Your First Step Into Investing
#WTF_Basics
In our previous What The Finance #Basics article, we saw, in simple terms, what investment is: you commit money today with the expectation -not the guarantee- that it will generate returns in the future. The theory is nice. But that’s where the next, much more practical question comes in: “How does anyone start?”
If you are looking for an investment as a junior, chances are you have already come across one of two extremes. You either find extensive practical guides and/or investment books whose in-depth analysis is far from beginner-friendly, or self-proclaimed ‘experts’ who seem far too eager to help you open an investment account while revealing the ‘secrets’ of successful investing, usually on a platform that may be paying them a commission.
At Snappi, we believe that proper money management is indeed difficult and at the same time achievable, and that for a rational investment, you don’t need a degree in finance or thousands of euros. What it does require is taking the right steps in the right order.
Before you invest even 1€: Build the foundations
The most common mistake, at least for most people, is not that they choose the “wrong” investment. It is that they invest hastily before securing the basics.
Two things always come first:
1. Get rid of “expensive” debts
If you are paying 10-20% interest on a credit card, no realistic investment is likely to deliver consistently high enough returns to pay it off reliably. Paying off a debt is, mathematically, the best “return” you can secure -and a guaranteed one at that, which is extremely rare in finance. Low-interest debts (e.g., a mortgage) are a different matter, but credit cards and consumer loans come first.
2. Build an emergency fund
Perhaps the most important step before investing in anything, is to put aside 2-4 months’ salary (or whatever amount you can) in an account you can access immediately (not a term deposit, for example). This “safety net” is what allows you to leave your investments untouched when the car breaks down, when a job is lost, or if something unexpected comes up. Without an emergency fund, the first unexpected setback could force you to sell -probably at the worst possible time (so-called liquidation). This emergency fund allows us to apply what In other words, it allows us to have a safe behavioral “refuge” when things don’t go as expected and our worry and anxiety pile up.
6 steps to start investing
Step 1: Define your goal and your time horizon
“I want to make money” is not a goal, it is a wish. The goal is: “I want to save for a house deposit within 8 years” or “I am building something for my retirement over a 30-year span”. The time horizon (when you will need the money) determines almost everything: the further away the goal, the more fluctuations your plan can withstand -and the more time compound growth which we explored in the first article, works for you. Remember, we want time to be our ally.
Step 2: Understand your risk profile
Economists distinguish between two concepts that are often confused. Risk tolerance is psychological: how much of a decline in the values of the assets you hold can you watch without panicking? The ability to take risks is objective: how much of a decline can your pocket afford, based on income, financial obligations, and the investment horizon you have set? Give yourself this simple test: if the total value of your portfolio fell by 20% tomorrow, would you sell in a panic, wait to see how it unfolds, or buy additional assets? The honest answer says a lot about how you respond to difficult market conditions.
Step 3: Decide how much to invest -and yes, it can be a small amount
You don’t need 10,000€ to start investing. You need an amount that you can consistently set aside, perhaps 50€, or 100€ a month -without touching your emergency fund and without changing your lifestyle. A strategy of committing an amount that causes you hardship is unlikely to last. Consistency and patience matter more than size: small and regular amounts, over time can build more than one large, stressful, one-off investment.
Step 4: Choose a platform based on clear criteria -not ads
To invest, you need an investment account with an investment services provider such as a broker, an investment platform, or an asset manager. What are the key factors to look out for:
- a) supervision by a European Union (EU) authority (look for the operating license, it is publicly available ).
- b) transaction costs, and/or custody costs, and/or management fees and any fixed charges. Costs are the silent enemy of investment returns.
- c) make sure they provide offers the products you are interested in (e.g., UCITS ETFs, the “European standard” ETFs).
- d) how ease of use the application is to you. if you are accessing a platform. Take time to compare different platforms -it pays off more than you think.
Step 5: Keep your first investment simple
For many juniors, the natural starting point is a broadly diversified ETF -the “ready-made basket” of hundreds of stocks, as we explained in the first article. This is because with a single investment you get diversification which reduces the risk of losses. Picking individual stocks is like betting on individual players, while an ETF is like betting on the whole league. (A full article on ETFs is coming soon to the WTF series).
