Or what is good to know right at the starting line of investing, whether you are beginning at 18 or at fifty. It’s about money, and therefore every personal experience is often costly. So at least take a look at the basic ten commandments below – do you know all the tips, tricks, and advice? If yes, congratulations. If not, apply them to your own situation, try to build on them and adapt your activities and current or future asset portfolio accordingly. Good luck with investing!
Ten Commandments for Beginner Investors
1
First a surplus budget – First you need to keep your personal finances in the black, only then does it make sense to start investing part of the money you don’t need for living expenses or short-term goals (or part of it to trade on the stock market).
2
Secure yourself with a financial reserve – Before you start investing, set aside at least 3 to 6 months of expenses, for example in a savings account. This will protect you from having to withdraw investments due to unexpected events.
3
Invest regularly – Even if you start with just hundreds or a thousand per month, you have to start somewhere, and you can increase it later. The strength lies in regularity (so-called cost averaging), not in hitting the right moment.
4
Use a long horizon – At 18, you have decades for investing, which means short-term fluctuations don’t have to worry you as much and time works in your favor (multiplying the effect of reinvested returns).
5
Diversify your deposits – Never put everything into one stock, ETF, commodity, crypto, market, sector, or region, but rather spread your deposits across multiple instruments, thereby reducing possible risks of failure.
6
Keep risks in mind – Every investment (even speculation) always carries risks (market, credit, liquidity, currency, …), so always be clear about how much you are willing to risk and never invest money you can’t afford to lose.
7
Don’t worry about short-term fluctuations – The price of your various investments will definitely go up and down over time. The important thing is to remember why you are investing (e.g., a future apartment, financial freedom, retirement, etc.) and if you are moving toward that.
8
Keep track of costs – Every trade costs something (a fee) and profits are usually taxable, so always look at the costs as well. Low-cost instruments (ETFs, funds) and a properly chosen broker can save you a lot.
9
Keep educating yourself – Investments are not a casino, even though it often looks that way on TikTok or in crypto groups. Instead, take more professional books and articles seriously and follow reputable sources.
10
Be cautious with speculation – Remember, investing is not trading → trading is speculation with high risk and requires knowledge and time, while investing is long-term appreciation with lower stress.
A closer look at portfolio diversification
Diversification means not putting all your money into one investment (or speculation) but spreading it across different types of assets. The goal is to reduce risk without necessarily reducing long-term returns. This has several nice effects:
- Reduces volatility – when one part of the portfolio falls, another may rise and stabilize the overall performance
- Protects against unexpected events – the collapse of one company, sector, country, or market won’t affect you as much
- Uses different sources of growth – stocks, bonds, ETFs, commodities, and real estate often behave differently
The advantages of this approach are lower risk of losing all capital (one bad investment or speculation won’t ruin everything), mental resilience (you don’t have to panic right away when one or a few assets drop), leveraging long-term growth (less risky parts can grow steadily, while more dynamic investments and speculations can smartly increase overall returns), and flexibility (you can gradually adjust risk ratios according to your age, acquired experience, and current goals).