Investing can foster one of the most integral parts of life: growth. So if you’re looking to build long-term wealth and create the financial means to achieve life-long goals, investment basics can be the key to unlocking these freedoms. To get you started, we’ve put together your investments basic guide for 2025, including tips on how to invest, investment terms explained, and what you might need to start your investment journey.
Key takeaways:
- Investing can be an effective way to build long-term wealth and unlock financial freedom.
- When you invest, you can expect to earn a profit on the money you have invested, otherwise known as an investment return.
- Investment returns compound (grow bigger and bigger) each time you reinvest them, helping you to reach financial goals faster.
- Investments are referred to as assets, which are grouped into asset classes, such as cash, stocks, bonds, real estate, commodities, and alternatives.
- Anyone can start investing, regardless of experience or financial situation. Even just a little money can go a long way.
What is investing?
We constantly invest throughout our lives, whether it’s our time getting a university degree or our energy learning how to cook a new recipe. Often, we do these things because we expect them to bring us value in the future, such as landing that dream job after finishing university. When it comes to the financial side of investing, the concept’s very similar: You put money into something with the expectation that you’ll achieve a financial profit in the future.
The profit you earn from financial investments is commonly referred to as an investment return, which is expressed as a percentage. For example, if you were to invest €1 000 in something and at the end of the investment period, you get back €1 100—your profit is €100, giving you a 10% investment return.
Learning investment basics for beginners includes understanding these essential terms, as they are building blocks for creating wealth. For a beginner, this foundation is key to understanding how beginner investment strategies work. Additionally, when you reinvest earnings, they start to compound (or grow upon themselves), helping you to reach your financial goals faster.
For further guidance, explore our article on portfolio diversification
Why do people invest?
For hundreds of years, people have used investing as a way to build long-term wealth and achieve their goals. The reason long-term investing is so effective lies in compound growth. Each time investment returns are reinvested, they begin to compound, creating even greater growth potential over time. This compounding effect helps investors meet financial goals faster, making it a cornerstone of investment fundamentals.
For example, if you invest €100 a month over the next 20 years at an 8% annual return rate, each year, your funds grow at an accelerating rate, leading to a balance far greater than simple saving could achieve.
Many people begin with investment basics for beginners—setting up investments to cover major life expenses such as education, homeownership, travel, and retirement. Understanding investment basics and exploring investment types and strategies can also help new investors align their choices with financial goals. As you explore how to invest for beginners, keep in mind that one of the key principles of investing is the risk and return basics. Generally, higher returns come with higher risk. Balancing these factors within an investment portfolio is a vital part of successful investing.
Saving vs. investing
Saving focuses on preserving money so it’s there when you need it. For example, if you put away €50 a week for the next 5 years, you’d have those funds readily available at the end of that period. Savings are generally low-risk and easy to access, but they don’t usually offer high returns. Even with interest-bearing savings accounts, returns may struggle to keep up with inflation, meaning your money could lose value over time.
Investing, on the other hand, has the potential to grow your money through investment returns. However, investing also comes with risks, as there’s a chance that you might not get back some or all of the money you invested. This is where the concept of recognizing risk and return basics comes in, where higher returns generally mean higher risk. This tradeoff is an important part of investment fundamentals and can help you make informed choices as you develop your investment portfolio basics.
Another difference between saving and investing is time. Simple investment tips often recommend saving for short-term needs, while investing is better suited to long-term goals. Knowing the types of investments available and learning investment basics for beginners can help you understand which approach best aligns with your financial objectives.
What do people usually invest in?
When you own something of value that can be converted into money, it’s known as an asset. In investing, assets are categorized into asset classes—groups of similar types of investments with shared characteristics. Knowing the types of investments available is helpful for beginners that are interested in investment basics.
Stocks
Also called equities or shares, stocks represent ownership in a company. By purchasing shares, you essentially own a small part of that company, allowing you to participate in its growth and profitability.
