Investing is the act of allocating money with the aim of increasing its value over time. Instead of keeping money in a savings account, you may purchase shares, bonds or ETFs in the expectation that they will generate a return. Investing always involves risk, as the value of an investment can rise but also fall.

Investors can achieve returns in two ways: through an increase in the value of the investment and through income, such as dividends or interest.

Anyone who invests accepts that the value may fluctuate in the meantime. In the short term, prices move due to news, economic developments or changes in market confidence. Over the longer term, investing is about growing wealth.

This can be achieved through capital appreciation, but also through income such as dividends or interest. Because no market is fully predictable, risk is always part of investing. For this reason, many investors choose to diversify across multiple companies, sectors or regions in order to reduce risk.

Short example:

Suppose you buy one share for €100. At that moment, this is your investment. After one year, the company has grown and the share is worth €115. You decide to sell and receive €115, resulting in a profit of €15. If the share had instead fallen to €90 and you had sold, you would have incurred a loss of €10. Investing can lead to profit, but also to loss.

Disclaimer: Investing involves risks. Our analysts are not financial advisors. Always consult a professional advisor when making financial decisions. The information and tips provided on this website are based on the personal insights and experience of our analysts and are intended for educational purposes only.