Nearly 30% of people state their intention to invest in stocks in 2025; a figure that's increasing year over year. But other investment vehicles are also experiencing significant growth. This is notably the case for ETFs: 15% of investors currently hold them. The reason? Investing is about preparing for the future and supplementing your income. And access to these markets is now much simpler than before. Still, taking your first steps in investing can seem complex. Which products should you choose? How much should you invest? In short: how do you start investing? Find the answers in this guide.
Why Start Investing?
Investing in the stock market, or in other vehicles like a Share Savings Plan, ETFs, or bonds, allows you to grow your capital and secure your financial future. Investing offers numerous possibilities: building wealth, preparing for retirement, or financing a personal project.
Reasons to Invest
One of the primary reasons it's important to start investing is to combat inflation. By keeping your money in a savings account, its value diminishes over time. Savings account yields are low, and often fall below inflation. Investing, on the other hand, can offer higher returns, helping to protect your purchasing power and increase the value of your capital.
Also, investing generates income. For example, investing in company stocks allows you to benefit from dividends and capital gains if you resell them.
The Starting Point of Any Investment: Defining Your Financial Goals and Investor Profile
Before investing, it's essential to clarify your financial goals and assess your investor profile.
Short, Medium, or Long-Term Investment Goals
Short-term goals, typically 1 to 3 years, can include: building an emergency fund, financing a personal project, and so on.
Medium-term goals (3 to 10 years) can be more ambitious: financing a real estate purchase, securing funding for a business creation, etc.
This time, for long-term goals—10, 15, 20 years, or even more (e.g., throughout your professional career)—the objectives are different: building retirement savings, anticipating wealth transfer, or moving towards financial independence.
What's Your Investor Profile?
Knowing your investor profile helps you build an investment portfolio that aligns with your goals and risk tolerance. Three profiles emerge:
- The cautious investor: Prefers safe and liquid investments, even if it means not benefiting from very high profitability.
- The moderate investor: Accepts some risk for better returns.
- The aggressive investor: Seeks performance in the short, medium, and long term. They aim for high profitability and are therefore willing to endure high potential volatility in their investment portfolio. They are also inclined to put their capital at risk.
The Risk-Return Couple: The Foundation of Investing
A golden rule exists when you start investing, especially in the stock market: profitability and risk always go hand in hand. Many beginners make the mistake of only looking at the promised rate of return, forgetting to assess the associated risks.
Here are some tips to avoid pitfalls:
- Accept the concept of the risk/return couple. The more potentially profitable an investment is, the more exposed it is to market volatility, stock market fluctuations, or the soundness of a company. Understanding this dynamic is essential for building an investment strategy consistent with your profile.
- Analyze the promised return in relation to the risk level. An investment that announces a 30% annual return without mentioning any risk should immediately raise your vigilance.
- Never believe promises of guaranteed high returns. There is no high return without exposure to some form of volatility or potential loss.
Investment Risks to Consider: How to Manage Them?
Every investment carries a degree of risk: whether it's capital loss, stock market price volatility, or interest rate risk in the case of a bond. But it's possible to manage these risks using three levers:
- Diversify your investments: Spreading your investments across multiple asset classes, different sectors, and geographical areas helps smooth out risk while increasing potential returns.
- Invest gradually.
- Regularly adjust your portfolio based on your objectives and economic developments.
Focus on Portfolio Diversification to Combine Return Potential and Risk Reduction
A well-constructed portfolio is a diversified investment portfolio. Why diversify? Because each asset type reacts differently to economic cycles. Some go up while others go down. By mixing several asset classes, you can smooth the overall performance of the portfolio while capturing growth opportunities.
An example of a diversified portfolio:
- Stocks (40% to 60% of the portfolio) for growth. Investing in shares of listed companies allows you to benefit from the dynamism of financial markets. Be aware of their volatility, however: they offer attractive returns but with a higher level of risk.
- Bonds (20% to 40%) for stability. These debt securities provide a form of stability. They generate regular income in the form of interest and offset the volatility of stocks.
