What's the best investment choice for beginners?
The present is packed with tech tools that let you start investing without needing to be an expert. Quickly figure out your options, and don’t just throw money away – you can get more out of it, says financial market analyst XTB, Matej Bajzík.
Got some extra cash at the end of the month and don’t want to let it just sit in a non-interest-bearing account? You can direct it toward something more profitable – whether it’s a term deposit (though the interest is weak), mutual funds, ETFs, or stocks.
Before you dive in, it’s good to ask: What risks and returns does it bring? How long are you willing to let the money work? And what about fees and taxes?
In the long run, investing through ETFs (Exchange Traded Funds) turns out to be the best choice. These funds have revolutionized investing, allowing even small investors to join the game.
“ETFs have changed the game. They’ve given everyone the chance to invest cheaply and easily. There's no need to be an expert today to invest and generate returns,” says Matej Bajzík from the investment platform XTB.
After the last 15 years of great stock market returns, it's clear more people are interested in this tool. For both beginners and regular investors, ETFs are a great option to access a wide range of assets without having to sit by a monitor all day studying charts.
Unlike stock picking (where you choose specific stocks), ETFs automatically provide a diversified portfolio – basically, it’s a basket of stocks that can replicate the stock market of a specific country, sector, or index, like the S&P 500.
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How About ETF Performance?
For those looking for long-term growth, ETFs tracking stock indices are an ideal choice. Historically, the U.S. stock market has delivered an annual return of around 10%, and after accounting for inflation, it’s still around 7% per year. This means your investment doubles every 10 years.
If you’re investing in ETFs, don’t forget about your investment horizon. The longer the time, the higher the chances of profit and lower the risk of losses. ETF benefits also include low fees. Compared to actively managed funds that charge up to 2% annually, ETFs ensure lower costs. You can buy or sell them anytime without early withdrawal fees. And the best part? No entry fees and no tax on sales after a year in Slovakia.
“Passive ETFs achieve performance that surpasses 85-95% of actively managed funds. It’s a great choice for anyone who doesn’t want to worry about the details but wants their money to grow,” adds Bajzík.
As for bank funds, they’re suitable for those who know nothing about investing. But if you want more flexibility and lower fees, ETFs are the right choice. If you want to dive into ETFs directly, the best way is to use platforms like XTB, where you’ll have to spend a few hours studying, but the profit is all yours.