Step 6: Automate
Set a fixed monthly to invest, ideally with an automatic and recurring instruction. By regularly investing the same, even small amount, you buy more shares (units) when prices are lower and fewer when they are higher -and above all, you take emotion (usually stress) out of the equation. Consider a simplified example with a fixed average return: 100€ a month for 10 years is 12,000€ of your own deposits, and with an average annual return of 7%, the portfolio reaches approximately 17,300€. The difference didn’t come from talent -it came from consistency and time. (And as always: actual returns are neither stable nor guaranteed and can even be negative).
The 6 most common mistakes of juniors
Waiting for the “perfect moment”:
The market does not send invitations. Historically, the amount of time spent in the market (having an investment portfolio) has proven to be much more crucial than the «perfect entry point» which not even professionals consistently achieve.Investing money, you will need soon:
Money for the next 1-2 years or the emergency fund is strictly for saving and not for investing.Checking your portfolio every day:
Daily market fluctuations are more than noise. And noise creates anxiety. The more often you check your investments, the more likely you are to make a panic move (the result of fear) and panic usually leads to selling off at the wrong time.Following the hype:
If you hear about it everywhere because it’s “going up”, you’re probably late. Remember the TikTok gurus from the first article: anyone who promises fast and guaranteed returns is either hiding something or is completely ignorant.Putting all your eggs in one basket:
A single stock, no matter how “safe” it may seems, creates concentrations risk. Diversification is not a luxury, it is the first line of defense.Not fully understanding the assets they invest in:
The most common example is the cryptocurrency space. Very few understand the technology on which these “currencies” are based.
Mini glossary so to help you find your way
Portfolio:
The totality of assets (securities) you have invested in -your “basket”. (And yes, the Greek word comes from paper + guard: where you “guard your papers”, i.e., your securities).Stock:
A small piece of ownership in a company.Bond:
You lend money to a state or a company and collect interest.ETF:
A ready-made “basket” of many stocks or bonds, with instant diversification.Diversification:
Dividing your money across many investments so you don’t depend on just one.Time horizon:
When you estimate you will need the money.Risk tolerance:
How much fluctuation can you handle psychologically without panicking.Liquidity: How easily and quickly an investment can be turned back into cash. In other words, how easily can you put something up for sale and find a buyer.
Conclusion: the hardest part is not knowing «how», it is taking the first step
An investment is not chasing a “magical” opportunity. It is a series of simple, almost boring steps: reducing existing debts, building an emergency fund, setting a goal, a risk profile, small and regular amounts, diversification, and patience. The paradox? The more boring your strategy is, the more exciting its results tend to be. Start with small amounts, stay consistent, and allow time -the great ally we met in the first article- do its job.
📌 FAQ
- How much money do I need to start investing? Less than you may think. With modern platforms, you usually start with an initial amount (e.g., 100€) and continue (reinvest) at 50-100€ a month. Consistency matters more than the initial amount.
- When is the right time to start? When you have the foundation: no significant debts and an emergency fund set aside. Beyond that, waiting for the “perfect moment” to start usually costs more than it benefits you.
- Is it too late to start? Not at all. Compound growth works best the earlier you start, but “earlier” simply means earlier than never starting at all. Whether you have a short-term or long-term investment horizon, can provide more than enough time for a long-term investment plan to develop.
About the Authors
Angela Katopodi is Head of Investment Products & Operations at Snappi, with extensive experience in the banking sector, and expertise in the development of investment products and services, as well as operations. She is passionate about inspiring more people to discover and understand the investment industry.
Dr. George Tsomidis is an academic and the Senior Advisor at Snappi’s FinTech & AI Lab. He is passionate about making complex financial concepts understandable for a general audience.
Disclaimer: This article does not constitute investment advice in any way. It is strictly for educational and informational purposes. Every investment decision involves risk and should be made after your own extensive research and/or advice from a certified professional.
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