Why it is not convenient to leave the money in the current account? One word: Inflation. As you know, and also as a result of the health crisis, inflation in Europe has started to grow again. And this means one obvious thing: leaving the money still in your checking account, money loses its purchasing power every year.
High inflation can erode its real value and so shrewd savers will want to try to protect and enhance it. Liquidity is useful for taking advantage of market downturns, especially equity markets, to invest gradually and put it to work with a long-term perspective.
To put it in a sentence: since there are no yields on liquidity, leaving the money in the current account is a net loss of purchasing power.
How to invest in time of inflation?
You can also choose to invest in a mutual fund or exchange traded fund (ETF) that specializes in gold. Many investments have historically been viewed as a hedge – or protection – against inflation. These include real estate, commodities and some types of stocks and bonds.
How to invest to avoid inflation?
Shifting funds from bonds to stocks, especially preferred stocks, is one strategy. Real estate usually does well in inflationary times. Adding global stocks or bonds to your portfolio also protects your portfolio from domestic inflation cycles. What is a stock? A stock or shares are an instrument of participation in the ownership of a company. In particular, a share represents the minimum quota into which the capital of a particular type of company is divided (precisely called joint-stock companies).
Investment options
Choosing to invest in stocks as an online trading tool can be an excellent opportunity, given the presence of hundreds of stocks that can be bought and sold through brokers. First of all, however, it is essential to understand what are the elements that influence investments on the Stock Exchange in shares. In order to buy and sell shares, it becomes very important to fully understand the company listed on the stock exchange in all its aspects.
Online bank or broker? Where should you buy shares?
Is it better to buy the shares in the bank or through an online broker? Cost differences can also be very important, as well as the services offered. A bank usually offers a more substantial service, but with higher commissions. The online broker, on the other hand, offers fewer services (e.g. it has no advisory services) but is generally cheaper.
If you decide to proceed through a bank, it is better that it is your bank, or that you already have an open current account, to be a customer. Some banks offer the possibility of operating through their own trading platforms, in which they can manage operations (especially monitoring) in full autonomy.
What are the risks of shares?
Investing in stocks always involves risk. Risk is associated with volatility, i.e. the movements that the price of an asset shows over time. Stock prices typically move more sharply up or down than bonds.
Therefore, traditional or more modern channels can be used to buy shares today. Traditional channels include banks and SIMs (stock brokerage companies). Among the most modern channels are the platforms for buying shares online and for trading (the so-called online brokers).
Let’s find out about them in more detail. We will talk about banks first and then move on to platforms for buying shares online or trading their value via CFDs.
Platforms to buy shares online or trade
If you are looking for a platform to buy shares online, ask yourself first if you intend to trade real shares, then shares, or share CFDs. We mentioned the difference earlier but it is good to highlight it again:
Trading shares: it is a question of negotiating real securities, with commission costs for each operation.
Trading with CFDs: it involves negotiating financial instruments (Contracts for Difference) that replicate the performance of an underlying asset, which in the case of equity CFDs consists precisely of a share. For example, the Amazon CFD follows the performance of the Amazon stock on the stock exchange. It is therefore possible to negotiate up and down the value of Amazon.
What are the risks of shares?
Investing in stocks always involves risk. Risk is associated with volatility, i.e. the movements that the price of an asset shows over time. Stock prices typically move more sharply up or down than bonds.
