Start investing in 5 steps
Investing is easy, as long as you know what to do. Many websites use tricky terms and try to deter new investors. We do not like this! Investing should ultimately be fun, and we are happy to help you start investing.
On this page you will find all the information you need before you start investing. Before you can start investing, you must first go through the following steps:
- Step 1: decide where you want to invest.
- Step 2: determine your goal.
- Step 3: decide how much money you want to invest with.
- Step 4: decide what you want to invest in.
- Step 5: learn to invest well by practising.
Is investing a good idea?
Before you review the steps, it is important to ask yourself if it is wise to invest money. Do you have money you can miss for a longer period of time? And can you live with it when you lose money? Then you can consider starting investing.
Step 1: Where can you start investing?
You invest with a broker. A broker is a party that makes it possible, for example, to buy and sell shares. Where you can best start investing depends on investment style. There are two ways you can invest.
You can choose to actively trade in shares. When you actively trade, you buy and sell them on a daily basis. This way, you can take full advantage of price fluctuations. A good party for active trading is the Plus500 platform. Do you want to open a free demo at Plus500? Click the button below to open an account directly:
Some investors prefer to buy shares for the long term. When the share prices increase, you can make a profit. Sometimes, you also receive a part of the profit in the form of dividends. As a beginner, it is smart to choose a cheap broker. That way you can get a better return with the same amount of money. At eToro you can buy shares without commissions. With the button below, you can open a free account immediately:
Step 2: why do you want to invest?
Before you start investing, it is important to consider what you want to achieve. Before you start trading it is important to set a clear investment goal. Some people prefer investing for short-term price gains, while other people invest to build a comfortable retirement for the future.
In any case, the fact remains that investing is more profitable in the long term than saving. In the article why you should invest now you will discover the greatest benefits of investing.
Step 3: how much can & do you want to invest
After you have your investment goal, it is important to determine how much money you can and want to invest. Remember that investing always involves risks. Many novice investors make the mistake of investing money they cannot really miss. Avoid this by making a clear plan, so you immediately know how much you can and want to invest!
Step 4: what do you want to invest in?
Before you start, it is wise to decide what you want to invest in. After all, there are several possibilities.
Start with shares
Stocks are often the most popular for investing. Buying and selling shares can help you make a nice profit. In addition, you often receive a profit portion in the form of dividends. Do you want to know more about buying shares? Read our article on this topic:
Investing in options
Options are a little more complicated. Before you start investing in options, it is wise to gain some knowledge. With options, you can speculate with a higher leverage. A lever makes it possible to take a large position with a small amount of money. You can also speculate on a price drop with options. Do you want to know more about options? Read our course about the subject for more details:
Bonds are perfect for the novice investor who wants to avoid risk. Bonds are debt securities. At the end of the term you will get the issue back. As a result, the price development is less important. Do you want to know more about investing in bonds? Read our article on this topic:
Raw materials or commodities
Trading in raw materials can also be very interesting. Precious metals such as gold and silver are widely traded, especially in economically bad times. Oil can also be an interesting investment. By investing at the right time, you can achieve good results with raw materials. Do you want to know more about investing in commodities? Open our article here:
New and hip is trading cryptocurrencies. Many people have started investing in cryptocurrencies. Cryptos do come with higher risks. On the other hand, the price can suddenly rise considerably overnight. Read more about it here.
You can also invest in the more traditional currencies. In the article investing in Forex you can discover how this works.
Consider the risks
Each type of investment involves different risks. It is therefore important to think for yourself what your risk profile is. What risks are you willing to take? How do you prevent sleepless nights? For example, people with low-risk appetite will opt for bonds, while high-risk investors will opt for cryptocurrencies.
Step 5: learn to invest well
Starting to invest is not difficult. However, getting a good return on investing can be a lot more challenging! It is therefore important to practice first, so that you understand what influences the share prices. You can use a free demo account for this. With a demo account, you as a beginner can try out the possibilities completely without risk.
Do you want to open a free demo right away? By using the button below you can compare the different trading demos! This is a must when you are going to invest for the first time.
Why do you have to start investing now?
Today is the perfect time to start investing. But why would you? In this part of the article we discuss this briefly.
Low return on savings
A long time ago, you received a fair amount of interest on your savings. This is no longer the case. You are lucky if you receive any interest at all. For many savings accounts, the interest rate is 0% and banks even consider charging a negative interest rate in the future.
At the same time, you can see that the stock markets always have performed well over a longer period of time. The average return on shares is as much as 6 to 8 percent depending on the period you review. If you want to achieve a higher return, it is definitely advisable to invest.
