Start investing: 11 tips not to be missed
Not at all a crazy idea that you’re considering investing. It’s a great opportunity to get more out of your money. In this step-by-step plan we show you how to get off to a good start!
1. Determine your investment objective
Do you want to invest to build up capital, or do you see investing as an exciting new hobby? Of course you can do both. Whatever your reason for starting investing, it can help to think in advance about what goal you have in mind.
Many people start investing to build up extra retirement income, to secure tuition fees for their children, or to finance a major renovation.
2. Think about how much money you need
Once you have determined your investment goal, you can start looking very specifically at how much money you need to achieve this goal. You can then make a good estimate of the money you already have available, and how much return you need to make in order to reach your target amount.
3. Determine how much money you can miss
Think carefully about how much money you want and you can start investing. It can be tempting to deposit all your money. However, always keep a financial buffer for when, for example, your washing machine breaks down. Also, invest only with money you can spare for the long term. Read more about how much money you need to invest.
4. Determine how long you need to invest your money
Once you know your target amount, you can determine your investment horizon. In other words: how long you need to invest your money before your target amount is reached.
Keep in mind that financial markets will fluctuate, and so will the value of your invested assets. Remember: the longer your investment horizon, the higher your chance of a positive return.
5. Gain some basic knowledge!
When you open an investment account, you will have to answer a number of questions to find out which strategy suits you best. These questions also test your knowledge about investing. You can make a start by checking whether you already know these important investment terms.
6. Know what you can invest in
Investing in shares
If you invest in shares, you become, simply put, a small part owner of a company. You can buy shares of individual companies, but you can also invest in an entire index via a so-called ETF. For example, you can invest in all companies in the AEX at once.
Investing in bonds
Bonds are slightly less well known, but no less interesting. A bond can be seen as a type of loan that you grant to a government or company. In exchange, you receive interest on the amount you have lent out. Some bonds, like shares, are freely negotiable on the stock exchange.
Investing in real estate
You can invest in real estate by buying a house, but it is also possible through the stock exchange. In that case, you do not buy a physical house, but you invest in real estate funds that own real estate portfolios. This way you can also invest smaller amounts in real estate. However, you do pay the costs of the fund manager.
Investing in commodities
Commodities are part of a varied investment portfolio. Popular commodities on the stock market are gold and oil, but in principle you can invest in any commodity. You do not own physical commodities, but investment products that derive their value from the price of commodities.
7. Immerse yourself in the risks of investing
If you invest, you run risks. Your return may be lower than you expected. In a negative scenario, it is possible to lose part or all of your investment. Novice investors would do well to learn how to limit the risks.
The risks of investing largely depend on the products you invest in. For example, equities are generally riskier than bonds. In general, the higher the potential return, the higher the risk.
8. Determine how much risk suits you
You will have to weigh up how much risk you are willing and able to take. Are you awake to fluctuations in exchange rates of 10% or more? Or are you looking more at the long term and are you not so quickly impressed by short-term rises or falls?
In order to help you with this assessment, we will draw up an investment profile for you, which will then fit one or more risk profiles. We do this on the basis of a questionnaire that you fill in when you apply for an investment account.
9. Choose between self investment and managed investment
Investing can be done in different ways. You can decide to invest actively yourself. You will learn by making mistakes. Read here about 5 common investment mistakes.
You can also have your investments managed by an expert. The question is which option suits you best. Read more about the difference between investing yourself and having yourself invested.
10. Invest a fixed amount every month
Many people think that you can only invest when you have a lot of money available. That’s not true. You can also invest with a fixed amount per month, e.g. € 250. If you do that every month, you will build up a nice wealth.
An advantage of investing periodically is that you are less dependent on exchange rate fluctuations. This is because you spread out your investment. Of course, you can also opt for a combination of one-off and periodic investments.
11. Take the costs into account
When you invest in the stock exchange, you pay costs for the investment platform and management costs when you have your investments managed. This is usually a fixed percentage of your invested assets per year. These costs have an effect on your return.
On comparison sites such as Beleggenvergelijking and Beleggingsmatch you can compare the costs of providers.
Do you want to start investing right away?