Investing for Beginners - The five most famous ways of investing
Investing for Beginners
Last week, we kicked off our new series, “Investing for Beginners”, by dealing with the prejudices around investing. We also looked at the actual meaning of the word investing:
“An investment is a form of trading, in which money is committed for a longer or shorter period of time to gain financial benefit in the future.” Source: Wikipedia
Today, we take you through the five most famous ways to invest. From stocks to real estate — and everything in between!
Ways to invest money
You can invest in different ways. And you don’t have to be a millionaire to do so. All types of investing have become accessible to all kinds of wallets: and that includes yours. Do you want to invest? All you need is some spare change. We have listed the most well-known ways of investing for you.
Investing in stocks
Buying shares of a company makes you part-owner of that company. If the company performs well, so do your shares. The longer the company performs well, the higher the value of your shares become: this is called a dividend. Would you decide to sell your shares once they’ve increased value, you can make a profit. That’s how simple it is.
Investing in bonds
Instead of becoming co-owner of a company, you can also choose to borrow money from the company. This is called buying a bond. Or several bonds, for that matter. This bond is a debt instrument from the company to you. You will receive interest on the amount you’ve borrowed. This interest is called your return. Please pay attention to whether the interest on your bond is a fixed percentage or whether it’s variable: this affects the level of your return. A bond has a fixed term, and any interest is only paid after this term ends.
Investing in real estate
You may have heard someone say that he (or she) has invested in “bricks”. This means that they’ve invested in an investment property. If you have a lot of funds at your disposal, you can buy an extra flat or house and rent it to someone else. The rental income from this is your return. Unfortunately, this isn’t an option for everyone. So instead, you can also invest in existing buildings, such as office buildings. By doing so, you become a real estate investor. The rental income from that real estate is distributed among all property investors.
Investing in investment funds
An investment fund is a package that consists of different shares (or bonds). This package is put together by a fund manager (a bank or an investment company) who will use your investment to trade on your behalf. You retain control over your assets and can withdraw money from your fund (or top it up) whenever you want to. You can also decide to buy other funds or sell existing ones. The investment company does charge a fee for each transaction, though, and these fees can add up to quite the sum of money!
Investing in cryptocurrencies
Investing in cryptocurrencies is the most recent form of investing. Well-known cryptocurrencies are Bitcoin, Ripple and Dash. The value of cryptocurrency is constantly changing: just like stocks. The actual investing in this currency even works the same way as it would when investing in stocks. You can invest in one type of cryptocurrency, which is similar to investing in stocks, or you can decide to invest in a group of cryptocurrencies: which you can compare to investing in a fund. Just like investing in funds, investing in cryptocurrencies often requires an intermediary (the digital fund manager) to manage your investments and trades.
The BOTS app
The BOTS app currently focuses on investing in cryptocurrency (more trading options will come soon!): but we cut out the middle man. We’ve reinvented automated trading and put it out there for anyone to profit from. The BOTS app uses bots that do all the work for you. All you have to do is pick a bot, invest the funds, and be patient!
But how can you trust these bots? The bots in the BOTS app are developed by specialized developers and work through algorithms, artificial intelligence and machine learning. As a result, there is no more need for a (digital) fund manager. This means that you don’t have to pay for the costs of one, either.
The return that a bot achieves is significantly higher than the returns that a human might achieve. Why? A bot doesn’t eat, sleep, take pee breaks or gets stressed out when the market dips. This means that a bot can respond to changes in your crypto fund right away: no matter the hour.
And there you have it, in a nutshell: how we made investing with higher returns available for everyone. All you need to get started is 2 minutes and € 5.
There is no such thing as risk-free trading. It is possible to lose (part of) your stake.