Complete Guide to Investing in Stocks: From Beginner to Expert

Investing in stocks is one of the oldest and most dynamic ways to grow capital. For some, it’s a source of long-term passive income, for others a quick speculation opportunity, and for many simply a way to protect value against inflation.

Although the idea is simple, the world of stocks has different levels of complexity. Starting from scratch is not the same as having experience. And investing in a giant company like Apple is not the same as in a startup that has just gone public.

In this article we will divide the explanation into three parts:

What someone who has never invested in stocks should know.
What someone who already has some idea should know.
What someone with advanced experience should know.

What someone who has never invested in stocks should know

What are stocks?

Stocks are ownership shares in a company. When you buy a stock, you become the owner of a (small) part of that company. If the company does well, your stock rises in price and you can sell it at a profit. Some companies also distribute profits as dividends, which means you receive money just for being a shareholder.

What do you need to get started?

A broker: a platform or financial intermediary that allows you to buy and sell stocks. Some brokers are international (e.g., Interactive Brokers, eToro), and others local (depending on each country).
A bank account to fund the money you’ll use to buy stocks.
Knowledge of your country’s laws: in many countries, stock market investments are regulated and subject to taxes on profits. Before starting, it’s crucial to know what taxes apply and how to declare them.

Risk and company examples

Not all stocks are the same. When talking about risk in investing, it refers to the possibility of losing capital. For example, companies with:

Low risk: large companies known as blue chips; established firms with decades in existence, billions in revenue, diversified products, consistent profits, cash reserves, and access to financing because of their reliability. Low risk doesn’t mean zero risk: a big company can drop in stock price for months or years due to economic crises, sales decline, regulations, etc. but it’s unlikely you’ll lose all your capital. Examples: Apple, Microsoft, Johnson & Johnson, Coca-Cola, Nike. These are established companies with decades in the market, global products, and stability.
Medium risk: innovative or growing companies, but with some volatility. Example: Tesla, Mercado Libre, Samsung, Netflix, Nvidia. They can rise quickly but also fall sharply.
High risk: small, lesser-known companies or newly listed startups. Example: regional appliance makers like “Liliana” in Argentina, Rivian (EV maker), or new technologies listed on secondary markets. They often attract investors due to the chance of multiplying capital, but you could also lose it all.

In summary, the risk you are willing to take can be compared to the car insurance you buy:

high risk: you only buy mandatory liability insurance.
medium risk: you add total loss coverage to the mandatory insurance.
low risk: you buy full coverage.

Initial mindset

When investing for the first time, it’s crucial to understand:

You can lose part or all of your capital. So start with small amounts. Some companies allow you to buy fractional shares.
There are no guaranteed profits.
This is not “gambling” like a casino: while there is chance involved, there’s also analysis and fundamentals. It’s useful to start with well-known companies whose products you use or understand.
Research your country’s laws (taxes, investment rules). Choose a reliable, regulated broker.

In summary: for beginners, the best approach is to start with small amounts, invest in large and stable companies, and use a regulated broker.

What someone with some investing knowledge should know

Once you’ve passed the beginner stage and understand how to buy and sell stocks, a new level appears: risk management and diversification.

Diversification: don’t put all your eggs in one basket

Investing everything in a single stock is extremely risky. If that company drops, you lose much of your money. The solution is diversification:

Mix low, medium, and high-risk stocks.
Diversify by sector (technology, healthcare, energy, finance).
Diversify by region (U.S., Europe, Asia, Latin America).

How to choose a company

Fundamentals: look at balance sheets, earnings, debt, and growth.
Industry: understand the sector it operates in (tech, healthcare, energy).
Competition: compare with rivals (e.g., Apple vs. Samsung).
Business plan: innovative companies often grow more but are also more volatile.

Example portfolio:

40% - 50% in blue chips (Apple, Johnson & Johnson).
35% - 45% in growth companies (Tesla, Mercado Libre).
5% - 10% in small speculative stocks.

Brokers and commissions

At this stage, the intermediate investor already compares brokers:

Some offer more international markets.
Others have lower fees.
Some provide research and advanced tools (e.g., technical charts). It’s important to start learning concepts such as:
- Capital gain: the difference between the purchase and selling price.
- Volatility: how much a stock rises and falls in a short time.
- Liquidity: how easily a stock can be bought or sold without major price changes.

Legal and tax aspects

Intermediate investors should be aware of:

Tax withholdings on dividends (e.g., in the U.S. usually 30% for foreigners unless treaties apply).
Capital gains tax in their country.
Annual investment declarations to avoid penalties.

What someone with advanced investing experience should know

Advanced investors already manage significant amounts and seek sophisticated strategies. Here the rules change: it’s not enough to buy and hold, the goal is to optimize returns.

Advanced strategies

Margin trading: investing with money borrowed from the broker. Very high risk, only for professionals.
Options trading: buying “calls” or “puts” to speculate on price moves without owning the stock. These are derivative contracts whose value depends on a stock. For example, a “Call” is the right to buy a stock at a set price in the future, while a “Put” is the right to sell at a set price. Some investors who already own shares sell “Calls” to generate extra income, known as a “Covered call.”
Hedging: using derivatives or assets like gold to protect the portfolio during crises. In short, hedging means investing in other asset types such as precious metals or utilities to balance stock declines.
Combined technical and fundamental analysis: not just looking at balance sheets but also charts, trends, and market patterns.

