Guide for the small investor

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Ecuador's stock market is an excellent investment alternative as it offers a wide range of financial instruments belonging to companies from all economic sectors in the country. The returns offered in the stock market are competitive with those offered by the traditional financial system. In the words of Fabricio Arellano, head of statistics for the Guayaquil Stock Exchange, at the end of 2019, there have been closings of negotiable commercial invoices with profitability close to 9%. The probability of making a profit is extremely high. However, it is important to identify the best steps to be able to make investments in the most efficient way. Here is a detailed guide on the correct path to invest wisely in the Ecuadorian stock market.

1. Personalized advice.

In the search for smart investments, the small investor should approach a licensed brokerage. In this way, you will be able to obtain the appropriate advice to identify investment alternatives that are profitable and comply with the corresponding regulations. The Ecuadorian stock market is made up of several brokerage houses which have the exclusive power of financial intermediation. This means that they are the only entities authorized to trade on the stock market on behalf of third parties or on their own account. All of them have professionals with great experience and knowledge about the financial dynamics of the country. Thus, they will be able to identify the investor's needs and propose the best alternatives in terms of financial instrument, term and expected return.

2. Diversification.

Diversification is an essential method in the execution of efficient investment strategies. It provides the investor with the ability to reduce the risk of our portfolio by investing in different assets. The main objective is to improve the profitability obtained in relation to the risk assumed. Diversify is a concept widely used in the financial branch. It refers to a risk minimization technique, through the placement of the total investment in different assets, such as stocks, bonds, commercial paper, among others.

3. Analysis and evaluation of options

Unlike the traditional financial system, the investor of the Ecuadorian stock market has optimal transparency standards due to the stock market dynamics of Ecuador. The investor, small or large, has the opportunity to properly choose the company whose security he is going to claim. Since absolutely all companies are committed to accurately publishing their respective economic / financial information, the investor has the indispensable tools to be able to analyze and choose the best option.

Identifying and knowing the nature of the business will allow the investor to be attentive to any unexpected impact. For example, if investment is made in the agricultural sector, events that affect its dynamics such as international competition or government regulations will be an urgent sign that the investor needs to relocate his invested capital in less affected sectors.

4. Continuous control and monitoring.

Once the corresponding investments have been made, the investor must control and monitor all the securities in which he has decided to invest. In this way, you will be able to know how the companies of the securities you acquired are performing. It is important to devote the same care and interest in monitoring investments as in choosing them, for which several recommendations for efficient monitoring have been accumulated.

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