Oy, investing. This is a subject that many people shy away from. Because that’s very risky, isn’t it? And you have to be rich to do that, right? Think again, dear woman! Because investing, provided you do it smartly, can be especially tremendously smart for your future. You can build wealth, turn your money into more money (yes, really), and give your financial future an extra touch of peace and solidity. However, there are ifs and buts. Investing has risks, and understanding them is important. In addition, there are now many, many ways to invest, just try to make a good choice that suits your situation. Are we going to help you with that, no worries. In this article, we share seven questions we often get when talking about investing. Read along soon. Think of this as a first start.
How do I get money to invest with?
Waiting to invest until you are rich is like waiting to date until you are married. Exactly the wrong order 😉 Investing is a way to build wealth, so you certainly don’t have to be rich to start. You don’t have to put in a large amount in 1 lump sum either, you can also put some money into an ETF on a monthly basis, for example. The important thing is that you start by mapping out your income and expenses, and start prioritizing that you set aside a (small) amount each month to invest.
An ETF is a so-called basket containing, for example, a mix of all kinds of stocks. By 1 single purchase, you can invest in as many as a thousand (or more) companies at the same time.
You can start investing in ETFs as little as a few tens per month. As a result, you benefit from many forms of diversification: time, markets, type of business. However, it is very important to pay close attention to costs you incur.
It is important to know that you should only invest with money that you can spare for the long term (5 to 10 years). That’s because the economy can be erratic, and stock market prices can rise and fall. Experts indicate that if you take at least 5 years, preferably 10, then the chances of seeing your money grow are enormous. Want to buy a new car next year? Then it’s better to save that money instead of investing it.
Investing can be as little as a tenner. Yes, really!
What can I do to free up some money to start investing? Because I don’t just have money “left over” to invest.
Start with the following steps:
Step 1: Map out what comes in and goes out each month.
Step 2: Spend less. Decide what you are going to save on, and do so!
Step 3: Save more. Decide what you want to save each month, and do it!
Step 4: The amount you save, or part of it, even if it’s only 10 euros, you can now start investing.
Step 5: Apply smarts to make investing even easier: for example, set up a direct debit.
Okay, that sounds simple, but if you’re barely making ends meet right now, it’s a little too easy to say “just save!”. Think of investing as one part of your financial journey. Are you not that far along yet? That doesn’t matter, all in good time. Perhaps it would be smarter for you to start working on your budget and financial plan first. Or maybe you want to focus on generating additional income first in the coming months. Once the basics are in place, you can start investing. Don’t let yourself get crazy and keep a pace you feel comfortable with.
Psst: All Elfin members have access to comprehensive tools to create a personal budget. Do you want this too? Check out the membership here!
I find the first step quite scary, what can I do?
We get that. Starting to invest is also exciting. Let’s start small. Because did you know that when you start with a small amount, your confidence slowly grows and it becomes less and less scary? We are going to start investing with 50 euros. Because once you have made your first investment with a small amount of money, you will find it easier and easier. You may remember your first driving lessons. That first time may have been killing in terms of nerves, but after 10 lessons you step into the car with much more confidence. So is investing.
So where can I invest? I hear so many names passing by.
Long live our digital age, there are many platforms where you can open an account quickly and free of charge and start investing from a few tens. Think Peaks, Brand New Day, Semmie, ASN, Meesman or BUX Zero. The difference between all parties? Often there are not that many differences and the most important thing is to choose a party that suits you. There are two things to pay close attention to:
- Regulation. Are they licensed and allowed to do business in your country? In the Netherlands, for example, a DNB and AFM license is important. All the parties we list at Elfin are licensed, otherwise don’t list them. So you can be sure you’re in the right place when you see a name come by with us.
- The cost. Investing involves costs, such as transaction fees and management fees. The higher the cost, the less you have left for yourself. Don’t drive yourself crazy, however. Costs come with it. Does a party promote being free? That’s a red flag, because left or right, money has to be made somewhere. Just be careful that the cost is not too high. In Elfin’s Beginning to Invest course, you’ll find fee overviews.
Read more about different investment parties here
Why should I invest at all?
First, nothing must. We think that investing is smart , because being smart with your money creates financial freedom. With investing, you build wealth and create a passive income stream. Investing contributes to your financial strength and your financial independence. Imagine in a few years you have built up a nice wealth through investing, and you decide to take a sabbatical, but you are still making money? You can do that with investing. Nice idea, right!
In what ways can I invest and invest?
In many ways. For example: stocks, ETFs, bonds, crowdfunding, real estate, commodities. You can invest monthly, annually, every day. Long live the Internet and all the easy products and services developed to make investing very accessible. But one way of investing is also: saving, spending less, starting a new business.
We very much unbiasedly (lol) recommend the Elfin course Beginning to Invest. Here you will learn about different investment products and get super good explanations from financial experts.
Investing is very risky, isn’t it?
Yes, investing has risks. Absolutely and we will never deny that. But you can invest with minimized risk. If you know what you are doing, and apply the golden investment rules, the chances of you losing your money are very small. The risks of investing are mainly in the depreciation of your investments. How about this?
The market is volatile, and stock markets rise and fall. Sometimes a stock is €100, the next moment you buy this same stock for €110 and a month later this stock can be purchased for €90. The 4 factors that determine current prices?
- Company news and company results;
- Industry
- Investor sentiment
- The economy
And meanwhile, points 3 and 4 in particular can drive up prices tremendously, but also bring them down. History shows that every drop in stock prices was followed by a rise in stock prices. Therefore, it is vertanding to invest long term. With a plan. And observance of the “rules of smart investment.
Starting to invest?
Yes, do. Even if it is by a tenner. Join Elfin and consider gaining knowledge as a first investment!
Become a member at Elfin and learn all about building wealth wisely from experts and advisors. No difficult language, no dull stuff. Promise. Find out more about Elfin membership here.
