Education • 8 min read
The days when you had to scour daily newspapers to stay fully informed about the world of stocks are long gone. Even the stock exchange price lists are no longer reserved for dedicated experts - Bitpanda provides everyone interested in investing with the latest developments in stocks.
When you look at the daily news about key interest rates and inflation, you inevitably come to the topic of investing money. What does investing money actually mean? Here is one definition: As an investor, you invest a sum of money in a (financial) product in order to make a profit on this investment within a certain period of time. If you buy stocks, for example, you own shares in a company and receive a proportionate share of its assets and profits as a result.
Relatively low key interest rates and rising inflation rates have a negative impact on funds in current accounts and savings accounts. Currently, such products generate comparatively low returns. Therefore, it is essential for not only curious first-time investors, but also for savers, to inform themselves about the topic of investing money in order to achieve returns.
So, why is the return on savings so low? The low key interest rates of central banks and their effect on the investments of commercial banks also have a negative impact on the returns on savings deposits. In addition, inflation also leaves its mark on the real value of deposits: as the prices of goods rise, purchasing power falls. On the other hand, stocks are sometimes associated with considerably higher risks than current accounts or savings accounts. This means it is a good idea to acquire some general basic knowledge of personal finance.
Of course, as with almost all topics, you will find countless websites online where you can inform yourself about stocks. In any case, you should be careful when choosing, especially if you discover websites that promise you quick money or "insider tips" on investing.
Even if, as an investor, it sounds tempting for you to simply invest your money in various forms of investment and wait and see, the risk of making massive losses with a strategy like this is simply too great. You probably don't have the time to research tons of companies either.
Nevertheless, in order to invest as little time as possible, a certain amount of time is still necessary for your research. Luckily you can simply start with a few basic questions.
You should only make your final decision on an investment after a thorough analysis which gives you satisfactory answers to your questions.
Before you invest in a company’s stocks, it is definitely important that you research the company thoroughly by writing down and researching all the questions that come to your mind.
Here are some sample questions: Which industry is the company in? What does the company produce or what services does it offer? How do the products/services sell - is the product in demand? What is unique about this company? What factors or other industries does the company's production/service depend on? Is there any particular raw material that is required for production? Is the company making a profit or is it heavily in debt?
Where can you find the answers to these questions?
To find all this out, the best first step is to visit the company's official website. Then, research any reports about the company and the industry through reputable media sources, preferably including older articles dating back a few years to get a general impression of the company's development.
Reading stock charts may not always be easy, especially for beginners navigating the charts jungle. There are many different types of charts and sometimes advanced knowledge is necessary to understand them.
But don't worry: Bitpanda also offers easy-to-read stock charts that don't require any prior knowledge. Why should you look at a company's share chart at all? Well, because you want to know how the price (price) of a company's share has developed over time - is the price going up or down?
You can recognise this by the course of the jagged curve in the middle of the diagram from left to right - this price development represents the price. If the curve generally runs from the bottom left to the top right, it indicates a price increase over a fixed time frame in the broadest sense. If the chart generally runs from the top left to the bottom right, the price had to undergo declines over the selected time frame.
How do the basics work?
Take a look at the chart below using this stock as an example (Note: This is not a recommendation for buying this stock, instead it is just an illustrative example):
Note: Historical performance is not an indicator of future performance. Investments can go up in value as well as down.
The horizontal (straight) axis at the bottom from left to right shows the progression of time. The vertical axis on the right represents the price per stock. If you move the cursor along the curve of such a chart on the Bitpanda website, you can follow the price exactly.
The price of €122.50 shown in this chart indicates today's high (the highest price reached on the current date) of a stock. With the one-day, seven-day, thirty-day or one-year indicators in the top right corner, you can use the mouse to view the average of these dates in the specified time parameters.
The figures below the price, shown in green in our example (shown in red if the price is falling) show the increase (in red: the decrease) in the value of the stock (independent of other factors) as well as its change compared to a reference period.
Where can you find these charts?
The best thing to do is to check out the overview of all stocks on Bitpanda and then search for the companies of your choice. By clicking on the respective company, you will find further important information as well as the share price chart.
Don't worry, you don't need a degree in Business Administration to understand what it's all about, we explain it very simply. Actually, what we want to know here is how the stock in question compares to other stocks.
