Stocks, funds, ETF’s… What are they and how to invest?

At BBVA we know that the key to any good investment is to stay informed. Knowledge is power, so today we want to dedicate this article to some of the main financial concepts that you should take into account when investing, what opportunities they represent and how to use them to your advantage.

Remember: the secret of every successful investment is financial intelligence.

Investor Basics: Stocks, Funds and ETFs

Stocks, what are they and how to take advantage of them?

Shares are financial assets that represent an aliquot part (that is proportional: if the net amount changes, the final amount of the percentage that this part represents also changes) of the capital stock of a corporation (or company). When you buy a share, you become a member of a company in proportion to what you contributed to its capital.

Shares that open for sale to the public can be listed on the stock exchange and their presence on the stock market reflects the confidence that investors have placed in them. As they are variable income financial instruments, the economic remuneration received by investors will depend on the price at which they are listed on the market and the distribution of dividends is at the discretion of the company as it deems appropriate to the company’s financial situation.

How to invest: you can either list directly on the stock exchange or get on the “whitelist” of the companies in which you are interested in investing if their participation is not yet public. Consult with one of our BBVA New Gen experts to learn about the opportunities that best suit your interests.

Investment funds and its opportunities

Concept: also known as “mutual funds”, investment funds are financial instruments that pool the money of several investors to invest it together in stocks or bonds, which is why they are also known as CIIs (Collective Investment Instruments).

The form of return in the eyes of the investor is similar to that of shares but depends on the value of each of the assets -shares and/or bonds- of which the investment is compose, but depending on the assets that make up the fund, it can be a fixed income, equity or mixed fund.

How to invest: the advantage of mutual funds is that they allow small investors 1) access to investment portfolios managed by asset management companies -banks and other financial institutions such as BBVA- 2) diversify their investment and therefore their risks.

ETFs, concept and forms of investment

Concept: ETFs (exchange-traded funds) are a hybrid between stocks and mutual funds, as they combine the liquidity of the former with the investment diversity -in financial assets- of the latter.

How to invest: Unlike mutual funds, ETFs are traded on the stock market, and each investor buys a share as a share in that exchange-traded fund. In short: ETFs are mutual funds or collective investment vehicles whose shares are listed, liquid and traded in real time on the stock market.

And you, what are you waiting for to take advantage of all these investment opportunities presented by BBVA New Gen?

 

Sources:

https://www.investopedia.com/terms/e/etf.asp

https://economipedia.com/definiciones

https://moneysmart.gov.au/managed-funds-and-etfs/exchange-traded-funds-etfs