How to start investing - A guide for beginners
Are you interested in investing but unsure where to begin? Maybe you hesitate, leaving funds idle in your account because you think investing is too complex or fraught with risks.
Remember, the key to investing is simply to begin. Our guide provides practical tips to help you get started right away.
What is investing?
Investing is a strategy to save and grow your money over time. By investing into stocks or mutual funds, investors can potentially achieve higher returns compared to traditional savings accounts. Returns on investments may come from an increase in stock or fund value or paid dividends.
However, investing also carries risks alongside potential rewards. These risks include possible declines in investment value and, in extreme cases, the bankruptcy of companies. To mitigate these risks, it is crucial to diversify your investments. Mutual funds, for instance, spread investments across various assets, thereby reducing risk more effectively than investing directly in single companies.
The power of time in investing
The longer your investment period, the more you can benefit from compound interest, where the interest on your savings generates additional interest. Essentially, your money is working for you!
Additionally, extending your investment timeframe facilitates diversification across time. This strategy involves spreading your investments over different periods rather than investing a lump sum at once. You can contribute to selected investment instruments in multiple instalments or invest monthly in mutual funds, which helps to automate your investment process. This approach allows you to purchase shares at varying market prices, thereby minimising the risks tied to investing at a single point in time.
The benefits of investing
Investing is fundamentally about helping your dreams come to life. Through strategic saving, you not only can bring your dreams and aspirations to fruition but also secure financial stability and peace of mind.
Common investment goals include:
- Ensuring a comfortable retirement
- Attaining financial independence
- Supporting your child’s educational and career aspirations
Moreover, investing serves as an effective hedge against inflation. In an environment of rising prices, low-interest savings accounts may not suffice, as they allow inflation to diminish your purchasing power. By contrast, investments can yield returns that outpace both inflation and traditional account interest rates.
Getting started with investing
There are numerous ways to invest, catering to both seasoned investors and newcomers alike. Whether you prefer to invest independently in stocks or funds or seek the guidance of a bank through investment advisory or asset management services, there is an approach that fits your needs. Before embarking on your investment journey, it's crucial to develop a personal financial plan. Consider your investment objectives, your risk tolerance, and the amount you are prepared to invest.
Key considerations for beginning investors include:
- Your comfort level with risk and potential fluctuations in investment value.
- Your specific financial goals and the amount you intend to invest.
Remember, the most crucial step in investing is to begin. Your investment strategy can adapt and evolve in response to changes in your life and financial circumstances.
Discover your own way to invest
Begin investing through your Mobile Bank
Starting your investment journey can be as simple as setting up a monthly investment plan in funds via your Mobile Bank. Once established, contributions are made automatically each month. You can initiate your investment with as little as €10 per month. Additionally, you have the flexibility to pause or discontinue your contributions at any time.
Debunking common investing myths
Many myths about investing might deter you from starting. Here, we address these misconceptions to empower you to make informed decisions.
"Myth 1: Investing requires a lot of expertise"
While investing in individual stocks may require a significant time commitment and deep knowledge, you can also opt for monthly investments in managed funds. These funds are overseen by professional managers who adjust investments based on market conditions, offering a simpler alternative for those new to investing.
For example, equity funds diversify investments across multiple company stocks, generally reducing risk compared to investing in individual stocks. However, it is important to remember that fund investments also carry risks, and selecting the right fund should be done with care.
Empower yourself to invest
Don't let common myths hold you back. We are committed to providing the tools and resources necessary for everyone to manage their financial future and achieve financial peace of mind.
Monthly investing is an excellent way to ease into investing. Learn more about how you can begin this journey and take control of your financial destiny.
Investing in a fund always involves various types of risks depending on the fund invested in. Risk refers to the uncertainty relating to returns on an investment in a fund. The value of investments may rise or fall and there is a risk of losing some or all of the capital invested in a fund.
When you invest in funds with fund management companies with which Danske Bank has an agreement and under which distribution fees are received, you are entitled to access additional services related to investment services.
Read more about distribution fees (in Finnish)
This is not a complete description of the funds or of the risks involved. Before making a decision to invest, please study the relevant Key Information Documents and other fund materials.
Funds registered in Finland are managed by Danske Invest Fund Management Ltd. Danske Bank A/S, Finland Branch acts as the agent of Danske Invest Fund Management Ltd when offering investment funds managed by the fund management company. Funds registered in Denmark and Luxembourg are managed by Danske Invest Management A/S and distributed by Danske Bank A/S as the agent. Key Information Documents, other fund materials and further information on the funds are available at www.danskeinvest.fi.
