The Briefing

Crypto, ETF, Future – STOP!!!

Back to basics. What is a fund?

May 17, 2021
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Reading time 2 min.

🌈 A quick taster for you:

  • Funds are an instrument to invest money
  • A broad investment spreads the risk more widely
  • Funds are a classic entry-level product

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🧐 Why do I care?

  • Are you earning interest on your current account right now?
    NO!
  • Are you earning interest on your savings account right now?
    NO!
  • Unfortunately, due to inflation, your money loses 2% of its value on average.
  • Back to School: Apples and Pears
    So if you could buy exactly 1000 apples this year with €1000, you will only be able to buy 980 apples next year with €1000. Stupid, isn't it?
    Therefore, it is worth investing so that your money grows and you can buy more apples.
  • A fund is a very good way to start investing, even with little money.

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πŸ” What exactly is happening here?

  • What exactly is a fund?
    A fund is a pot with the money of many different investors. This money is used to invest in different assets such as stocks, real estate or bonds. This diversification tries to reduce the risk of loss. You've probably heard the saying "don’t put all your eggs in one basket," right? With a fund you do exactly this - you spread your money across 10, 20 or even more baskets.Β 
  • Who decides what to invest in?
    A highly competent management is responsible for this. They decide which values the money should be invested in, in order to reduce risk and increase profit.
  • OK and now? What's in it for me?
    Your risk of investing is significantly reduced by diversification. Let's assume that the fund invests in 10 stocks. 3 lose value, but 7 increase in value, then the gains can balance out the losses.Β 
  • What this looks like in numbers:
    3x each -3% loss = -9% total loss
    7x each +3% profit = +21% total profit
    Result: 12% difference as profit

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πŸ€“ What does this mean for me?

  • You are offered the opportunity to invest with little money.Β 
  • What exactly does that mean?
    You don't have to invest a lot of money all by yourself, you can decide how much money you want to put into the pot. Imagine you're traveling with 10 friends – OK it's Corona – imagine it's 2030 and you're traveling with 10 friends. You are going to Bali. Alone you can't afford a villa for a week because it's too expensive, but together with your 9 friends everyone pays less and you can stay in the villa.
  • This is also how a fund works!
    You can invest in a fund from as little as €25 a month and maybe soon from even less and casually with OWWN.

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