Skade, how does it work?

It's much easier than you might think! and it's safe and fun with Skade.

We tried to be as concrete as possible, using everyday vocabulary, as we would explain to our friends/ies (We are non-professionals, excuse us for our explanations that may seem too basic or inaccurate to some (we also used ChatGPT).

For the more experienced and those for whom these bases are obvious, they will find a lot of other in-depth information online on Skade and also on numerous sites and social networks as well as in television programs on the stock exchange.

Intro to the stock market

The stock exchange is a large international market where investors can buy and sell company shares (These shares are called shares), corporate debt (called bonds), and other financial products.

Where does the stock market take place? Transactions take place on computerized platforms such as Euronext (Paris), the Deutsche Borse (Frankfurt), the NYSE or the NASDAQ (New-York), the TSE (Paris), the TSE (Tokyo)...

Stock prices fluctuate based on supply (how many people want to sell) and demand (how many people want to buy). If a lot of people want a stock and buy it, the price goes up, and if a lot of people want to sell the prices go down. It's the same for bonds.

Why do businesses sell stocks and bonds? When a business needs money to grow, it can sell part of itself by issuing shares or borrow money by issuing bonds. In exchange, investors contribute their money.

How do you make money on the stock market? If a business grows well, the value of its shares may increase. For example, if you buy a share at €10 and it goes up to €15, you make a profit that is also called capital gain. Some companies also share part of their profits with shareholders in the form of dividends regularly paid to shareholders. Some companies also borrow money on the stock market by issuing bonds that “require” them to pay you interest regularly and to repay you at the due date.

Investing in the stock market can be very lucrative but also involves risks. If a business does not perform well or cannot repay its debts, its value may decrease or even go bankrupt and you could lose money. The stock market is not a lottery, you have to make reasoned choices, patiently and by respecting a few rules of common sense in order to make your savings grow.

A few tips to get started

Educate yourself: Learn the basics before investing, get informed and share your ideas, questions and experiences with other investors like you, Skade is made for it all!

Create a fictional wallet on Skade and follow its evolution, compare it with other public wallets, you will learn while having fun and gain experience without any risk.

When you feel ready you can really invest with the platform or bank of your choice and will continue to monitor your investments and you can continue to inform yourself and progress with your private portfolios in Skade and duplicate your real portfolios.

Now let's go deeper into various concepts

As you have understood, the stock market is a global market where those who want to buy or sell shares, bonds, and other financial securities trade with each other, called “investors”.

An investor is a person, individual or legal entity (companies, organizations, organizations, associations, investment funds,...), who buys shares, bonds, or other financial securities to invest their money.

Their main objectives are

• An appreciation of the value of its investment: When the price of shares increases, it allows you to really grow your savings to meet future expenses and until retirement while protecting yourself from inflation. This is all the more important nowadays because pay-as-you-go pensions will be increasingly lower due to the decrease in the number of workers, the increase in the number of retirees, not to mention the increase in health costs.

It is important to note that the average return on global equities measured in euros has been 9.5% per year over the last 10 years and around 13% per year for American equities (this return includes increases in value and reinvested dividends).

The average performance in euros of the global equity markets over the last 30 years can be approximated through global indices such as the MSCI World or similar indices. An estimate based on historical data (Source: ChatGPT) shows that over the last 30 years, the average annual performance in euros of global indices (shares with reinvested dividends) has been between 7% and 9%.

This includes periods of rapid growth (such as the 1990s and after 2009) and crises (such as the bursting of the dot-com bubble in 2000 or the financial crisis of 2008).

An average annual return of 7-9% over 30 years implies a cumulative return of more than 700% (multiplication by about 8 of the amounts originally invested).

This performance reflects the ability of global stock markets to weather crises and deliver significant returns over the long term.

• Receiving dividends: Some shares compensate their partners by paying them dividends regularly, which corresponds to a share of the company's profits.
• Receiving interest: Bondholders receive periodic interest at an agreed rate and therefore regular income. The average yield on bonds denominated in euros from high-quality companies over the last 10 years is around 3.4% per year.
• Diversifying your assets intelligently: Investing in the stock market is complementary to investing in real estate or other assets, it allows everyone to reduce their risks and protect themselves from inflation and to start with very small amounts. Indeed, on the stock market, we can invest very small amounts in companies that are all over the world, in all sectors and of all sizes, where the opportunities are the most promising and that correspond to our values, while benefiting from new economic dynamics and this in transparency, with good information.
• Benefit from permanent liquidity to deal with an unexpected event and to have total availability of its funds at a value known daily. This liquidity is a very big advantage of the stock market. especially compared to other investments (real estate, land, forests, objects...) which cannot be sold very quickly under good conditions and whose real resale value net of expenses is often not really known in advance and is lower than expected.
• Actively participate in the economy by investing in the businesses of their choice. It is an intelligent and contributive investment, it gives the meaning you want to give to your money and what it allows you to achieve. It is important and reassuring to know exactly where your savings are invested, in what society and what does she do with it, to be well informed and to be able to stay there or leave freely. It is also a good way to better understand our world, its economy and to be able to be an informed player active in its future. An important point: when you invest directly in a share or a corporate bond you know where and what you are investing in and the price is known and updated at all times (unlike a fund where you depend on managers, their skills and decisions as well as their management and liquidity constraints).