Look for your Wealth Solutions
A stock or bond is listed on the stock exchange at a specific price. That is the amount for which you can buy or sell the share. If the company increases in value, you can see this reflected in the share price, for example. Trading on stock exchanges today is mainly done electronically and digitally. You do not have to travel to Amsterdam or New York to invest there.
You can invest on the stock exchange through a so-called broker. Your home bank is often a broker. You also have companies in the Netherlands that specialize in this.
Start Investing – Which Stocks to Buy?
When you start investing in stocks or bonds, you can do so in single stocks or bonds. You will then have to determine which company or companies you choose. For example, you can buy a single share of Apple. In the Website you can have the best deal.
However, it is virtually impossible to pick out winning shares. If the market expects a share or sector to perform relatively well, then this will already be included in the share price at that time. And there are many unpredictable aspects that can affect the price, so it is mainly a matter of guessing which stock will do well.
The most return is mainly achieved by those who simply invest well diversified at a low cost. Preferably spread worldwide, so that you are minimally dependent on regional ups and downs, for example as a result of political developments.
Investing in index funds
When you start investing, you can also choose to invest in thousands of companies at once. You don’t need a large sum of money for that. This is already possible for a few bucks. You can do this simply by buying an investment fund that has many stocks represented. An index fund is an example of this.
An index fund that tracks the AEX index has the 25 stocks that make up the AEX index in the fund. The AEX index represents the 25 largest companies listed on the Amsterdam stock exchange. However, the AEX is a relatively small index.
A somewhat larger index is the well-known S & P500 index. It contains the 500 largest US companies. The price development of this index over the past decades looks like this:
Investing for beginners
In the short term it shows considerable fluctuations, in the long term a steady increase. There are also indexes that represent all the major companies in the world. An index fund that tracks such an index then contains shares of thousands of companies.
Advantages of index funds
An advantage of investing in index funds is that you can easily realize a well-diversified investment at low costs. Good spread is necessary to minimize your risk. When one company performs poorly and you have shares in it, you can be seriously affected. When that company is in your index fund together with thousands of other companies, you will hardly be bothered by it.
Another advantage of investing in index funds is that you no longer need to understand markets and companies to start investing. Another big advantage of holding an index fund is that poorly performing companies in the index are automatically replaced by well-performing companies. So you don’t have to do anything yourself.