Many investors are drawn to stocks because they offer the potential for high returns, either through the appreciation of the share price or dividends (a portion of a company’s earnings paid to shareholders). While stocks are often considered essential in an investment portfolio basics approach, they are also known for volatility, meaning their value can fluctuate significantly.
More about investment risks
Bonds
Bonds are debt-based investments, where you lend money to an entity, such as a government or corporation in return for regular interest payments and the return of the principal amount at maturity. Bonds are generally viewed as safer investments than stocks, as they offer predictable returns.
There are two main types of bonds: government bonds, which are issued by governments, and corporate bonds, issued by companies. The risk associated with bonds varies, with higher-rated bonds (often called investment-grade bonds) being more stable, while lower-rated (or high-yield) bonds carry greater risk but offer higher returns. Including bonds as part of your investment fundamentals can add stability to a portfolio by balancing higher-risk assets like stocks.
Real estate
Real estate investments involve owning or investing in properties, such as residential homes, commercial buildings, or land. Real estate is known for its ability to generate passive income through rental payments and the potential for long-term appreciation in value.
However, it is typically less liquid than other assets. This means it can take time to sell a property and access the cash. Many investors find real estate appealing because of its tangible nature and historical track record as a store of value.
Including real estate in your investment portfolio basics can provide diversification, especially as a hedge against inflation.
Further reading: The benefits of investing in passive real estate
Commodities
Commodities are physical goods like gold, oil, wheat, or other raw materials that are traded in markets worldwide. These types of investments offer diversification benefits, often serving as a hedge against inflation or market downturns, as commodity prices sometimes move independently of stock markets. Commodities are generally classified as “hard” (such as gold and oil) or “soft” (like agricultural products). Investing in commodities can add stability to an investment portfolio since they typically respond differently to economic events compared to stocks and bonds.
Relevant reading: Everything you need to know about portfolio diversification
Alternatives
Alternative investments are non-traditional assets, including things like private equity, hedge funds, collectibles (e.g., art, wine), and digital assets (like cryptocurrencies). Once only accessible to institutions or high-net-worth individuals, alternatives have gained popularity among retail investors in recent years.
These investment types and strategies offer unique opportunities but also come with increased risks due to factors like lower liquidity and market unpredictability. Alternatives are sometimes used to add growth potential to a portfolio but require careful research and an understanding of risk and return basics.
Familiarize yourself with alternative investments here
Cash
Cash includes bank deposits, money market funds, and other highly liquid assets. Cash investments are extremely low-risk and are often held for their stability and easy accessibility.
They’re particularly useful for short-term financial goals, emergencies, or as a safety net within an investment portfolio basics structure. While cash doesn’t generate high returns, it’s a reliable way to ensure a portion of your portfolio is protected from market volatility.
Need to know: The ultimate guide to cash investments
Where to start if you’d like to begin investing
How to start investing can feel like a daunting question, especially with so many options and strategies available. But the introduction to investing starts with setting clear financial goals. Once you have clarity around your goals, it’s easier to identify the types of investments and investment portfolio basics that align with those objectives.
Another strategy to consider is setting up a regular investment plan. This can be as simple as investing a fixed amount monthly. Known as dollar-cost averaging, this approach helps reduce the impact of market volatility by spreading your investments over time. If you’re curious about the benefits of this strategy, explore our article on dollar-cost averaging.
For those ready to take the first step, many platforms require minimal capital to begin. On Mintos, you can start with as little as €50, making it accessible to investors of all experience levels. Even a small start can have a big impact, as consistent investing can gradually build towards larger financial goals. Remember, it’s not about having a large sum upfront but about making steady progress toward achieving long-term wealth.
With Mintos, you have the flexibility to grow at your own pace while learning the investment basics to confidently manage your portfolio.
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Disclaimer:
This is a marketing communication and in no way should be viewed as investment research, investment advice, or recommendation to invest. The value of your investment can go up as well as down. Past performance of financial instruments does not guarantee future returns. Investing in financial instruments involves risk; before investing, consider your knowledge, experience, financial situation, and investment objectives
