How much money do you need to start investing?
Keeping free funds in a current account for a long period of time will cause you to lose some of the value of your money, so it's worth looking for more profitable alternatives like the stock market. You can invest even if you don't have thousands of euros in your account, but the amount you choose depends on the type of investment that suits you.
The key is to determine how much you can afford to invest for the long term and how much risk you are willing to take.
In general, the potential for higher returns is also associated with higher risk.
Product-related costs should also be taken into account when deciding whether to invest.
Currently, individuals have about €7 billion in their current accounts. The free funds held in the account not only do not earn money, but also lose value over the long term due to inflation (currently around 3%, for example). Is there a better option to use this money so that it doesn't lose value and potentially earns you a profit?
A savings account or deposit is not the most attractive option at the moment because of the low interest rates. It is therefore useful to become familiar with the variety of investment products that are united by the fact that the money is invested in the stock market.
How do you know if you have money to invest?
Before you consider investing the money in your stock account in the stock market, it is important to assess whether it is really available money, i.e. whether you will need it in a few months for renovations or major payments. Only if you have a stable income and a cushion of security should you start to consider investing a certain amount in an investment product.
Most of these products are linked to the stock and bond markets, so their value on the stock market fluctuates over the short term - a few days, a few months, even a year.
This is an important consideration when deciding to invest: to expect a return, you must be prepared to invest for at least 5 years.
The different types of investment
It wouldn't be quite right to start a conversation about the investment experience by calculating the amount - anyone, regardless of income, can participate. More important than the amount is the risk you are willing to take.
The golden rule: if an investment product promises potentially higher returns, it also comes with a higher risk.
No amount is too small to invest, but for each amount you have to find the most appropriate type of investment. When it comes to tens of thousands of euros or more, it makes little sense to keep it in a savings account, which potentially has one of the lowest returns, because it is with the larger amounts that an investor has the widest range of investment opportunities and potential returns.
On the other hand, small monthly contributions of a few dozen euros may not be very profitable and may not even be possible to invest in the dynamic stock and bond markets. In this case, it is worth considering an option such as life insurance with euro savings.
Investing more can help you earn more, but it also has a cost.
In the investment world, it is the behaviour of the products chosen, not the amount invested, that determines the outcome.
In the market, returns are very often calculated as a percentage, so if you earn the same interest, an investor with more invested will earn more - that's the only difference.
A small amount may indeed limit the range of products available, but costs must also be taken into account. In particular, the relationship between the amount of commission and the potential profit should be assessed before investing, so always check the fee schedules carefully.
Let's look at some examples:
If the commission is set at €3, then investing €1,000 will incur a commission of 0.3 %, while investing €100 will incur a commission of 3 %.
Often the commission is set as a percentage - say 0.3 % of the amount invested. So if you invest €1,000, it will be €3, and €100 - €0.3.
In both cases you have to earn 0.3 % to offset the fee, but in euros the amounts will be different.
Commissions are often combined, for example 0.3 % of the amount, with a minimum of €3. Thus, a person who invests €1,000 and another who invests €50, for example, will have to pay the same amount in commission, i.e. €3. However, while in the first case it will be 0.3 % of the transaction amount, in the second case it will be 6 %.
"Investing should be like watching how paint dries or how grass grows. If you need excitement, then take 800$ and go to Las Vegas!" - Paul Samuelson.
In summary, the key is to research where to invest and under what conditions, so that it is profitable and potentially profitable, regardless of the amount of the investment chosen.