Allright, you have a nice nest egg, no debt and possibly an extra “fuck it” pot for worse times. Once you have the basics in place, you can start investing. Because continuing to save is a bit of a waste somewhere. When you hoard money in your savings account, you know you are “gathering dust” and with current interest rates won’t yield much. Indeed, over the next few years, the value of your savings itself will continue to decline due to rising inflation. So you’re not going to sit around waiting for that, and so investing is a good idea. “How do you make money investing,” you ask yourself? There are three ways to do that, pay attention!
3x how to make money investing
There are 3 ways to make money with your investments.
- The value of your investments increases.
- You receive dividends from the stocks you hold in your investment portfolio.
- You receive interest through bonds or rent from real estate, for example.
We further explain the 3 ways to make money investing below.
Way 1: the value of your investments increases
When you decide to invest some of your savings in stocks, it means that you are buying a piece of that company per share. Besides sounding very cool, this will also pay you off in the long run once the value of that stock will rise. This is because if that company is doing well (and the overall value of that company is rising) and/or the company is in demand, this will be reflected in the market value of that stock. So if you paid €5 euros for your share when you bought it and after 5 years that share has risen to €10 euros, you will therefore make a profit of €5 euros per share when you sell. Katsjing! Runs up nicely when you’ve bought 100 shares 😉
Way 2: You receive dividends
We love stocks that pay nice dividends. Dividend is actually a reward you get for the confidence you have in the company you bought stock from. Often that reward is then paid out in a monetary amount. At least, when the company has made enough profit because otherwise they can’t pay a dividend either. By the way, a company may choose how to pay its dividends. We also know of companies that pay out an additional share in lieu of cash, for example. Anyways, it always gets you something so. Moneymakers in that area in the Netherlands include Ahold and Shell.
Way 3: you receive interest
You can also make money by receiving interest, for example, if you invest in real estate or bonds. Let’s talk about bonds. You should think of bonds as a loan you make to, say, a company or to the state. In return, you receive interest in the form of a coupon payment. Thus, a bond is a debt instrument issued by the government or a company. Bonds are freely tradable. However, it is wise to first carefully find out what the risk of the bond is. After all, you do want them to start repaying your pennies and that that will pay off. Government bonds of our own country, for example, are enormously popular, not only because they thus yield something but because the Netherlands also has enormous credits when it comes to “low risk” bonds. Simply put, that means there is a small chance that you will not get your borrowed amount back. In the Beginning to Invest course you will learn the ins & outs of investing in bonds!
What do I choose to do now?
What you choose to do is a very personal choice. One likes to get down to business with loose stocks and the other goes all out on bonds. In any case, what you should keep in mind is to choose wisely and see what suits your situation and investment style. And investing is something you do for the long term. We cannot keep emphasizing this often enough. So keep in mind in your choices that this is something that will pay off for the long term. The quick fix, we don’t really believe in that.
Learn more, in an accessible way, without difficult language, about investing? Take Elfin’s online course Starting to Invest! Thousands of women went before you and made their first investment.
