1. Before investing: the emergency fund
Before putting money into anything that can go up or down, it's worth having an emergency fund in something liquid and accessible (a savings account, for example) that covers a few months of expenses. That way you won't be forced to withdraw an investment at the worst possible moment because something unexpected came up.
2. Understand the basic options
- Savings account or deposit: low risk, low return, high liquidity. Good for the emergency fund, not for growing money long-term.
- Index funds: track a broad stock market index. Moderate risk and return long-term, low fees, and you can start with small, regular contributions.
- Pension plans: designed for retirement, with their own tax advantages and restrictions worth checking carefully before signing up.
- Individual stocks: higher risk from concentrating in few companies; requires more knowledge and monitoring.
3. Start before feeling "fully ready"
Compound interest rewards time above almost everything else. Contributing €50/month for 30 years usually ends up generating more than contributing €150/month for only 10 years, even though in total you put in less of your own money, precisely because the extra time lets interest accumulate on interest.
4. Automate the contribution
Setting up an automatic transfer each month (as soon as your paycheck arrives, not at the end of the month with whatever's left) removes the dependence on willpower and turns saving into a habit, not a decision made from scratch every month.
5. Define your goal first
Instead of asking "how much can I invest?", it can be more useful to ask "how much do I want to have in X years, and therefore how much do I need to set aside each month?". That's exactly the reverse calculation solved by the calculator's "Calculate goal" mode.
Mistakes to avoid when starting out
- Waiting for the "perfect moment" to start, instead of starting with what you can now.
- Not having an emergency fund and being forced to sell at a bad time.
- Putting all your money into a single product or company.
- Following investment trends without understanding the product.
- Not checking fees, which over the long term eat into a significant part of returns.