Getting started is more important than scheduling.
If you have the financial opportunity to do so, the best time to start investing is probably right now.
But what does “economic opportunity” mean? How much money do you need to start investing?
I had a completely distorted view of this a couple of years ago.
Two summers ago, I visited my bank when the banker inquired at the end of the meeting about my intentions to start investing. I sighed deeply and thought it might take a while longer.
When he then introduced me to different investment products, my first thought was that I probably can’t afford these. I closed my eyes, and in front, I saw those middle-aged costume men who certainly invested a trillion euros a month. I wonder why in the world he talked about these things to me.
And when he asked at the end of the show how much I could imagine investing in a month, I blushed. For some reason, I thought there was a right and wrong answer to this question.
After a moment of twisting and curving, I was told that maybe 100 euros a month would dissolve into this. However, I had started my first full-time job, so I practically had the opportunity to put money aside. However, I was embarrassed. That must have been little, he thought.
How did it go? The banker smiled and said it was okay.
Today, when I think of that situation, I think about what kind of a fool I’ve been. 100 euros a month for investing supposedly a little? Of course, that’s not a bit. That’s more than enough. That is 85 euros more than what that bank had announced as the minimum investment per month.
If that’s the amount you feel you’ll be able to put aside in a month, it’s worth considering. When you make a habit of investing promptly, the monthly amount can be easily changed as your life situation changes.
Well, where is it worth 15 euros (or more) then?
That simple, vanilla-flavored investment product that’s the easiest to start with (and that’s a great and awesome option for power!) Is an index fund.
As I’ve mentioned in the past, funds encompass shares and securities of many different companies. The funds can be divided into active and passive funds.
Active funds have their portfolio manager who actively selects the shares they think are suitable for the fund. This guy is on the bank’s payroll, and naturally, someone has to pay his salary. Because of this, active funds are subject to management fees, regardless of how successful the fund is.
Passive funds, i.e. index funds, do not have a portfolio manager because they follow a benchmark index. The benchmark is predefined.
An example of a benchmark index is the SP500, which consists of 500 major U.S. companies, with the highest weighting in the index at the time of writing.
The Index Fund automatically buys shares of companies that are purchased in the Benchmark Index. It also picks up shares with the same weight as the index, meaning the shares of different companies are distributed in the same way as in the benchmark index.
Due to the passivity, the index fund should also be unprofitable, as no one needs to shell out the monthly salaries for portfolio management.
This, in turn, is very important for the long-term monthly savings we talked about in the previous post. To benefit as much as possible from the interest rate phenomenon, it is worth investing in cost efficiency.
The best thing about index investing is that you can start it at any time, and you can get involved with little money.
Thanks to index funds, anyone (yep, including you) can become a stock market investor in a day.
PS. Remember that as a reader, you can influence the content of the blog yourself, so any topic related to money that makes you think (no matter how rudimentary or high-flying) can be reported in the comments field. Yours truly is committed to finding out the answer.