Investor: why use the financial markets ?

Financial markets are physical or virtual places that promote the meeting of’long-term capital supply and demand. They thus offer great opportunities to investors. In particular, they can invest their savings and finance development projects’company while benefiting from’a number of privileges.

Discover the different interesting possibilities that’offer financial markets to investors or lenders.

Financial markets: gain’money while taking relatively low risk

Invest in capital markets allows to’obtain substantial gains while limiting the risk of loss of’money. In practice, there are two main means of making an investment in a financial market. Concretely, investors can either buy bonds or acquire shares from companies.

In L’one or l’Another case, L’investment is profitable and subject to low risk. As it concerns I’Purchase D’obligations in particular, it guarantees a stable flow of income. This mechanism is an excellent solution of’savings adapted to people who wish to make their assets grow without taking too many risks.

Of his Côsuch’Purchase D’shares includes more risks, especially in the event of a stock market crash. Nevertheless, this type of’investment guarantees a more substantial profitability as well as interesting privileges in the’Investor (obtaining quality D’shareholder, right to dividends, right to vote).

To secure their investments in the financial markets, lenders can only bet on companies in good financial health. They may also require that the managers of these companies regularly present to them a certain number of financial documents. These provide certainty to investors that’they will actually be reimbursed or’they will receive dividends, s’they are shareholders.

Investor: you can use the financial markets to achieve your goals

There are different types of capital markets, namely:

• the stock market,
• the bond market,
• the foreign exchange or currency market,
• the commodity market,
• the derivatives market…

Each market allows financial market professionals to negotiate a specific instrument and thus’achieve specific goals.

Concretely, on the stock market, you can meet public or private companies that wish raise capital to finance their development. VS’is there’ideal place to acquire shares in listed companies and thus obtain dividends according to the amount of your investments.

In addition, you can also go to the bond market to lend cash to companies that issue bonds. This will allow you to become the creditor of large multinationals or even of’State. At the’maturity of the bonds purchased,’investor will recover his capital and will also receive interest.

For investors who wish, they can sell or buy a currency in exchange for’another currency on The exchange market or forex market. As for the derivatives market, it allows you to trade derivative financial instruments such as swaps, options, futures or warrants. By using this tool, financial players seek to hedge the risk of variation in the cost of assets, interest rates or exchange rates.

Finally, the commodities market allows investors to’trade derivatives related to natural resources (oil, gas, precious metals, foodstuffs…). All transactions s’perform over-the-counter, c’i.e. directly between sellers and investors.

Markets can be used to spread risk between different types of’investments

All investments involve risk. Nevertheless, it is possible to reduce these risks by investing your savings in several capital market products. Concretely, you can buy both stocks, bonds, currencies or raw materials.

It is even possible to spread your financial risk in a single category’investment in several companies, countries or sectors of’activities.

This portfolio diversification’investment is a very effective method to reduce the risk of total or partial loss of invested funds. Indeed, if a company or a sector s’collapses because of the crisis, this does not’will not affect the’all of your investments.

A tool to buy and sell assets quickly and easily

Financial markets bring together large companies, firms, states and investors with unlimited resources. The demand and the’offers financial products are therefore very high. Thus, as’public or private investor, you can easily and fairly quickly sell the assets you hold on the capital markets.

Likewise, I’purchase of’actions, titles or shares is very easy since many companies offer these types of products to investors.