Protect yourself from inflation
Inflation is the process where the products you can buy become more expensive. The consequence of inflation is that you can buy less with the same amount of money. When you park your money in a savings account, your money slowly becomes less valuable.
It is therefore wise to invest part of your money in shares. The return on shares over a longer period is higher than the return on a savings account. This at least gives you a chance to beat inflation. Of course, you have to take into account that you can lose (part of) your deposit.
Saving for big expenses
By investing, you can collect a large amount of money in the long term. For example, you can use the money to retire, or you can buy a nice house. Investing is faster, especially when you use the power of compounding.
When you utilize compounding, you reinvest the return you get with your investments. You will receive interest on interest. That way, your assets grow exponentially in the long run!
Fun & accessible!
Personally, I also invest because I like it. It is a lot more interesting to follow the news when you know you are also co-owner of some of the companies mentioned. Investing is also very educational and as a beginner I am sure you will learn new things.
With the advent of online brokers, investing is also much more accessible nowadays. You do not have to pay a high transaction fee and you can already buy a stock with the click of a mouse. If ever there was a good time to start investing, it is today!
Indispensable tips for the novice investor
Beginner investors sometimes make mistakes. Online brokers offer user-friendly software that allows you to trade in well-known shares within minutes. However, few beginners know how to get a good result. As a beginner, how do you make sure you do not lose all your money right away?
Spreading your investments is important
It is especially important to spread your investments sufficiently. Do not put all your money on one share. For example, many novice investors put all their money into bitcoin. This is tremendously risky. By spreading your money across different investment products like shares and bonds, you are already reducing the risk. Subsequently, it is wise to invest in companies from different sectors to improve your results even further.
Many beginners are not careful. For example, they immediately put all their money into one investment. Other beginner investors invest money they cannot really miss. This can lead to negative emotions that adversely affect your investments. It is therefore important to start with caution. Start with a small amount of 1000 or if necessary 100 and first develop a feel for the market.
Limit your costs
Many beginner investors underestimate the importance of costs. When you invest with an expensive party, your chances of success are much lower. Opening an investment account at the bank is therefore rarely a good idea. A cost difference of half a percent can cost tens of thousands of euros over a long period of time.
Are you curious where you can invest cheaply? In this article we reveal the cheapest brokers to invest with:
Invest in things you understand
Some beginners make the mistake of investing in products they do not yet fully understand. However, this is very risky. If you do not know what you are doing, chances are you are losing money. Therefore, spend enough time to gain an understanding of the investment product you want to invest in. That way you avoid losing a large part of your money due to a lack of knowledge.
14 more investing tips?
Do you want to get off to a flying start as a novice investor? We have written an article with 14 golden tips for the starting investor. Use the button below and find out how you can greatly improve your results!
How does investing work?
The starting point of investing is actually quite simple: you buy or sell something to buy or sell later with the aim of achieving profit. In recent years, thanks to the introduction of various online brokers, it has been possible to take advantage of both rising and falling markets.
For example, if you think that BMW's share price is going to fall, because German consumer confidence has fallen sharply, you may decide to sell BMW shares. We also call this shorting. When you open a short position, you earn money as soon as the price drops.
The great thing is that you can make money regardless of the direction of the market. With this new way of investing you only have to decide whether you want to buy or sell and at what time. When you open a position, the winnings or losses are tracked in real time and as soon as you close the position again, these winnings or losses will be definitively settled with your balance.
In the previous paragraph, we had already pointed out that certain news events may influence the prices of, for example, shares and currency pairs. It is also possible to invest by recognizing patterns in the price charts. For this you need some insight and through practice you can quickly become better at recognizing these patterns. Many people who start investing learn to recognize these patterns quickly and know when it is a good time to open a position.
In the end, investing is the (combined) game of supply and demand where a trend reversal means a shift in these ratios. For example, a price can fall quickly and rise again at a low value. At the lower price, new buyers can be found again.
Even without complicated technical analyses, patterns often can be identified easily. Horizontal lines through which the price rarely breaks can be found at any period. By buying and selling at these points, you can greatly improve your investment results.
Do you want to learn to invest better? We have developed a course in which you learn the basics of technical analysis. With this comprehensive tutorial you can start investing in shares! Use the button below to open the course.
Investing is fun, exciting and potentially profitable. As a beginner investor, you will have to get used to some terms, but do not be put off by this. Once you have made some investments with a broker, you will quickly become more experienced. Everyone was a beginner once, the question is when you are ready to start investing?
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