5 Smart Moves to Start Investing
I always dreamed of investing but never started - it seemed too complicated. Even with a Master’s in Finance, while studying for the ACCA and working as a Financial Analyst, I still felt unsure. The fear of not knowing enough held me back.
Eventually, I decided to give it a try and started with 200 € per month - just to see how it works. And it worked :) I have an average return of 13–17%, and even during the current market downturn, my return is holding steady at 0-2%, so I feel quite stable.
During the process, I arrived at one key insight:
Investing is not always about deep market analysis. It's more about mindset, consistency, and financial discipline.
Step 1 - Understand the Reason: Why Invest at All?
You save money
Most people spend everything they earn. There’s always something to buy. But if you set clear goals like a child’s education, buying a home, or early retirement - you’ll naturally start to save. Even if you don’t have a specific reason now, saving just to save is a powerful habit. I cover more of the psychological aspect of this topic in my previous article.
“You don’t need a specific reason to save” - The Psychology of Money by Morgan Housel
You make your money work for you
Instead of keeping money “under the mattress”, investing gives your savings a chance to grow. You start earning passive income even with small amounts.
Compound Interest is real magic
Unlike simple interest, where you earn interest only on your initial investment, compound interest earns interest on both your original amount and any interest that has already been added. In other words, it’s interest on interest.
Let’s look at a simple and conservative example. If you invest $500 per month with an average annual return of 10% (historical average of the S&P 500) over a 30-year time horizon, you would end up with over $1 million.
And more than 80% of that is from compound interest - not your original investment. Try it with your own numbers: Compound Interest Calculator.
Step 2 - Know Your Options: Types of Assets
Assets can be divided by risk, time horizon, and goal. Quick guide: the higher the risk, the higher the return.
Low-Risk Assets are ideal for preserving capital and supporting short-term financial needs. They generally offer lower returns but provide stability and liquidity. Examples include money market instruments, cash, cash equivalents, and bonds.
Medium-Risk Assets offer a balance between growth potential and risk, making them appropriate for investors with a longer time horizon who seek steady wealth accumulation. In terms of risk, they range from mutual funds and ETFs to real estate and stocks.
High-Risk Assets carry greater volatility and are suited for investors with a higher risk tolerance, longer time horizons, and specific financial strategies. Examples include cryptocurrencies, collectibles (such as wine and art), and private equity/venture capital.
The right mix of assets depends on your personal risk tolerance, financial goals, and investment timeline. A combination of different assets makes up an investment portfolio...
