Investing for beginners 

Georges Bock
Table of contents
Georges Bock

Investing for beginners - investing money easily and uncomplicatedly

Are you dreaming of finally buying your first apartment together? Maybe you also want to save for a trip around the world or are already thinking about your retirement provision. There are plenty of reasons to start thinking about how to build up assets in your mid-20s or mid-30s.  

In the past, the savings book was the means of choice. Nowadays, there are many other options. Have you ever thought about investing in funds or stocks, but been put off by the abundance of options? If you value transparency and sustainability and want to be selective about which companies you invest in, it may seem especially difficult at first.  

The question quickly arises: Is investing money for beginners even possible in a sustainable way? We at Moniflo are convinced: Yes. Investing money for beginners is possible and even sustainable. In the following, we would like to explain how investing money as a beginner works and how our app helps you find sustainable funds.  

In a nutshell

  • In general, you distinguish between tangible and financial investment and intangible investment
  • There are many options for beginner investors. Mutual funds are worth considering, for example.
  • Rule of thumb: 20 percent of net wages should be saved
  • Choose a term of at least 5 to 10 years. Because: Confident investing for beginners is possible if you pursue a long-term investment horizon.
  • Do you value sustainability? Find suitable funds with Moniflo, the place where you can easily invest sustainably.With the help of certain filters, you can find suitable funds for you and manage them easily in the app.

What are investments, anyway?

Investments are, for example, bonds, shares or even real estate. An investment can also be translated as a capital investment. You spend financial resources with the aim of increasing your private assets. In a professional context, investments are a way to increase the profits and value of a company.  

In general, you distinguish between two types of investments:

  • Property, plant and equipment and financial investment
  • Intangible investments
With a financial investment, you want to make a medium- or long-term financial investment. The goal is the purchase of debt and equity securities. You will find a wide range of investment products on the financial markets. To decide what suits you best, you should first define your own values and consider how much you want to invest.  

Why and how much should you invest?  

There are many reasons why people decide to build wealth. Maybe you dream of your first house together or want to build a financial investment for your children.

Are you unsure how much you can put aside? As a rule of thumb, 20 percent of your net salary should be saved. The days of seven or more percent interest on savings accounts are long gone.  

That's why it's worth choosing an alternative to savings books and the like.  

What forms of investment are there for beginners?  

If you want to invest money as a beginner, you will first come into contact with many technical terms. At the beginning it is not so easy to keep the overview.  

At Moniflo, we are convinced that investing money is possible for beginners and experts, regardless of how much knowledge or assets they already have. In other words: the world of funds, shares and co should be easily accessible and affordable for everyone. For this reason, we have provided you with a table on the most important forms of investment for beginners.

Shares Become a rental owner of a company by buying shares. If the company performs well, the value of your shares increases. The longer the positive record, the higher the value of the shares increases. This is also called dividends or capital gains.
Investment Fund A package consisting of several shares or bonds is referred to as an investment fund. The fund manager puts this package together following a pre-contractually defined investment objective, the investment policy. This can be based on specific sectors (e.g. technology, pharmaceutical industry), geographical location (e.g. USA, Asia, Europe) or specific themes (e.g. environmentally friendly energy, growth).
Risk diversification is one of the biggest advantages of funds: the fund manager distributes the fund assets in such a way that there is no total loss for the investor, as in the Wirecard case, for example. It is also important to know that there are distributing and accumulating funds. If you want to build up assets over the long term, you should invest your money in an accumulating fund. In this case, the dividends are not distributed, but automatically reinvested for you. This way you can profit from the compound interest effect.
If you also want transparency and a sustainable focus, you can find suitable funds with the Moniflo app. Perfect for value-oriented beginners!
ETF's (exchange-traded index fund) ETF are exchange-traded funds that usually invest in a stock market index. With these, beginners invest relatively easily and inexpensively. The ETF tracks the stock market index. This means that it is difficult to pursue one's own personal sustainability goals, since an index is very broadly based and exclusions cannot be controlled by the fund manager on his own.
Bonds When you choose to buy a bond, you are lending money to a company. A bond is a debt security issued by the company to you. You receive interest on the amount borrowed. Important to know: Pay attention to whether it is a fixed percentage or a variable number. This is important for the amount of your return. To achieve risk diversification, you can also buy bonds through a bond fund.

Is it still worth investing money?

Are you unsure whether it is worth investing at all at the moment? For many people, the current developments on the market are causing uncertainty. Low interest rates and inflation mean that some forms of investment, such as savings books, are no longer profitable.  

Fortunately, you can still opt for a lucrative alternative to escape the low-interest trap. In general, there is the option to choose between stocks, bonds or funds, and riskier investments in cryptocurrencies or gold are also possible. Investing money, however, is more recommended for beginners with funds or shares.

