Investing
Investing is growing in popularity, as online investment platforms make it more easy and accessible. You can start investing with only small amounts. There are platforms to invest in almost anything, from stocks and bonds to real estate, business loans, peer-to-peer loans and crowdfunding projects.
Please note: investing in stocks or other investments involves risks, you can (partially) lose your investment.
Contents:
- Popular platforms
- How much should you invest?
- Investment goals
- Active versus passive investing
- Types of investments
Investing is popular in Europe
Investing is growing in popularity across Europe. For example, around 35 percent of households in the United Kingdom invest in stocks or similar assets, and 20 percent of German households.
Although this number is much higher in the United States (almost 60 percent), investing in the stock markets is rapidly growing in Europe.
Next to stocks or bonds, Europe has also quite a large alternative finance market you can invest in. For example opportunities like crowdfunding, peer-to-peer or business lending platforms.
35% of households in the UK invest in the stock market.
Bank versus investment platforms
So, investing in stocks is growing in popularity. But how do you start with it yourself? The old fashioned way is to open an investment account with a bank, although this is not always recommended. The costs of such an brokerage account can be very high and options or user-friendliness are often better at an online broker.
Trading apps and investment platforms of new online brokers are the more popular and easy option. When choosing your investment platform, make sure to compare their costs and offerings.
Comparing brokers
Fees can differ a lot depending on the platform. If starting your account is cheap, the cost per transaction might be higher and vice versa. There may also be some additional service fees. A fee of 1 percent may sound like very little. But with an annual return rate of 5 percent, this is already one fifth of your yearly profits.
Lastly, compare the portfolios of different platforms. Your investment of choice, like crypto and bonds, might not be available with every bank or broker platform. Of course you can use multiple platforms to counteract this, but maybe you do not want to at the beginning. Below you will find different popular options to consider.
Make sure to compare the costs of trading, as it can differ a lot per platform.
Popular investment platforms
European stock brokers that are popular to start with are:
At the online broker DEGIRO, you can personally invest worldwide in stocks, bonds, funds, ETFs, options, and futures. DEGIRO is the market leader in the Netherlands and is known for its low fees and high user convenience. Note that investing can result in the loss of your capital.
- used by 3.5+ million investors
- low costs (low spreads)
- assets under custody: 95+ billion euros
- trade on 50+ global exchanges
- 5-star award winner (Financial Times)
If you want to trade and invest all by yourself eToro is currently Europe’s online brokerage champion. You can trade in stocks, commodities, crypto and other currencies. Templates allow you to invest directly in a variety of sectors. Don’t invest unless you’re prepared to lose the money you invest.
- beginner-friendly platform
- you can copy other traders
- 24/5-trading (S&P 500 & Nasdaq 100)
- premade investment strategies
- zero commission on ETFs
- over 40 million users worldwide
Invest through this European broker in stocks, ETFs, and crypto. Transactions in iShares ETFs and investment plans are free; other trades cost 0.99 euros. With Prime+ (4.99 per month), trades from 250 euros are free. Uninvested funds earn an expected return of 2 percent.
- 20+ billion euro in assets under management (AUM)
- flat-fee model for 4.99 euro per month (PRIME+)
- extended trading hours (07:00 to 22:00)
- Stop-loss and take-profit orders available
- fractional investing in stocks and ETFs
- founded in 2014, Munich Germany, regulated by BaFin
With the platform Trade Republic, you can invest in 10,100 stocks and ETFs. Start investing in fractional shares, ETF's or bonds from 1 euro. Deposits can easily be done by Google or Apple Pay. You can also earn 2,50 percent interest on uninvested balances.
- 10+ million investors
- 150 billion euro in assets under management
- optional: virtual debit card
- unique saveback rewards program
- fractional investing
- 24/7 customer support
Invest in over 1 million stocks, ETFs, bonds, and other instruments across U.S., European, and Asian markets. Explore predefined selections of high-yield ETFs and bonds with potential dividend returns of up to 6 percent in EUR. Utilize in-house market research and weekly investment ideas.
