How Do I Start Investing?

How Do I Start Investing?
How Do I Start Investing?
Table of Contents

Key Summary

You have made the decision to start investing. But what comes first? How much money do you need, what types of investment are available, and how do you make your first investment? Here are the key questions and answers for getting started.
  • Define your investment objective, investment horizon, and acceptable level of risk before choosing a security. 
  • Keep money needed in the short term and an emergency reserve readily available. 
  • Risk tolerance describes how comfortable you are with market fluctuations.
  • Risk capacity is your financial ability to absorb losses. 
  • Review investment types, providers, costs, and order types before buying. 

I Want to Invest. What Should I Do First?

The first step is not to select a security. Start by considering what you want to achieve with your money. Are you aiming to build wealth over the long term, or do you have a specific financial goal? It is equally important to consider when you are likely to need the invested capital again.

These considerations provide the basis for your next decisions: how much capital is available, what investment horizon is realistic, and what level of risk is appropriate.

Do I Need a Lot of Money to Start Investing?

There is no universal minimum amount required to start investing. What matters more is that you do not invest all the assets available to you. Money for ongoing expenses and unexpected costs should remain readily available.

As a rule of thumb, an emergency reserve of around three months’ salary may be appropriate. The amount you actually need depends on your individual circumstances. Once this reserve is in place, you can consider how much additional money you can invest for the longer term.

What Do I Want to Achieve with My Investment?

A clear investment objective makes many subsequent decisions easier. Someone who wants to build wealth over a long period has different requirements from someone who needs the money again at a specific time.

Your objective should therefore answer two questions as clearly as possible: What am I investing for, and when will I need the money? These answers can then help you determine which investment horizon suits your situation.

How Long Should I Be Able to Keep My Money Invested?

The investment horizon is the period for which you expect to keep your capital invested. The longer this period, the more time there is to recover from temporary market declines. If you need the money within only a few years, there is less time to do so.

You should therefore invest only capital that you are unlikely to need during the intended investment period. What constitutes a short or long investment horizon also depends on the investment concerned.

How Do I Determine How Much Risk Is Right for Me?

It helps to distinguish between risk tolerance and risk capacity. Risk tolerance describes how well you personally cope with losses and market movements. Risk capacity, by contrast, is your financial ability to absorb losses. It depends, for example, on your income, financial reserves, and obligations.

The two do not necessarily align. Someone may be financially able to take risks but still feel uncomfortable during sharp price movements. Both aspects should therefore be considered when assessing your personal risk profile.

Shares, Bonds, or ETFs: Where Should I Start?

Shares, bonds, and exchange-traded funds (ETFs) work in different ways. When you buy a share, you acquire an ownership interest in a company. A bond is a claim against the relevant issuer. ETFs are funds traded on an exchange and may, for example, track an index comprising a broad range of securities.

Rather than viewing individual investment types in isolation, it is also important to consider how they work together. Diversification means spreading capital across different companies, sectors, regions, or asset classes. This can reduce the risk of depending too heavily on the performance of a single investment.

How Do I Choose a Bank or Broker?

To buy and sell securities, you need access to an appropriate financial services provider. Before opening an account or securities account, it is therefore worth taking a close look at the provider.

In Switzerland, for example, you can check whether an institution holds the required authorization. A credible website, transparent information on fees and costs, and details about the available investment range and accessible trading venues can provide further guidance.

What Costs Should I Know About Before Making My First Investment?

When investing, the price of a security is not the only consideration. Buying and selling may involve transaction fees or brokerage fees. Securities account fees, currency conversion costs, or statutory charges may also apply. Funds and ETFs additionally incur ongoing product costs.

The spread is also part of the effective trading costs. It is the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept. Comparing costs therefore helps you understand how much of your capital is actually invested.

How Do I Buy My First Security?

Once you have opened a securities account and selected a security, you can place a buy order through your bank or broker. The order is sent to the relevant trading venue, where buy and sell orders meet in the electronic order book. If the conditions match, a transaction can take place.

The order type is also relevant before you buy. A market order prioritizes prompt execution at the best available market price. With a limit buy order, by contrast, you set the maximum price you are willing to pay.

What Should I Do After Making My First Investment?

Above all, be patient. Investing is not a one-time event but a process that can extend over many years. Especially at the beginning, it can be tempting to monitor every price movement and react to short-term changes.

Instead, it helps to keep a long-term perspective. Review your investments from time to time to assess whether they still align with your original objectives and whether your personal or financial circumstances have changed. Patience does not mean simply forgetting about an investment. It means distinguishing short-term developments from long-term decisions.

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