The 4 golden rules of investing

Investing basics

In our previous article, you learned that before investing, it is important to analyse your financial situation, define your goals and risk tolerance and understand your investment options. It’s now time to learn about the 4 golden rules to get you started with investing.

Rule number 1: start early

The best time to start investing is… 20 years ago. Did you miss it? Not a problem because guess what the second-best time is: right now.

Investing early can give you a big advantage, even if it’s a small amount. Why? Because it gives your investments enough time to grow, and because of compound interest.

Compound growth is when you start earning money on the money your investments have already earned. It is the reason why people who start investing earlier in life can vastly outperform late starters.

Rule number 2: watch out for costs

Paying a financial advisor 2% per year in fees might not seem like a lot now but in a lifetime, it could add up to hundreds of thousands of euros.  

So do your research well and make sure you are aware and understand the costs linked to your investments. At BUX, you have the option to invest without paying fees, using the Zero Order; however, external fees and external implied fees might apply.

Rule number 3: stick to your goals

You need to commit to a period of time during which you will leave your investments untouched.

The markets are reacting a little crazy to some news? Drown out the noise and learn to deal with losing periods in a mature manner and give your money time to grow and compound.

Long-term investments are more likely to support the inevitable ups and downs of the market.

Rule number 4: diversify

Don’t put all your eggs in the same basket! Spread your money across a wide variety of investments within your portfolio. It will help minimise your risk of losses. 

Portfolio holdings can be diversified across asset classes, within classes, and geographically.

ETFs are often considered a good tool for diversification. On BUX, you can invest in both shares and ETFs. 

To learn more about how to pick the investments that are right for you, we recommend you visit the next article of this series. But first, don’t forget to test yourself with our quiz!

Test your knowledge