Investing is often seen as something for rich people, pension funds and financial experts. But the truth is: anyone can invest, even with a small budget and without in-depth knowledge. Thanks to modern technology and accessible platforms, you can easily get started without investing thousands of euros right away.
In this article, we share a number of basics about investing, so that you have a good starting point. Think about what a broker is, how to choose shares and why diversification is important. This article is not financial advice, but a stepping stone to further investigate how investing works and whether it suits you. Because one thing is certain: the more you learn, the better you can make decisions.
Do you want to go a step further? In a next article, we will delve deeper into how you can free up money to invest, the difference between growth shares and dividend shares and why it is important to recognize them. In this way, you build up more knowledge step by step and you can make well-considered choices for the long term.
What is a Broker?
A broker is a financial institution that acts as an intermediary between you and the stock market. Through a broker, you can buy and sell shares, bonds and other securities. Without a broker, you as a private individual do not have direct access to the stock market.
Accessible Platforms for Beginners
There are several online platforms that make investing accessible to beginners. One example is eToro, a social trading platform where you can follow and even automatically copy the strategies of experienced investors. This allows you to learn and potentially make returns without in-depth market knowledge.
However, it is crucial to do your own research and be aware of the risks. Investing always involves risks, and even experienced investors make mistakes.
Investing in Well-Known Brands
A common piece of advice for beginning investors is to invest in companies whose products and services you know and trust. For example, if you regularly drink Coca-Cola, you might consider buying shares in The Coca-Cola Company. This company has a long history of stable performance and pays out dividends regularly.
What is Dividend?
Dividend is a profit distribution that a company pays to its shareholders. This can be in the form of cash or additional shares. Receiving dividends can be an attractive way to generate passive income and increase your total return. Well-known dividend stocks include Coca-Cola and Johnson & Johnson.
Think Long Term: Diversification
Another piece of advice often heard in the investment world is to ensure a well-diversified portfolio. This means that you do not invest all your money in one stock or sector, but spread your investments across different companies and industries.
For beginners, this is not immediately relevant if you are just starting out with one or two stocks. But as you start buying more and more stocks, it may be wise to invest in different sectors (e.g. technology, healthcare and consumer goods) or even look at ETFs (index funds) that automatically offer a broad diversification.
Key Considerations
While investing is more accessible than ever, it is important to act responsibly:
- Do your own research – Don’t blindly trust advice and take the time to understand companies and markets.
- Invest with money you can afford to lose – Only use funds you don’t need for essential expenses.
- Be aware of risks – Even with the guidance of experienced investors, there are no guarantees; the market can be unpredictable.