Investing may sound mysterious and difficult. The men in suits who work on Wall Street buy and, sell,    stocks, and seem to be on the verge of a nervous breakdown. However, investing does not require      large sums or constant monitoring of stock market curves, but you can also get started with a smaller,  amount,and effort.

In the simplest terms, investing is about buying, holding, or selling financial instruments, i.e. in this case shares. A share is a share of a public limited company that can be acquired for money, such as Tesla, Microsoft, or Amazon. The goal of investing is to generate profit for the investor, taking the risk level into account. Not all investments bring profit, but they can also be loss-making - investing is always a risky game.

It is good for a beginner to put the money in safe investments and forget about quick profits. By diversifying your investments into several objects, you minimize the risk of loss. You can also invest in, for example, funds, derivatives, real estate, or raw materials. In this text, however, we focus on stock and fund investing.

How to invest?

The most common forms of investing for beginners are stock investing and fund investing. Stock investing involves buying shares of a certain company. Their value then either rises or falls depending on how the company is expected to succeed in the market. In fund investing, you invest in a fund that is managed by an asset manager, such as a bank. The money in the fund is invested in many places, for example among the 25 largest pharmaceutical companies.

Since money is spread over many places in funds, its return is not necessarily as fast as if you invested in shares. But, investing in mutual funds is safer because the money is in many places. The money is safe from major economic fluctuations. It is important to remember that investing rarely makes you rich overnight. In the long term, the average annual return on the stock market is around 7%.

Investment styles can be divided into active and passive investing. Active investing is actively monitoring your investments and quickly reacting to changes. With active investing, returns are sought from market fluctuations. According to the classic saying, buy low, sell high. Passive investing does not require the same dedication, but it can be investing a small amount, even once a month. It is called passive because the investments are allowed to grow and their return is formed over time. It happens with the help of the so-called interest-for-interest effect! Statistically, passive investing is more profitable than active investing.

Investing is always risky. You can minimize risks by investing smartly. It's good to have money in savings, but the interest rates on a bank account are usually so low that you can't get rich with them. If you have even a small amount left after the necessary expenses, it is worth investing it. The interest-for-interest phenomenon means that investment returns grow in addition to the originally invested capital. In this case, the money works for you.

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