From budget to investments and from savings to wealth, Professor Nabil shares his informed opinion on all matters financial. He’s here to teach you the basics, and a few more advanced ideas as well.
Today we’ll be talking about investing – or rather, how to invest without going broke. I can see some of you sniggering at the back, but get this: you don’t need to be a millionaire to invest in the stock market, or anywhere else. There are several types of investments that are both accessible and attractive, if you know where to look and how to go about it. It may just take a little patience and creativity to get the result you want. Don’t have unlimited cash? So what! Investing small amounts keeps your risk down, but with all of the satisfaction.
I’ll start with some important guidelines and then give you a few investment ideas, some classic, some more offbeat. Pens at the ready!
- Tip #1: patience is the mother of all virtues. Be patient: small amounts need more time to grow. Trust in the snowball effect. With time and proper care, your small investment will increase.
- Tip #2: play the long game. You have to think long term when investing, focus on the future and avoid dubious shortcuts. Stay consistent and coherent in your approach, and keep a cool head when volatility hits the markets.
- Tip #3: don’t put all your eggs in one basket. Betting everything on the success of one product or financial instrument jeopardises your whole investment. Diversification is the golden rule!
(…) no attractive investment is 100% safe. So never invest more than you can afford to lose.
- Tip #4: don’t be greedy. While every investment can deliver good returns, it’s important to keep in mind that no attractive investment is 100% safe. So never invest more than you can afford to lose.
- Tip #5: seek advice. Sound investing requires a certain amount of knowledge and experience, humility and time. When one of these ingredients is lacking, it’s better to seek guidance from the right people. That’s your banker job.
Now, enough theory. Let’s move on to practice! Here are some ideas for reasonable (and sometimes rather original) investments that will have you saying “Thank you, Professor Nabil”! Be warned, some of them are significantly more risky than others, so listen carefully before you get started: don’t invest a penny until you’ve had your investor profile analysed! Indeed, whether an investment is suitable always depends on the specific circumstances of the investor.
- The stock market. There is a vast range of financial instruments available. On a limited budget, an ETF (exchange-traded fund) or an index fund is compelling. They have low management fees and bring substantial diversification to your portfolio.
- Real estate. Yes, I know, we’re on a small budget. Don’t panic, I’m not about to push you into big property investments. “Real estate” also covers assets such as garages. Yes indeed, acquiring a garage is a reasonable and potentially profitable investment. In cities where looking for a parking space is like finding a needle in a haystack, it’s a smart move. Depending on its location and size, your garage could command several hundred euro a month in rent in Luxembourg. Don’t believe me? See for yourself on Luxparking.
Go with what you fancy and can afford today, with the hope that it will appreciate over time.
- There’s also what I call “pleasure investing”. Sure, your favourite young painter in Strassen isn’t a darling of the art market yet. But in 10 years’ time… Who knows?! The same goes for that case of Bordeaux 2015, appropriately stored in the cool of your cellar. You get the drift: go with what you fancy and can afford today, with the hope that it will appreciate over time. The worst that can happen is that you end up with a painting you like or a nice case of wine to enjoy with your friends.
- Entrepreneurship. Why not invest in a business, for instance in the digital sector. Say you believe in the potential of a small start-up that develops computer software, or an SME that makes no-slip soap bars. They are probably looking for investors too. But be careful, make sure you have the full picture and seek advice from experts before handing over your savings. It does entail some risk! In the same vein, consider crowdfunding and the opportunities offered by participatory economics.
- Savings solutions and life insurance. For this kind of investment, pay your banker a visit. They’ll be delighted to help. Yields, fees, terms – they’ll tell you everything you need to know and more about these topics and the different options available to you.
- And what if you invested in nature or animals? (Don’t laugh, I’m being serious.) For instance, you might choose to invest in a cow! Strange as it may seem, investing in one or more bovines offers an average yield of 5% from the sale of milk. While this may require a bit of outdoor space, you could also make an arrangement with a farmer in your vicinity. Still sceptical? Just look at what our Belgian neighbours are doing. In the same vein, you have racehorses Obviously, it’s a gamble, but for many it’s also a passion, or even a way of life. Finally, you could invest in a forest. You can either buy shares in a forestry group or make a direct purchase from a commune . You’ll receive profits on the sale of the wood, or on the sale of the tickets if you create a walking trail or an animal reserve, for example.
- You could also invest in a student. You then become the patron of a promising young talent. In a nutshell, you fund their studies, then they reimburse you with interest when they begin their career. This scheme is currently offered by American universities only, but it’s certain to cross the pond at some point. Find out what’s already available from Upstart.
That’s a wide range, don’t you think? I hope this list has given you some ideas. It may be that diversifying your investments is the real answer to our original question. Wherever you choose to invest, know that you’ll also be investing your time and effort. So make sure you pick things that you like and take a personal interest in, beyond the financial aspect.
That’s all, folks. And remember to find joy in life – that’s still the most valuable thing you can do!