Investing in any of the four Spanish stock markets is less inaccessible than it seems, but we have to approach this market with caution and distrust of easy money.
In Spain, there is not a single Stock Exchange, but four that act as one. They are the Stock Exchanges of Barcelona, Bilbao, Madrid, and Valencia. All of them act in a coordinated manner and the operations carried out in each of them are valid in all the others.
But let's review what is the stock market and what is it for? Basically, it is a market. A market where shares are bought and sold all the time and, as in a fish market, the shares that are in high demand go up in price, while those that are less sold become cheaper.
But what is an action? And why do they go up and down in price?
Stocks are a way of financing listed companies. When we buy a share we are financing the company that issues them and we can participate in its decision-making (voting and deliberating in the general meeting of shareholders) and also in the distribution of its profits. Each share corresponds to a part of the company's annual profits, called a "dividend." The more shares we have, the more decision-making power we have and the more benefit we get.
Shares rise or fall in price depending on the perceived strength of the company that issues them. If it is suspected that they will pay little or no dividends, their holders put them up for sale. If, on the other hand, it is perceived that the results are going to be good, more people want to buy them and, therefore, they become more expensive. Prices can go up or down several times on the same day.
Thus, with the sale of shares you can earn money in two different ways: with the capital gain -selling them more expensive than we bought them- or with dividends; waiting for the annual distribution of benefits of the company in which we participate.
And what does the IBEX have to do with all this? Why does it go up or down?
The IBEX is what is called an index: a stock market instrument to follow the evolution of all listed shares. The indices are calculated using a selection of stocks that are supposed to represent the rest. Indices are becoming an increasingly important benchmark for portfolio managers, as well as in new product offerings.
The IBEX 35 brings together the 35 companies whose shares are the most profitable of those operating in Spain. And, after complicated calculations and adjustments, it tells us how the market has fared in general. The usual thing is that, when a certain pessimism for business is detected, the IBEX goes down and rises when it is believed that the economy will do well. Simplifying a lot, of course. The evolution of the indices depends on many factors and is very open to interpretation. In addition, it is possible that there are companies whose price rises, even if the IBEX falls.
How much does it cost to invest in the Stock Market, what is the minimum capital I must have to buy shares?
Well, in theory, the minimum capital is the cost of a single share that we can buy, which can be less than one euro in many cases. Now, we cannot do this operation directly, but we must do it through authorized intermediaries, such as our bank or through stockbrokers or brokers. To start operating with them, we have to open a securities account, which is similar to a bank account, but in which we will have the shares that we acquire and it will be linked to a current account, which will be the one that pays the cost of the operations and receive dividends or capital gains.
Any operation in the Spanish market entails a series of costs and commissions, which must be clearly specified in the administration or deposit contract that the client has signed at the time of opening the securities account. They are called brokerage costs. The intermediation costs of the Spanish market are among the cheapest in the world. The Members of the Market (the agents recognized by the Exchange) usually charge their individual clients between 0.25% and 0.35% on the effective amount of each operation. In the case of brokers that offer their services through the Internet, the rates are even lower. A minimum per operation is usually included. If we do it through our usual bank, they will also charge us intermediation costs.
Current regulations require brokers to publish their rates and submit them to the National Securities Market Commission (CNMV). This way we can know from the first moment what costs we invest in the Stock Market.
What else should I take into account?
We must be very careful when making our investment decisions. The first thing is that we do not invest in the stock market money that we are going to need in the short term, but in amounts that we can do without. There are no absolute securities and the risk increases when the expected gain is higher.
To decide what we want to do, it is better to base ourselves on facts, not on rumors, or on “tips”. Let's avoid financial bars that are not authorized and that promise easy money. And it is better to consider things in the medium or long term. The CNMV periodically publishes a list of proposals that are unreliable and that we should avoid. It is also important that we do not invest only in the same value, but that we diversify. And that we always take into account the costs of intermediation and the taxes derived from our stock market activity.
