You are contemplating whether you should start investing and want to know why it might be a good idea. Then, this article is for you.
What is investing?
Investing is putting your money into an asset or a financial product with the goal of generating a positive return through capital appreciation, dividends, or regular payouts.
It is important to understand that when investing; you never really know if you are going to win or lose money. It is therefore very different to a savings account as you may receive less than you put in, or possibly lose it all. The reason you take the extra risk with investing is because you want to earn more than the little interest that your savings account brings you.
Why start investing?
There are three very simple reasons to start investing.
Better returns: Saving money traditionally in a bank or under your mattress will ensure that you have money when you need it, but it is not going to make you wealthy. Putting your money into a savings account earns you interests that is often not much better than inflation. Oftentimes much of the money you make is used to pay the monthly fees that these accounts charge you. Investing entails a little more risk, but if you make smart investing decisions and understand the markets, you can make more money over time with your investments.
Beat inflation: Speaking of inflation, it can fluctuate depending on how the economy is doing. For example, in 2020, when covid hit, inflation in Switzerland was negative -0.73% but the previous year it was 0.36%. Usually, Savings accounts in Switzerland pay you interests up to 0.5%., so if you are lucky enough you can sometimes beat inflation, but never in huge proportions. With investing you can hope to beat inflation in higher proportions if smart decisions are made, leaving you extra money to buy your dream house.
Provide a regular income: Investing can be the solution for people that need extra money on a regular basis. Each month you can decide to let the money that you potentially gained in the stock markets into your account and reinvest it to generate even more money, or you can take it and enjoy extra spending. There is a whole branch of investing called income investing using things like stock dividends to generate regular returns from the money invested.
Why is it good to start investing early?
Starting investing at an early stage of your life has some advantages, here are three:
Longer recovery time: If you invest early in your younger years and incur a loss, you have more time to make up for it. Indeed, markets constantly go up and down but over the long term they tend to rise. Thus, with early investments, you give your assets more time to recover.
Compound returns: Early investments lead to compounding returns. Indeed, your money grows with time, and since you have more time to make money by investing early you can expect higher returns overtime. Your returns add up over the years, so the earlier you invest, the more you generate in the long-term.
Retirement plan: If you want to retire as soon as possible, starting investing early is perfect for you as it allows you to save your returns or even if you’re good at it, have monthly “salaries” paid by your investments.
It’s never too late to start
Some people go years and years without realizing the power and potential of investing. And then, when they do, they are afraid it’s too late. But it is never the case. Investing allows a diversification from cash and makes it possible to leave something valuable to pass on to children or close relatives. Moreover, it is never too late to learn and here is how FlowBank helps you reach your goals.
What to buy?
You want to invest but you do not really know where to start? Well, Flowbank is here to help you in your journey. Everyday, you can find on our webpage daily live charts and insights on recent news in the market as well in-depth blog articles on the most recent market news, ranging from stocks, technology, cryptocurrencies to asset allocation and more.
Moreover, our email newsletters provide the most relevant financial news compiled into an easy to digest summary, allowing you to make the best investment decisions.
Investing can be overwhelming for beginners. What stock should I buy? How much should I invest? When is the right time to sell? Those are some of the many questions you might ask yourself.
At FlowBank, the customer support is available 24/6, ready to answer your questions and help you. The platform is ergonomic and easy to use, which is perfect to start. The fees are very low, and you have access to more than 10,000 shares from Switzerland and abroad. Finally, there is no account opening fees, maintenance fees, or inactivity fees. What else could you ask for your first time investing?
Register for a free investing account with FlowBank