Buy shares on the stock exchange: better in the bank or with online trading?

Anyone interestedin the investment sector has thought at least once in their life about buying shares on the stock exchange but, most likely, found themselves abandoning the idea for fear that it was too risky or difficult to manage. The concern is legitimate because, as is well known, buying shares involves the basic investment of considerable sums of money to own one or more corporate shares of companies valued on the international stock exchange. For this reason, many believe that buying shares is a transaction that only the most experienced or wealthy investors can afford, who have an in-depth knowledge of markets and financial materials and are therefore fully capable of dealing with investments of this magnitude.

Buying shares, in fact, implies the ownership of the stock and in fact you become a member of the company, albeit in a small percentage. This means that you are entitled to receive dividends on your turnover if it grows and you get a gain if the value of the stock on the stock exchange goes up, while you risk losing investment money if your turnover decreases or the company’s stock value follows a downward trend.

Buying shares in the traditional way, therefore, seems to be a challenging and potentially risky activity as well as profitable, but it involves considerable skills and skills. For this reason, the introduction of online trading to invest in the stock market has offered a less complex alternative even to novice investors, who have little capital to invest or do not want and the opportunity to face an investment of this magnitude. In other words, with online trading you can invest in stocks by choosing between two modes: actually buying the stock in a traditional way or speculating on its value without actually holding it. So let’s see which of the two types of investment turns out to be cheaper today and how it is possible to make real profits from it.

Buy shares with traditional investment in the bank. Forget those movie scenes in which the investor goes to the bank with a 24-hour briefcase full of money and hands it over to a consultant to proceed to buy the shares.
Although the traditional way of investing in a physical place like the bank is still possible, very few now go to the lender to invest. Although it is considered a traditional trading mode, the investment in the bank has adjusted to the times and today it is possible to execute transactions directly from home, thanks to investment platforms issued by the banks. These work a bit like online trading, but still have numerous limitations that make investing in the bank less affordable.

Specifically, buying shares with the bank means owning them concretely, becoming a full-fledged shareholder in the reference company and earning from the sale of the shares (if the value has increased) or from the dividends released by the company. There is nothing to do, therefore, if the investment turns out to be wrong and the shares lose value. In that case you will have to resign ourselves to the idea of wasting time and especially money. But what makes investing in stocks with the bank really unseemly are the commission costs that are applied on each transaction. While considering that this is a small percentage, the problem becomes unsustainable if you plan to open more positions on the same day, as is usual among professional investors. This means that every day users will find themselves investing a large part of their assets in commissions or fixed fees, without these costs being able to return in the form of a profit.

Buy shares with online trading. Investing in stocks with trading, on the other hand, is a different matter. We assume that brokers and investment platforms do not charge fees on transactions and their use is constrained by the payment of a fixed fee, which in itself is a great point in favour of preferring trading to investment in the bank. But the real novelty is that to invest in stocks with trading you do not need to buy the securities concretely and get a gain only if the value increases, but you can start speculative shares simply by borrowing them “on loan” with CFDs. CFDs (Contracts for Difference) are derivative instruments, offered only by online trading brokers, which simulate the price of an underlying asset and through which it is possible to earn from its changes in value. CfD trading in equities is not buying or selling a share but investing in the value of that stock, whether it is up or down. In this way, the trader can earn even if the stock loses value, if it has bet on the right trend (short selling).

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