- no EUR/USD currency conversion fees
- extensive bond selection
- optional: business accounts
- weekly investment ideas
- dedicated relationship managers
Interactive Brokers (IBKR) scores a 7 in our review. It offers low fees, global market access, and advanced tools. While suitable for beginners, it is mainly popular among experienced investors due to its wide range of products, including some high risk investment products.
- 3+ million users worldwide
- focus on experienced investors
- low trading fees
- professional trading tools available
- including bonds, options and futures
- founded in 1978 and listed on Nasdaq
This Copenhagen-based broker offers access to over 72,000 financial products through a user-friendly app. It features an auto-invest function, multi-currency accounts, and strong trading options. Best suited for more experienced investors due to its advanced tools and market access.
- both EUR and USD accounts
- focus on more experienced traders
- low transaction costs (spreads)
- securities lending available
Platform for experienced traders familiar with the trading and risks of turbos, CFDs, barriers, forex and derivatives. Please note that these are complex instruments and, due to the leverage effect, bring a high risk of rapidly mounting losses. 75% of investors suffer losses on these trades.
Popular European crypto platform with a wide selection of cryptocurrencies, including bitcoin, ethereum and solana. In addition to crypto, investors can also access popular stocks, ETFs and commodities such as gold and silver through a single account.
- beginner-friendly platform
- 600+ cryptocurrencies
- supports multiple European languages
- optional: stocks, commodities and ETFs
- recurring investment plans
- MiCAR-licensed in Austria
Young online broker that lets you invest in stocks and ETFs at low cost. Offers low trading fees and multiple currencies, helping you reduce foreign exchange costs or invest in money market funds. Lightyear also supports fractional investing and provides relatively detailed stock information.
- founded in 2020 by former Wise employees
- available in 25+ European countries
- uses AI to provide news arounds popular stocks
- regulated in the EU by the Estonian authority EFSA
How much should you invest?
Before choosing investments, decide how much you can invest. Investing always carries risk, and you may lose your investment. Therefore, only invest surplus funds you can afford to lose without serious consequences, such as savings you will not need in the foreseeable future.
If you have more to spare, you can invest more, but it is fine to start small. Some platforms require a minimum deposit, but you can usually choose the investment amount yourself. Because of transaction costs, it is often better to avoid too many small trades. Returns depend heavily on the amount you invest, so investing at least a few hundred or a few thousand euros is often needed to make it worthwhile.
It is generally advised to spread your money to reduce risk. You can do this while limiting transactions by investing in funds or ETFs instead of individual stocks. Many beginners also spread their investments over time. This can reduce risk, as markets fluctuate, and it lowers the chance of investing a large amount just before a downturn. However, it may also limit returns. It is often better to spend more time in the market than to try to time the market.
You do not need to be rich to start investing.
Investment goals
Before you start investing, consider your objectives. A clear strategy helps you decide what to buy, how long to hold it, and how much risk to take.
Risk differs per investment. Bonds are relatively low risk, while startups or cryptocurrencies are high risk. Higher risk increases the chance of losing part or all of your investment.
Returns often follow the same pattern. Lower risk usually means slower growth. And the amount of time you have makes a big difference as well: do you want to liquidate funds in the short term, or can you build up your returns over the years?
Also consider your priorities: do you aim for higher returns, or do you want to support specific sectors, such as sustainable companies? Some platforms focus only on socially responsible investments.
High risk can bring high results, but increases the chance of losing your money in the process as well.
Active versus passive investing
When you start investing, maybe first look into what type of investor you are. You can invest in two main styles: active investing and passive investing.
Active investors select individual assets and try to outperform the market. This often involves frequent buying and selling to benefit from short-term price movements. It carries more risk and requires timing and market knowledge. For most beginners, this approach is not recommended.
Active investing is usually not recommended for first-time investors.
Passive investors take a long-term approach. They buy assets and hold them for years, regardless of market fluctuations. A common method is investing in index funds that track many companies. Returns come mainly from long-term growth and reinvested dividends.
