Investing for Beginners - What is Investing?
BOTS wants to make sure that everyone in the world has the opportunity to build a second, passive income through investing. But, not everyone has experience with investing - which can make it all look a bit daunting. So that's why we've decided to share as much information as we can in our "Investing for Beginners" series!
Investing for Beginners
You know, it’s pretty crazy when you think of it: so many people worldwide aren’t investing yet. In the United States of America, 50% of all households are investing. But in the Netherlands, this is only a mere 15% of all households (source: ABN Amro).
Why? Because investing is a bit scary if you don’t know too much about it.
But now that the savings interest rate dropped to nearly 0% simply saving your money in a bank account has become a lot less lucrative. Including inflation, your funds in the savings account will even drop in value over the years.
The average return on the AEX, on the other hand, has been approximately 10% over the past ten years. So each year you’ve invested your funds in the AEX, your money increases in value by a whopping 10%. It’s a lot more attractive than the 0% savings interest that you get from your bank.
So why aren’t we investing en masse?
Because prejudices taunt investing, most people still believe that you can only invest if you already have loads of money or that you can only invest when you wear a fancy suit. One of our BOTS app users had these same preconceptions in mind (read her story here)!
So in the coming weeks, we are taking you on tour through the world of investing. A world that is not as impenetrable as you might think. Because you, too, can start investing. And you don’t need loads of money or expensive suits to do so!
The definition of investing
First things first. Before we start with the rest of the tour for “Investing for Beginners”, it’s pretty handy to know what investing is.
A quick search on the internet immediately yields several clear definitions.
“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
So, in layman’s terms: you invest money to benefit from it ultimately. Sounds appealing, right? But how do you ensure that your investment will increase in value? Don’t you have to invest a lot of money to benefit from it? Which way of investing is the right one?
If you’re new to trading or new to investing, these are probably the first questions that come to mind. But instead of Googling your butt off, let us do the work for you. You can find all the answers you’re looking for in our “Investing for Beginners” series, and don’t forget to follow us on social media so that you can start investing with confidence and some knowledge!
There is no such thing as risk-free trading. It is possible to lose (part of) your stake.