This is a ratio that shows the relationship between the price of the stock (P) and the earnings per share (E). To do this, you divide P by E. For example, let's say the current price of a stock (P) is €122.50 and in the previous year E was €3,310, so the P/E ratio calculated here is 37.00.
Since the P/E ratio can be calculated not only for a single stock but also for an entire sector, you can use this figure to see how "your" stock compares with the average.
Where can you find the details for this calculation?
On Bitpanda, we save you the trouble of calculating. You can find the P/E ratio in the information about the company. Simply find the company in the overview, click on it and then scroll down to find everything you're looking for, including all the market statistics and downloads at the bottom of the page.
"Volatile" sounds complicated again, but there is actually nothing complicated about it. The word has its origins in the Latin "volatilis" and means something like "fleeting, flying" - in other words, the opposite of stable. The volatility of a stock therefore indicates how strongly the prices of a stock fluctuate, i.e. rise and fall.
Once again, it is important to look at this indicator of fluctuation in comparison to the market as a whole and to other companies. Does this stock show higher or lower fluctuations than comparable competitors?
Where can you find information about volatility?
Bitpanda makes it easy to find the information you are looking for on the volatility of a stock, just like the P/E ratio: Open the overview again, select the company of your choice and find the information you are looking for in the statistics and/or downloads.
Of course, this is often the most interesting part of the whole research. The dividend of a stock could be compared to the interest on an investment. The dividend is a withdrawal that shareholders receive from the share-issuing company itself once a year, or in some events more often. Management tends to set the amount of these payments based on the performance of the company.
Where can you find information about the dividends of a stock?
You already know the answer - go back to the overview page on Bitpanda, find the company of your choice and then read the information about the dividend - the amount distributed per stock - and the dividend yield: the ratio of the dividend to the share price. As you already know, you can then also compare the dividend yield with the same key figure for the sector, similar companies, etc.
As you can see, using Bitpanda Stocks* is easy and convenient - register your account and invest in fractional shares and ETFs of large companies with Bitpanda Stocks - around the clock, commission-free and with tight spreads.
*This blog article is not intended to be used as a general guide to investing and should not be seen as investment advice. Bitpanda Stocks enables investing in fractional stocks. Fractional stocks in Europe are always enabled via a contract which replicates the underlying stock or ETF (financial instruments pursuant to section 1 item 7 lit. d WAG 2018). Investing in stocks and ETFs carries risks. For more details see the prospectus at bitpanda.com.
€100k worth of daily prizes are waiting for you, from Dec. 1Read more
Bitpanda GmbH ve grup şirketleri (Bitpanda) Türk Parasının Kıymetini’nin Korunması Hakkında 32 sayılı Karar’ın 2/b maddesine göre Türkiye’de yerleşik sayılan hiçbir kişiye yönelik olarak 6362 sayılı Sermaye Piyasası Kanunu başta olmak üzere Türkiye Cumhuriyeti Devleti mevzuatı hükümleri gereği Türkiye’de faaliyet izni gerektiren hiçbir sermaye piyasası faaliyetine dair hizmet sunmamaktadır. Şayet Bitpanda’nın yabancı sermaye piyasalarında vermiş olduğu hizmetlerden Türkiye’de yerleşik kişilerin faydalandığı tespit edilecek olursa tüm zararları kullanıcıya ait olmak üzere bu hizmetler ivedilikle sona erdirilecektir.
As the name would suggest, some cookies on our website are essential. They are necessary to remember your settings when using Bitpanda, (such as privacy or language settings), to protect the platform from attacks, or simply to stay logged in after you originally log in. You have the option to refuse, block or delete them, but this will significantly affect your experience using the website and not all our services will be available to you.
We use such cookies and similar technologies to collect information as users browse our website to help us better understand how it is used and then improve our services accordingly. It also helps us measure the overall performance of our website. We receive the date that this generates on an aggregated and anonymous basis. Blocking these cookies and tools does not affect the way our services work, but it does make it much harder for us to improve your experience.
These cookies are used to provide you with adverts relevant to Bitpanda. The tools for this are usually provided by third parties. With the help of these cookies and such third parties, we can ensure for example, that you don’t see the same ad more than once and that the advertisements are tailored to your interests. We can also use these technologies to measure the success of our marketing campaigns. Blocking these cookies and similar technologies does not generally affect the way our services work. Please note, however, that while you’ll still see advertisements about Bitpanda on websites, the adverts will no longer be personalised for you.