What to look out for... Share price and commission

The price of shares is a basic criterion that you need to pay attention to when investing. It determines the value of the shares that the investor must pay for a unit share in the selected company. The price depends on the stability and position of the company on the market, market changes, economic trends and financial results. When is the share price favorable? More important than the exact price are forecasts for the future. The price of stocks and other financial instruments is attractive when expert forecasts predict its growth, and the growth potential is promising, which may be due to the company's development plans. In general: it is better to buy fewer more expensive stocks with high growth potential than to buy cheap shares of a company on the verge of bankruptcy.

A commission is a transaction cost from which there is no profit, but it must be incurred to make investing possible – each stock market transaction involves the need to pay a commission to the broker, which is exactly what we talk about at Webinar Universe.

What to look out for... Minimum transaction values

Most brokerages set a minimum amount that an investor must spend on a transaction. This cost is of great importance for novice investors and people who trade smaller amounts.

Maintaining an investment account also comes with fees, although many brokers only charge them for higher trade amounts or when there is no specific activity on the account. This makes investing also accessible to people with a smaller investment portfolio.

The cost of the transaction and the broker's commission can significantly reduce the amount allocated for investment and reduce profits, so you need to think through your investment plans well and adapt them to your capabilities.

So what amount to start with?

It is impossible to clearly indicate at what amount investing will be profitable, as it depends largely on the fees associated with transactions and account maintenance. However, it should be remembered that commissions and fees are often proportional to the value of the transaction, but some of the costs are fixed. Therefore, by investing small amounts, you can feel the impact of fees on the final investment result to a greater extent. However, many brokers offer conditions that are favorable for both small and large investors, and the growing competition between brokerage houses allows you to choose an offer that is very favorable and well suited to your needs and capabilities.

Investing always involves some risk, and although every investor plays on the stock market to make money, you also have to take into account losses, especially at the beginning of the road, when it is more difficult to make the right decisions. It is also worth remembering that the amount you will allocate to the investment will remain frozen for some time – in the event of a sudden need to release funds, stopping the investment and, for example, selling shares at an unfavorable time may involve large losses. Therefore, the exact initial value of the investment portfolio should be determined individually each time based on the current financial situation of the investor.

Profits and losses

During our online trainings , we say that accurate calculation of profits and losses from stock market investments is necessary to assess the profitability of investments and make informed further investment decisions. In order to calculate the profit, the initial capital and all costs related to transactions (commission, fees, etc.) should be subtracted from the final value of the investment portfolio.

PLN 5,000 was invested, and a year after the first investment, the portfolio is worth PLN 6,000, so theoretically the profit is PLN 1,000. The costs incurred for commissions and fees amounted to a total of PLN 120, so the actual profit was PLN 880.

portfolio value – initial investment – costs = actual profit If you want to determine the profit in percentage, divide the actual profit by the initial capital and multiply by 100%.

(real profit/initial capital) *100% = profit in percentage terms It is therefore obvious that transaction costs strongly affect the actual return on investment. The higher they are, the lower the profit, so you should carefully check the fees associated with handling transactions and maintaining an account with a brokerage house.

Small amounts or large amounts?

Determining the amount for investment is very difficult, because each solution has its advantages and disadvantages. Therefore, the amount should be set individually, matching it to your financial capabilities, goals and investment strategy. Investing small amounts is certainly safer, and possible losses will not be so severe – a loss of 5% from PLN 5,000 to PLN 50,000 is a huge difference for new investors. Therefore, investing small amounts is especially recommended for beginners who want to gain experience. This allows you to minimize risk and avoid larger losses at the beginning of investing. However, it should be remembered that with high investment costs (commissions, account fees), they will be more noticeable when ordering low-value transactions, which will negatively affect the final return on investment.

Investing larger amounts brings greater profits with successful trades, but it is also associated with a much higher risk. This is a good option for experienced investors, which allows you to maximize profits, but requires a lot of knowledge and constant commitment to investments. Regardless of the amount of investment, it is worth learning how to diversify your portfolio, which allows you to reduce risk. This involves investing in different assets and using a variety of investment strategies to manage risk more effectively. Investing in the stock market requires at least basic knowledge of the mechanisms of the stock market and the possibility of diversifying your portfolio, which makes it easier to minimize the risk associated with wrong decisions and unforeseen market fluctuations. It is safer to invest small amounts, but playing large allows you to increase your profits, especially if you are good at predicting and analyzing market trends.

On Webinar Universe , we mention that it is also worth remembering that the amount of the final profit is also affected by the fees associated with maintaining the account and concluding transactions, so when choosing a brokerage house, you should pay attention to the fees charged by the broker. Every investor, regardless of experience and the amount of investment, should remember that the most important thing is commitment and diligence when concluding new transactions. They will allow you to estimate the risk well, which is crucial when managing investments.