Invest via Mintos, Europe’s P2P leader with 11.62% average return, or Freedom24 for top-rated bonds (B+) with 6% yield, starting at 1000 euro. Investing involves risks. You can lose your investment.
Types of investments
While many people know real estate and stocks, there are many more ways to invest. Stocks are still common on most platforms, but ETFs are becoming more popular, especially among new or less experienced investors.
Indices and Exchange Traded Funds (ETFs)
Starting with investing can feel difficult. If you do not have much knowledge or do not want to follow the market closely, choosing individual stocks can be risky. It is often better to spread your money across different companies and sectors.
Investing in ETFs or similar investment funds make this easier. They are a mix of many investments, such as shares from different companies in one index. This way, you invest in many companies at once.
ETFs are a simple, passive option. The fund decides what to include, and the costs are usually lower than building a similar portfolio yourself. You can choose ETFs that follow the whole market, a specific sector, or assets like bonds or real estate.
Investing in an ETF saves you a lot of work, as the fund makes decisions based on certain premade rules.
Investing in stocks
Although ETFs are popular with new investors, investing in stocks is still common. In the past, you often had to buy shares through a bank with high fees. Today, many online brokers let you buy and sell shares at lower cost.
You can earn money from stocks in two ways. First, by selling shares at a higher price if the company grows in value. Second, through dividends, when a company pays part of its profit to shareholders. If profits are low, dividends may be reduced or not paid.
Stocks carry risk, as a company can lose value or go bankrupt. You can reduce this risk by spreading your investments across different companies and investing smaller amounts. You can also choose more established companies.
Bond investments
Aside from company shares, it can be interesting to invest in bonds. This is the most well-known investment aside from stocks and ETF’s. A bond is a type of loan that companies are required to pay back to their bondholders. There is still the risk of fluctuating market and interest rates, but this is much smaller compared to stocks.
Bonds from governments are an even smaller risk. This also means the potential returns of bond investing are relatively smaller. However, this might be one of the safest investments out there.
Investing in raw materials
Furthermore, there is the option to invest in raw materials like gold, silver or oil. You can even trade in grains, rice, coffee and sugar. Thanks to derivatives or CFDs (Contract for Difference), which are like financial securities, you can invest in almost any material you can think of. Most online investment platforms will also offer indexes or ETFs for certain materials.
You should see investing in raw materials as a long term investment.
Raw materials can offer potentially good returns. Commodities can also be less risky than stocks, because they react differently to economic and political developments. Besides, elements like gold can never go bankrupt. They will always be worth at least something.
Beware that although materials are a relatively safe investment, their value can still go up and down a lot depending on its scarcity. Therefore it is best as a long term investment. That way, if the value plummets, you can take time to wait until it goes back up again.
Crypto investing
You can invest in cryptocoins just like you can invest in stocks. Even though it is still unsure for many crypto’s if they will become a success, it makes for an interesting investment opportunity because the market is constantly moving.
To mitigate some of the risks, you can invest in older and established coins like Bitcoin and Ethereum. You can buy your own coins that hopefully will increase in value, or invest in crypto ETFs and indices that do this work for you.
Real estate investing
Real estate investing has been popular for decades now. And with good reason: it is fairly low risk because the property acts as collateral. In addition, it can offer very good returns.
You can of course buy a house and resell or rent it out for profits. But there are also real estate funds and trusts that spread your investment across different projects. Additionally, you can invest in different types of real estate crowdfunding projects. All of this is possible for residential or commercial property, like schools and office buildings.
Crowdfunding
Crowdfunding is increasingly popular in Europe and can be an interesting investment opportunity for investors. On online crowdfunding platforms, people and businesses can raise capital from a large group of smaller investors. You can invest in, for example, peer-to-peer loans, business loans and companies raising growth capital.
With crowdfunding you can choose your own investments carefully and easily spread small amounts of money across different projects. The return usually consists of a monthly payback plus added interest.
