What you can invest in
Education, not advice. This lesson is general information, not personal financial advice. The value of investments can go down as well as up, and you may get back less than you put in.
Stocks, bonds, ETFs, index funds. It sounded like a foreign language. It’s actually only a few simple ideas.
The main types
Shares (or stocks) are small pieces of ownership in a company. If the company grows and makes profits, your shares can rise in value, and some pay you a share of profits called dividends. If the company struggles, the value can fall.
Bonds are loans you make to a government or company. They pay you interest and return your money at the end. Usually steadier than shares, with lower returns.
Funds pool money from lots of people to buy many investments at once. One purchase can give you a small piece of hundreds or thousands of companies, which makes diversification easy.
Index funds and ETFs are funds that simply track a whole market, like the biggest companies in a country or the world. They don’t try to pick winners, so they’re usually cheap and widely diversified. Many beginners start here.
Property can earn rent and grow in value, but it needs a lot of money upfront, isn’t easy to sell quickly, and comes with costs like maintenance and empty months.
Crypto is highly speculative. Prices can rise or crash very quickly, and some coins have gone to zero. If you buy any, treat it as a small, high-risk bet with money you can afford to lose completely, never as your main investment.
Fees matter more than you’d think
Funds and platforms charge yearly fees, usually as a percentage of what you’ve invested. A difference that looks tiny adds up over decades.
Investing 100 a month for 30 years, growing at 7% a year before fees:
- With a 0.2% yearly fee, it could grow to about 117,300
- With a 1% yearly fee, it could grow to about 100,450
That small-looking difference costs you about 16,800, roughly 14 years’ worth of your contributions. Always check the fees.
Fees were the thing nobody told me to check. Now it’s the first thing I look at.
How to spot an investment scam
Walk away if you see any of these:
- Guaranteed returns, especially high ones
- Pressure to decide now, or to keep it secret
- Returns paid for recruiting other people
- Unregulated firms, or people who contact you out of the blue on social media
- Requests for your login details, codes or crypto wallet phrase
Always check a firm is registered with your country’s financial regulator before you invest a single unit of money with them. You’ll see how in the next lesson.
