Investing in shares can be a prudent way to nurture your savings. But all the information on how to buy stocks in Spain can feel a little overwhelming, especially while you’re adjusting to life in a new country. If you’ve moved to Spain and are exploring stocks for the first time, this is the jargon-busting guide for you.
The first thing to say is that it’s now easier than ever for newcomers to invest. That’s because of the many reputable online brokers which are available 24/7 through your computer, phone, or tablet.
Of course, you can always choose to use a traditional, full-service brokerage that will provide direct, bespoke guidance. However, this does tend to come with higher costs. Using online broker sites can be a more straightforward, cost-effective approach, ideally suited to casual investors. You can simply log in and make your trades with a few taps, usually with far lower commissions. That being said, it’s vital to always read the terms and conditions to know the potential charges.
Whatever online broker you sign up with, you should be able to invest in:
- Individual company stocks, which will technically make you a part-owner (however small) of the companies in question
- Exchange-traded funds, known as ETFs, are made up of different stocks and other assets
Bear in mind that this guide is just a quick overview of investing in Spain, and the information provided here is not intended to be financial advice. Investing in the stock market can be risky. You should consider seeking professional advice before investing in the stock market.
Buying Stocks 101
A stock exchange does exactly what it says on the label. It’s a place where investors can buy and sell stocks in various companies, from giant household names to thriving startups. By creating an account at an online broker, you’ll be able to access different stock exchanges to buy stocks in Spain. Some of the most well-known are the New York Stock Exchange, the London Stock Exchange, and the Nasdaq.
A good online broker will let you easily operate on a wide selection of exchanges. You can check the current prices of different stocks, trade assets, and manage your account at home or on the move.
Spain itself has four stock exchanges:
- Bolsa de Madrid
- Bolsa de Barcelona
- Bolsa de Bilbao
- Bolsa de Valencia
The biggest is the Madrid stock exchange, which lists Spanish banks like CaixaBank and Santander, among other big organisations.
Start Investing Early
Moving to Spain means adjusting to a new country and culture, not to mention a new place of work/study. So it’s totally understandable if investing in stocks is low on your to-do list. You may also feel inclined to wait until a point when your income is higher, or you reach a career milestone. But, while you should only invest when you feel comfortable, there are some good reasons to start early.
Time Will Be On Your Side
Stocks can go up and down in value. That’s why it’s generally recommended that you take a longer-term view of investments. The earlier in your life you invest, the more time you’ll have ahead of you in which to recover from setbacks and recoup losses. You’ll also have more time in which to hopefully grow your profits and provide for your retirement.
You May Be Able to Beat Inflation
We’re living in rocky financial times, and the cost of living in Spain isn’t set in stone. If inflation rises and goods/services become more expensive, any savings in your bank account may decrease in value. Rather than making do with interest paid by your bank, you may find it better to invest your savings in stocks.
This way, your money will be put to work rather than potentially simply sitting and stagnating in your bank. And, if you make good investments, your returns can mitigate the effects of inflation. Remember that you should have a longer-term strategy in place. Most experts recommend you hold onto assets for several years to ride out periods of market volatility.
Diversifying Your Stocks
It’s a well-known rule of thumb that you should aim to diversify your stocks as much as possible. In other words, buy assets in a range of companies and industries. Doing this means you won’t have all your ‘eggs in one basket. Instead, your risk will be spread. So, if one sector you have shares in suffers a downward turn, you may still be buoyed up by other investments. You can diversify very easily by investing in ETFs, which are bundles of different assets.
Where to Buy Stocks in Spain: Penny Stock Strategies
You don’t necessarily have to spend a lot of money to open an investment portfolio. One potential option when sticking to a smaller budget is to purchase penny stocks. As the name implies, these are shares that cost very little, generally less than one or two euros. However, it’s important to carefully consider the pros and cons.
The affordability of penny stocks means you can invest in a diverse range of assets at your own pace. Plus, many companies with penny stocks are startups with potential for significant growth. By having a stake in such businesses early on, you may reap the benefits as they achieve success.
The major drawback with penny stocks is increased risk. Companies with penny stocks are typically subject to less scrutiny, so assessing their potential can be more challenging. On top of that, many penny stock firms have been subject to poor management in the past, leading to their current status. This is why it’s important to do a lot of research and take a realistic view of what returns are possible.
Where to Buy Stocks in Spain: Investing in Innovation
As a member of an online broker, you’ll be able to invest in companies worldwide. It should be noted, though, that Spain itself is a hotbed of innovative businesses operating within sectors seeing huge growth.
For example, Spain is a leading player when it comes to renewable energy. It’s the world’s third-ranked exporter of wind turbines. The Spanish renewable sector as a whole encompasses more than 4,000 companies. The information and communications technology (ICT) sector is also growing rapidly. Spanish companies specialising in fintech, cybersecurity, and AI are all sought-after by investors.
Other Spanish sectors that investors should consider include:
- Life sciences
You can also choose to go down the ETF route in the interest of rapid diversification. There are a number of popular Spanish ETFs providing access to a range of stocks, and you can check out some of them here.
What is Profit-Taking?
You may choose to sell your stocks when they rise in value. This is called profit-taking, and it may take place on a large scale if a company posts a better-than-expected revenue report. Or, if there’s a significant change in a government’s economic policy. Individual concerns are equally important. You may, for example, decide to sell shares to buy a car, pay for renovations, or send money back home.
Investing and Risk
Investing in stocks can bring great rewards over time, but it’s inherently risky. The value of shares can rise and fall, often with little warning. That’s why it’s important to be prudent, research, and diversify your assets as much as possible. This measured approach can help you lay your financial foundations while living in Spain.