Introduction
Investing in the capital market is one of the most significant ways to build long-term wealth. This guide gives you all the information you need to start investing in a practical and informed way, from opening your first account to making your first trade.
Step 1: Opening an investment account
Choosing an investment house
The first step is to choose the investment house through which you will manage your portfolio. There are several options:
- Banks: convenient and familiar, but usually with higher fees
- Investment houses: lower fees and a wide range of tools
- Digital platforms: innovative and user-friendly, with competitive fees
Required documents
To open an account you will need the following documents:
- Identity card (Teudat Zehut)
- Bank account details
- Proof of source of income (pay slips or reports)
Step 2: Understanding the types of assets
Stocks
Stocks represent ownership in a company. When you buy a share, you become a partial owner of the company and can profit from a rise in the price and from dividend distributions.
Bonds
Bonds are essentially a loan you give to a company or to the state. In return, you receive fixed interest and, at the end of the term, the principal back.
Mutual funds and ETFs
These are "baskets" of many stocks or bonds. They allow you to invest in a broad spread of assets in a single investment, which reduces the risk.
Step 3: Depositing money into the account
After opening the account, you need to transfer money into it so you can start investing. The transfer is usually done in one of the following ways:
- Direct bank transfer
- Monthly standing order
- Instant transfer through the app
An important tip
It is recommended to start with a relatively small amount and increase the investment gradually as you gain experience and confidence.
Step 4: Making your first trade
Finding the asset
On the trading platform, search for the asset you want to buy using its ticker symbol (for example: the S&P 500 ETF - VOO) or the company name.
Choosing the order type
There are several main order types:
- Market order: buying at the current market price - suitable for beginners
- Limit order: buying at a specific price or lower
- Stop order: an order that is triggered when the price reaches a certain level
Making the purchase
- Enter the number of units you want to buy
- Choose the order type
- Check the trade details and the fees
- Confirm the purchase
Step 5: Managing the portfolio over time
Monitoring and control
Track your portfolio's performance regularly, but don't get confused by daily fluctuations. Focus on the long-term picture.
Rebalancing
Every so often (for example once a year), check whether your portfolio's diversification still suits your goals and the level of risk you are willing to take.
Continuing to invest
Consider adding money to the portfolio regularly (for example monthly). This creates cost averaging over time and reduces the impact of market fluctuations.
Important principles for success
Risk diversification
Don't put all your eggs in one basket. Spread your investments across different assets, sectors and geographies.
Long-term investing
The capital market is suited to long-term investing. Short-term fluctuations are normal - focus on a horizon of 5 years or more.
Ongoing education
Keep learning and staying up to date. The world of investing is constantly changing, and it is important to stay informed.
Summary
Investing in the capital market is not as complicated as it seems. With the right preparation, an understanding of the basics and informed action, anyone can start investing and build long-term wealth. Make sure to invest only money you do not need in the near term, and don't hesitate to seek professional advice at the start of the road.