7 Tips for Starting Investors
So especially from me, for you: 7 tips for starting investors. The advice I would like to have had myself. Hopefully, I help you with it!
Tip 1: start small & spread!
Start small and start with spread investing instead of a large amount in one go. It is a misconception to think that you can only invest if you a) have a lot of money and b) have to deposit this in one go. You can invest in large and small amounts. You can invest with your change, you can deposit € 20 per month, or € 100.
You can set that you automatically deposit money every month. You can invest entirely according to your wishes and situation. But: think carefully what amount you can miss. Before you invest, it is important that you first provide an emergency fund and that you have paid off debts with high-interest rates. Only invest with money you can miss, bla bla, I have said 100 times, but it is a tough true story!
Tip 2: invest for dummies
You don’t have to be a stock market tiger, economist or business guru. Nowadays you can invest through parties that process your investment for you. This means that you only have to think about your risk profile, and they do the rest. Brand New Day is a party that completely relieves you, whether you invest € 50 or € 5000. You also have parties such as Binck Bank and Kendu that do the same. I myself have experience with Brand New Day and am satisfied with it.
Tip 3: invest for the long term
You invest for the long term. Then the chance of losing becomes smaller and the chance of good returns getting higher. Do not invest with money that you will soon need for (un) anticipated expenses. You put that money in a savings account. My advice would be to first provide an emergency fund (suppose your washing machine breaks down or you suddenly have to pay high dental costs), then for a savings account with three to six months fixed costs (if you suddenly have no income you want to be able to read it out for a moment), and then you start investing. By the way, investing means that your money is not certain, you can always sell at the time you want. At least, at the parties where I invest.
Tip 4: Start investing early and don’t be fooled
The earlier you start investing, the longer your investments can grow. The combination of long-term and automatic investing is ideal. Set a term of 10 or 20 years for yourself. Because if you invest for a longer period of time, a temporary fall in price has less influence on the end result. Markets are falling and markets are rising, but in the long term, the economy is always in a boosted flow.
I believe that it will remain that way, simply because the world population is growing and that we are actively investing (we = the world) in new forms of energy, fuel, production, etc. In the meantime, there will undoubtedly be crises, but even then: hold your horses and don’t be guided by your emotions. Leave your money behind, because it will automatically become more valuable again.
Tip 5: Reduce the risk by spreading
There is no investment without risk. It is, however, possible to keep the risk as low as possible. You do this by investing long term and by spreading. In this article, you can read how you can spread your portfolio. In short, this means that you do not bet on one horse, because we want to earn money in the long term, even if we occasionally make the wrong choice.
You can spread by, for example, depositing money every month (spread in time), in different investment products (ETFs, real estate, shares, bitcoin), in different sectors (shares of, for example, Unilever or Adyen) in different countries(ETFs that follow the European market or the American market). I myself have spread my investments over real estate, ETFs (shares and bond trackers) and bitcoins.
Tip 6: automate your investments
What greatly helps me is automating my investments. Both monthly direct debit to my savings account, automatic money to my Brand New Day investment account and automatic investment of my change. That is why I see my money box and investments as a fixed charge. Read the article here about how I do this and how you can do this smartly.
Tip 7: calculate what you can earn
What helps you keep to your goal, and you keep getting enthusiastic about investing, is knowing what you are doing it for. I personally like the site, and I regularly check what my return will be in 10 or 20 years if I continue like this. That motivates me enormously! Apart from seeing the numbers black or white, I have written out my WHY and I think about this on a daily basis. For me, money is only a means of achieving my WHY – living in freedom and living my life on my terms. My why is so strong and important that it is now very easy for me to adjust my money choices accordingly.