Company examples by advanced risk level

Low risk: sticking with blue chips, but using derivatives to enhance returns. Example: Apple with covered calls.
Medium risk: innovative tech companies that have proven strong, such as Nvidia, Shopify, AMD.
High risk: investing in newly listed companies (IPOs) or hot sectors (experimental biotech, very early AI).

Professional brokers and platforms

At this level, investors no longer use simple apps. They look for brokers with:

Global access to multiple exchanges.
Real-time analysis tools.
Ability to trade derivatives and margin.

In these cases, brokers usually require a minimum account margin.

Legal aspects

Advanced investors should understand:

International double taxation treaties (e.g., with the U.S.) to avoid paying taxes twice.
Rules regarding offshore (foreign) accounts and banking to manage global investments.
Local regulations on foreign capital.

Conclusion

Investing in stocks is a real growth opportunity, but it requires different approaches depending on the investor’s level:

Beginner: should research their country’s laws, start with small amounts and big, well-known companies, and use the experience to learn.
Intermediate: should diversify across different risk levels, study fundamentals and trends, and allocate different capital percentages according to risk.
Advanced: can use derivatives and hedging strategies, manage global portfolios, and optimize taxes and risks, always with greater capital and experience.

At all levels, the most important thing to remember is that every stock investment involves risk. What changes is how that risk is managed: beginners with caution, intermediates with diversification, and advanced investors with sophisticated strategies.

It’s very important to diversify your portfolio to do well—try the oracle again to find out what else to invest in and how to do it properly.

Glossary

Blue chips: established companies with decades of existence, billions in revenue, product diversification, consistent profits, cash reserves, and if they need financing, banks and markets lend to them because they trust their solvency.

Broker: a platform or financial intermediary that allows you to buy and sell stocks. Some brokers are international (e.g., Interactive Brokers, eToro), and others are local (depending on the country).

Call: a financial contract known as a derivative, whose value depends on a stock. It is the right to buy a stock at a certain price in the future.

Cap rate: capitalization rate, an indicator of the annual return of real estate investment.

Cash flow: monthly cash generated by the property after expenses (rent – taxes – maintenance).

Certificates of Deposit (CDs): "similar to fixed-term deposits, but usually issued by banks or financial institutions in more formal or international markets. They allow investing in local or foreign currencies. They may have fixed or variable interest options, depending on the contract.

Commodities: any basic, homogeneous, tradable product produced in large quantities and traded in global markets. They are used both for direct consumption and for industrial production.

Covered Call: investors holding stocks who sell “Call” options to generate extra income.

Covered bonds: bonds backed by specific assets, lower risk than regular corporate bonds.

ETF: an investment fund traded on the stock exchange like a stock.

Fixed-term deposits: depositing money in a bank for a set period in exchange for a fixed interest rate. At the end of the term, you recover your capital plus interest.

Futures contracts: agreements to buy or sell a certain quantity of an asset at a fixed price in the future.

Hedging: investing in stocks of other types such as precious metals or utilities to balance losses if company stocks fall.

High yield / junk bonds: small companies or those with liquidity problems, high risk, and high return.

Interest-bearing accounts: bank accounts that generate daily or monthly interest on the available balance.

Interest rate swaps: a financial contract between two parties to exchange interest payments on a notional principal. The most common swap is exchanging fixed rates for variable interest rates or futures.

Inverse ETFs: gain value when the index they track goes down.

Joint ventures: partnerships between two or more parties to develop a joint project, sharing risks, costs, and profits.

Leverage: using financing (mortgage or loan) to buy more properties than your capital would allow.

Leveraged ETFs: multiply market movements (2x or 3x), up or down.

Liquidity: in economics, liquidity is the ease with which an asset can be converted into cash without losing value.

Microcaps: very small cryptocurrencies by market cap since they are new or unknown projects. They have the potential to multiply by 100 but also the risk of disappearing overnight.

Mining (Bitcoin): using computers to validate transactions and earn rewards. Miners compete, consume electricity, and receive rewards in BTC.

Mutual Fund: a collective vehicle where multiple people contribute money that a professional manager invests in different financial assets: stocks, bonds, commodities, or a combination of them.

Net Asset Value (NAV): the price of each unit, which fluctuates according to the value of the mutual fund’s assets.

Offshore accounts: accounts opened in another country, used by some investors to access products not available locally or for tax advantages. It’s legal if declared, but each country has its own regulations.

Portfolio: the total set of financial assets (such as stocks, bonds, mutual funds, or real estate) owned by an investor or entity, aimed at achieving financial goals through diversification and risk management.

Put: a financial contract known as a derivative, whose value depends on a stock. It is the right to sell a stock at a certain price in the future.

REITs (Real Estate Investment Trusts): real estate funds that allow investing in large portfolios without directly buying property. They are traded through brokers like regular stocks, and there are even REIT ETFs.

Staking: some blockchains (Ethereum, Cardano, Solana) allow you to “stake” your coins on the network and earn interest. This generates passive income similar to a fixed-term deposit, but with more risk.

Unit share: when you contribute money to a mutual fund, you receive “units” representing your proportional participation in the portfolio.

Validation (Ethereum and other proof of stake): locking large amounts of coins to maintain the network and receive rewards.