7 tips for beginning investors
If you have just started investing, or intend to start investing, it is nice to get some guidance. Some tips for beginning investors, that’s nice right? So especially from us, for you: 7 tips for beginning investors. Tips we would have loved to have had ourselves years ago.
Did you know that our online Starting to Invest course has already helped thousands of women start investing?
Psst: before we get started, it’s important to realize that investing involves risk. You may lose (part of) your deposit. So never invest with money you can’t afford to lose, and also make sure you have a well-stocked piggy bank before you start. Promise!
Tip #1: Start small & spread out!
The first tips for the novice investor: start small and begin with staggered investing rather than investing a large amount at once. It is a misconception to think that you can only invest if you are (a) have a lot of money and (b) must put this in at once. Investing can be done with large and with small amounts. You can invest with your change, you can put in €20 monthly, or €100. You can set up to automatically deposit money each month. Investing can be done entirely to your liking and situation. But: consider carefully what amount you can spare. Before investing, make sure you have an emergency fund and that you have paid off debts with high interest rates. Invest only with money you can spare.
Tip 2: investing for dummies
You don’t have to be a stock market tiger, economist or business guru. You can invest these days through parties that process your deposit for you. This means all you have to do is think about your risk profile, and they do the rest. Brand New Day is a party that takes care of you completely, whether you invest €50 or €5000. You also have so-called neo brokers like BUX Zero that make investing easy, fun and accessible. In the Starting to Invest course, we dedicated an entire chapter to helping you find the best investment party for you.
Tip 3: Invest for the long term
Investing is something you do for the long term. Then, too, the chances of losses become smaller and smaller and the chances of nice returns become higher and higher. So don’t invest with money you will soon need for (un)anticipated expenses. You put that money in a savings account. Our tip would be to make sure you have an emergency fund first (suppose your washing machine breaks down or you suddenly have to pay high dental bills), then a savings account that holds three to six months of fixed expenses (if you suddenly have no income, you want to be able to get by for a while), and only then do you start investing. By the way, with investing, your money is not fixed; you can always sell at the time you want. At least, if you invest in the stock market with mainstream parties.
Tip 4: Start investing early and don’t get crazy
The earlier you start investing, the longer your investments can grow. The combination of long-term and automatic investing is ideal. Set for yourself a deadline of, say, 10 or 20 years. Because if you invest for a longer period of time, a temporary drop in the price will have less impact on the bottom line. Markets fall and markets rise, but long term the economy is always in an upward flow (based on historical figures). We believe it will continue to do so, if only because of the fact that the world’s population is growing AND that we are actively (we=the world) investing in new forms of energy, fuel, production, etcetera. In the meantime, there will undoubtedly be crises, but even then: hold your horses and don’t be swayed by your emotions. Let your money sit, because it is going to become worth more by itself.
Tip 5: Reduce risk by diversifying
There is no such thing as investing without risk. However, it is possible to keep the risk as low as possible. You do this by investing long term and by diversifying. In short, this means not betting on one horse, because we want to make long-term money, even if we occasionally make the wrong choice. Spreading can be done, for example, by depositing money every month (spreading over time), in different investment products (ETFs, real estate, stocks, bitcoin), in different sectors (shares of e.g. Unilever or Adyen) in different countries (ETFs that follow the European market, or on the contrary, the American market). You’ll learn how best to spread in the Beginning to Invest online course.
Tip #6: Automate your investments
What can help tremendously is to automate your investments. Both monthly direct debits to your savings account and automatic funds to your investment account. So you see your savings and investments as a fixed expense
Tip 7: calculate what you can earn
What helps you stick to your goal, and keep yourself excited about investing, is knowing what you’re doing it for. For example, check berekenhet.nl, and check what your return will be in 10 or 20 years if you continue like this. That motivates tremendously!