January 28, 2023

How to Start Investing Money and Succeed in Strategy

By DENNIS BLACK on Jan 8, 2023

Learning how to start investing from scratch is easier than you might think — and it doesn't take a lot of money.

See what steps to follow to make your first application.

1. Choose a Financial Institution

The first step to start investing is choosing a bank, fintech or stockbroker to open an account. These companies act as intermediaries in the financial market, connecting you to the most diverse products and making investments possible.

Another essential point is to verify if the institution charges a brokerage fee to intermediate the purchase and sale of assets.

Today, there are many banks and brokerages that exempt investors from this fee on fixed-income investments (category of investments with known profitability at the time of application) and stock exchange assets. 

2. Open Your Account

After choosing a financial institution to invest in, the next step is to open your account. In most brokers, this process is done 100% online and consists of registering your personal data and sending digital documents such as RG and CPF.

To guarantee your identity, authentication techniques are used, such as sending a selfie holding your ID. Thus, you can open your account quickly without leaving your home and without bureaucracy. 

3. You Must Wait for Your Account to Be Approved

In most financial institutions, you need to wait for confirmation of your registration to start investing.

Depending on the broker, it is possible to be approved on the same day or in a few hours, but some ask for a slightly longer deadline.

4. Transfer Money to the Account

After having your registration approved at the stockbroker, the next step is to transfer money to the account to make your first investment.

In this case, institutions work with different terms for clearing the amount, but it is common for the balance to be available on the same day.

With the money in your custody account, you can now choose the financial products you want to invest in and start building your investment portfolio.

5. Choose Your Investments

Brokers' apps and websites offer a wide catalog of fixed income and equity investments (applications subject to market volatility) for you to start investing from scratch.

To apply for your money, just select the desired asset, analyze the conditions offered and define the amount that will be invested. The investment is confirmed in a few clicks and is settled according to the application term.

For example, a Treasury bond takes one business day to settle, while a CDB can start yielding immediately.

Why Start Investing?

If you want to understand how to start investing, it's because you want to see your money pay off, right? This is the central purpose of investments: to have financial returns and increase your equity over time.

Making your money work for you is what we call "making your money work". After all, all you have to do is apply your resources in the right places and let time take care of multiplying your money.

When you take out a loan at the bank, for example, you need to pay interest that increases — and a lot — the amount you initially borrowed. In investments, you are the one who receives compound interest by lending money to institutions.

In variable income, you have to deal with ups and downs due to asset volatility, but the prospects for long-term gains are great.

In short, if you want to monetize your money and build solid equity for the future, you need to start investing as soon as possible.

What Do I Need to Know to Start Investing?

We have already explained how to start investing in a practical way, but it is also necessary to have specific knowledge to enter the financial market.

Here's what you need to know before making your first contribution.

Have Clear Goals

To understand how to start investing, you need to have clear financial goals. For example, if you are investing to buy a property 10 years from now, you can select assets with a longer redemption term to have a better return.

Now, if you're going to need the money in a year or two, you need to look for assets with greater liquidity (we'll explain better what it means below) so you don't get the values ​​"stuck".

Likewise, your goals will determine the risk worth taking and the types of investments that are most suitable. 

Discover Your Investor Profile

When you open an account with a broker, you are likely to have to do a 'suitability test'. This test reveals your investor profile, which can be one of three:

  • Conservative: seeks to protect its assets above all with lower risk investments and more modest returns.
  • Moderate: seeks to balance risk and return by leaving most of the money in fixed income and a smaller percentage in variable income;
  • Bold: seeks greater gains and accepts to take risks to monetize its assets, opting for more aggressive assets.

Have an Emergency Fund

Every investor needs to build up an emergency reserve sufficient to cover their costs for a few months and protect themselves from unforeseen events. This money must be invested in a low-risk, high-liquidity investment such as a CDB or the Selic Treasury, for example.

That way, if an emergency happens, you have easy access to the reserve and don't compromise your other investments.