Investing in shares for beginners: diversification is important

Shares are also referred to as securities. If you decide to buy a share, you acquire a share in a company. If there are certain companies in which you want to invest specifically, you can buy individual shares. However, to minimize your risk, you should diversify stocks. It is important that you do not focus on just one company or just one industry.  

When you invest your funds in several asset classes or investment securities, you reduce your risk of loss. This is also referred to as diversification. If you invest in a single share, the investment is 100% dependent on the performance of this one type of investment.

Good to know: Funds are required by law to diversify risk. So they are a good start for beginners.

Invest money sustainably as a beginner with suitable funds

Funds are currently regarded as solid investments and are lucrative for almost every investor thanks to the large selection. Since you invest in several assets, you can benefit from diversification and avoid total losses as in the case of Wirecard.

Do you value knowing what you are investing in? Nowadays, a good return and sustainability are no longer mutually exclusive. The aspect of sustainability is also becoming increasingly important in the financial sector. However, the problem so far has been the lack of transparency.

Especially as a beginner, it is not so easy to overview the variety of investment forms and to choose funds that fit your own values. Moniflo offers you a place where you can invest sustainably in a simple way.With the help of certain filters, you can find suitable funds for you and manage them easily in the app.

What comes before investing?  

You are debt-free and have money to save every month? That is a good basis. It is important that you first get an overview of your finances. What are your monthly income and expenses and how much money do you need as a nest egg?  

The money that you want to use for asset accumulation should not be needed in between. Therefore, you need a nest egg of three to four net monthly salaries. Because it can always happen that your car or washing machine breaks down.

Time beats the time

What's the best way to make your first investment? By starting with it. It sounds simple, but it is. Because if you're wondering when is the right time to invest money for beginners like you, let me tell you: That time is always now.  

No one can predict exactly how share prices will develop tomorrow and whether it is better to wait another day or week before investing. A so-called stock market adage is: "Time in the market beats timing the market".  

So confident investing for beginners is possible if you pursue a long-term investment horizon. Plan for a term of at least 5 to 10 years.  

You want to invest money, but you don't want to do without?  

Saving is not the same as doing without. The more money you have saved, the more you can invest. So check what you spend your salary on, such as subscriptions, your cell phone plan or your electricity bill. The majority of Germans are lazy and spend more money than they should.  

What do you pay for your bank account? Do you use your gym membership and what insurance do you have that you might not need? Everyone has some potential to save money without having to cut back to do so.

Learning to invest: 12 tips for beginners  

  1. Get an overview of your finances. What do you earn and what are your monthly fixed costs?
  1. Get rid of debt. If you have loans, pay them off first before you invest.
  1. Question your spending. Do you have savings potential that you are not yet using?  
  1. Keep a nest egg for yourself. Your car needs to be serviced, your laptop is broken - then you need money fast.  
  1. First inform, then invest. Only when you know and understand the product do you know if it is right for you. Moniflo uses a score that gives you a complete yet simple picture of the impact of a portfolio or fund.
  1. What can you invest monthly? It is usually worthwhile to start with a monthly savings rate of 25 euros. If you can and want to invest more, that is also possible.  
  1. The sooner you start, the longer you can save. Be aware: investing is not about making money overnight. It's about your personal goals that you want to achieve in the long term with your investment.
  1. Do you want to invest in something that is important to you? With Moniflo's app, you can invest money in a value-oriented way as a beginner. The app filters funds that are suitable for you and helps you manage them all in one place.
  1. Don't wait for the ideal time to invest, because there is no such thing.
  1. Set yourself clear, long-term goals: save 100,000 euros, close the pension gap, build a house or something else? Be clear about what you want to achieve with your investment.
  1. Don't bet on just one horse, but diversify your investments. Cases like the Telekom share, for example, can then not rob you of your sleep.  
  1. Let your money work for you and build up a passive income. Stay on top of things with Moniflo's clear management. The investment market is not constant. But so far - with a wide spread - every low has been followed by a new high. "Buy and hold" is therefore the motto.  

Investing with confidence: just as lucrative for beginners

Just a few years ago, it was quite normal to simply park your savings in a savings account. Many people were taught this behavior by their parents. But today, this is no longer a good way to invest and grow your money. On the contrary, your savings shrink due to inflation.

Many people still have reservations about shares or funds. We at Moniflo would like to remove this hurdle. Everyone can invest, even with small assets. If you are just learning about the subject, you will find many more articles on our website. You'll also find tutorials in the app to help you gain more knowledge.  

Make your money matter! With Moniflo you can find sustainable funds and invest in what matters to you. Would you like to be part of the app launch? Then simply sign up for the list and get exclusive access in advance. 

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Georges Bock is the CEO and founder of Moniflo. He sees money and investing as a way to shape the future by taking a bottom-up approach. He lives in Luxembourg with his family and his dog Yola and enjoys nothing more than watching his two children discover the world.


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