly solid and diversified portfolio. Diversification is an essential strategy for balancing risk and increasing long-term return potential. The balance between stocks bonds in an investment portfolio is well known. One way to broaden your investment strategy is to explore other asset classes. In the case of bonds, for example, you can do this by investing directly or through bond funds.

Banco Carregosa, your partner since day one

All successful investors have been beginners. If you’re just starting out, these tips will be a valuable guide to buying shares and taking your first steps in the world of investing.

To make this journey easier and safer, you can count on the support and expertise of Banco Carregosa. We are proud to have won the "Melhor Corretora de Serviço ao Cliente" nos Rankia Awards 2024, award at the Rankia Awards 2024, which is proof of our commitment to providing excellent service to investors of all levels of experience.

Start today and invest in your future with the peace of mind that comes from having a solid partner at your side.