Investing: Where to invest?

In the beginning, investing can seem overwhelming and impossible to learn. Too many complicated phrases and choices. Where to invest, which broker to choose, and how much to invest?

If you are asking these questions, this is the right spot to get the answers! Let’s begin with a brief overview of basic asset classes you can choose from.

What are your investing options?
There are many options to choose from like stocks, bonds, ETFs (Exchange Traded Funds), commodities (gold, silver, oil…), REITs (Real Estate Investment Funds), Forex (trading with currencies), and Crypto. Choosing the right ones or a mix of them depends on your financial goals, risk tolerance, and investment horizon.

Publicly traded companies list their shares on stock exchanges. When a company goes public it basically sells its portion of the company to the public market. These portions are called ”shares” and they represent ownership in the company. They trade at a certain price which is changing every day depending on supply and demand. You can invest in stocks through many different brokers. In Europe most popular are eToro, Plus500, and Interactive Brokers.

When buying bonds, you lend the money to the bond issuer. In return, you recieve monthly or quarterly payments that are called interest. The bond issuer can be a country (government bonds) or a company (corporate bonds). The safest bonds are those from financially stable countries like the U.S., Germany, and Japan, as they are backed by a country which it is less likely to default than a company. The easiest way to invest in bonds is through Bond ETF. Bonds are considered as the safest investment, but returns are generally lower compared to stocks.

Exchange-traded funds are managed by financial institutions. Like stocks, they can be bought and sold on the stock market. ETFs contain a set of stocks or bonds in them. For example, one ETF can include 10 stocks in the same percentages and track performace of all of them. While the returns or loss are lower compared to individual stocks, ETFs offer a safer investing option. There is a wide vairety of EFTs available, some focusing on technology and others on commodity companies.

Commodities encompass raw materials such as oil, gold, coffee, wheat… The price of commodities is driven by global supply and demand. Trading commodities requires a deep understanding of the industry, as events like droughts, wars, or pandemics can disrupt the supply chain. However, if you understand geopolitics, it might be a good choice for you.

Real Estate Investment Funds are companies that own and rent or sell properties like offices, homes, or even hotels. If you are a shareholder of a REIT you are eligible for monthly or quarterly dividends. It is like you are collecting rent, but with no physical ownership of properties and with no maintenance.

The foreign exchange market is a currency trading market. Traders are speculating on the strength of currencies based on geopolitical events, economic indicators, and central bank policies. Like with the commodities you should have a deep geopolitical understanding to trade currencies.

Crypto is gaining a lot of exposure in the investing sphere and we could say that is becoming a more and more important asset class. Some say that is the alternative to FIAT currencies. Only time will tell if cryptocurrencies will prevail over the classic currencies, but for now, they remain one of the most risky investments.

So now is up to you to choose from many of the options you have! Whether you go for stocks, bonds, ETFs, commodities, REITs, Forex, or crypto, always make sure to make informed investing decisions based on your knowledge and risk tolerance. Remember, there’s no one-size-fits-all approach! If you want to know more about asset classes let me know!

Trade safe!