Small investments: What can be done with money that is sitting around?

The article was written in collaboration with Videa

Why should you invest even small amounts?

Many believe that you need a lot of money to start investing, but the truth is that even with relatively small amounts you can start investing and enjoy the benefits of the capital market. Since, in the end, these are quite small amounts, many ask themselves whether investing in the capital market will be the right direction for them, or whether other, more profitable investment solutions can be found.

Small investments will not make you rich overnight, but through a proper investment strategy and managing an investment portfolio that suits your needs and goals, you will be able to see how small amounts slowly turn into substantial amounts. This is mainly due to the "compound interest" effect, which refers to the fact that the accumulated returns over the years are calculated not only on the investment amounts (fund) but also on the return accumulated in the previous years.

The factors influencing the choice of investment avenues suitable for small amounts

The choice of investment avenues suitable for small amounts should take into account a number of key parameters, among them:

Defining needs and goals

Each investor has his unique characteristics and needs, from which his investment goal is derived. Understanding the needs and goals of the investor is the basis for building a personalized investment portfolio.

Your preferred level of risk

The yield potential and the choice of financial instruments that will make up your investment portfolio are affected by your preferred level of risk. It is important that the level of risk in the investment suits the investor - not everyone is suitable for an investment with a high level of risk.

Which investment avenues are suitable for small amounts?

Once you have defined your needs and goals and your preferred risk level, you can choose the most suitable investment channel for you. The investment avenues you can choose from can be:

1. An investment channel for the short term (one to two years) - will be more suitable for solid investment channels such as government bonds for example.
2. An investment channel for the long term (three years or more) - will be more suitable for investment channels with a higher level of risk, such as stocks for example. 

Rules for investing in small amounts

In order to achieve the goals and objectives you set for yourself when opening an investment portfolio, it is important to adopt investment rules. Here are some of the most recommended rules:

Long term investment

Investing for the long term has proven itself time and time again to be a profitable and profitable investment, especially in light of the effect of the compound interest effect on the investment amounts that grow every year. 

Diffusion of risks

Whether you have chosen a solid level of risk or a higher level of risk, one of the basic rules in managing a successful investment portfolio is spreading risks through investment diversification, in a way that well describes the famous saying "don't put all your eggs in one basket".

Devotion

The capital market is a fairly volatile market and even if at a specific point in time you experience declines, it is important to remember that history proves that in the long term the gains outweigh the declines. Therefore, it is important to stick to the goals you have set for yourself and not take rash actions.

Tips and recommendations for the beginner investor

So if you also intend to start investing small amounts, here are some tips and recommendations that will make your investment particularly profitable:

1. Start saving and investing as early as possible.
2. Even if you don't intend to become an expert in the field, you should learn and get to know the field and the basic concepts of the capital market.
3. In your first steps in the capital market, you should contact a professional and experienced company in the field, which will guide and accompany you throughout the entire process. This way you can save valuable time and enjoy an investment portfolio managed by an expert investment manager. 

The article was written in collaboration with Videa