- Real estate (up to 20%): Real estate investment, whether direct (property purchase) or indirect (via SCPIs – Real Estate Investment Trusts), provides recurring income in the form of rent and diversification outside traditional financial markets.
- European emission allowances (10% or more), via platforms like Homaio. This is both a strategic and responsible investment. By betting on the evolution of carbon prices, you invest in an asset linked to the energy transition while further diversifying your portfolio.
Mistakes to Avoid
Launching into investing without preparation is one of the main causes of failure for a beginner investor. Here are the main mistakes to avoid when building a solid portfolio that aligns with your goals, investor profile, and investment horizon.
Mistake #1: Confusing Speculation and Investment
It's fundamental to understand that speculating means betting on short-term price fluctuations, while investing means building lasting wealth based on long-term value creation.
Mistake #2: Not Measuring the Risk/Return Couple
A new investor might fall for the siren song of a product that generates double-digit returns with no risk. But the fact is, there are no high returns without risk.
Mistake #3: Investing Without a Plan or Diversification
It's essential to define an investment plan and actions for the short, medium, and long term. It's also imperative to set a goal: to enjoy supplementary income, finance a real estate purchase, save for retirement, etc.
Mistake #4: Letting Emotions Control Your Decisions
Financial markets inherently fluctuate. Recent downward and upward movements in assets like cryptocurrencies, for example, demonstrate this. As a result, a beginner investor can be gripped by the fear of losing everything and sell in a hurry. These are common, normal reactions. However, they are often the worst decisions. Conversely, a successful investment strategy relies on controlling your emotions, consistency, and objectivity.
Starting to Invest Means Diversifying Your Investments
Effective investing means spreading your investments across different vehicles. There's a wide range available.
Stocks: For Potentially High Returns
Investing in stocks means becoming a co-owner of a listed company. This investment offers high return potential, but it is also subject to the vagaries of financial markets. Stock investment is intended for investors who opt for a long-term vision while demonstrating a certain risk tolerance. Before any stock purchase, however, it's imperative to research the companies, their sector, and their growth prospects.
Bonds: Lower Returns but More Secure Capital
Bonds are debt securities issued by states or companies. They offer regular income in the form of interest, with generally lower risk than stocks. For investors who spread their investments across different vehicles, they act as a kind of buffer in a diversified portfolio.
Real Estate: The Safe Haven
Investing in property, whether directly through the purchase of real estate or via SCPIs (Real Estate Investment Trusts), is an investment solution that offers a double benefit: generating rental income and benefiting from long-term appreciation in case of capital gains upon resale.
ETFs: The Booming Investment Vehicle
ETFs (Exchange-Traded Funds) replicate the performance of a stock market index. Also known as "trackers," they have seen explosive growth in just a few years. In the USA, growth is around 30% per year, while in Europe, ETF investments rose from 2.4 billion euros in 2022 to nearly 7 billion in 2023. ETFs provide easy access to a wide selection of French or foreign securities, representative of a market or sector of activity. They significantly simplify access to stock markets. In fact, they are recommended for beginner investors looking to diversify their portfolio without having to select individual stocks.
Investing in Sustainable Investments to Combine Performance and Positive Impact
Faced with climate challenges, a new generation of investment vehicles is emerging. Sustainable savings, socially responsible investing (SRI), and ESG (Environmental, Social, Governance) investments—these terminologies all refer to the same goal: investing while reconciling financial profitability and social responsibility.
Labels to Guide Your Sustainable Investment Choices
Several labels help identify sustainable investments. This is the case for the ISR label, which guarantees a rigorous selection of companies based on ESG criteria. The Greenfin label is even more demanding, as it excludes fossil fuels and favors green projects.
Promising Sectors for Green Investment
Among the most popular themes in sustainable sectors are:
- Renewable energies
- Energy efficiency and thermal renovation
- Sustainable mobility
- Regenerative and organic agriculture
- Water and waste management
Flagship Products for Starting Sustainable Finance Investing
Several sustainable investment vehicles are essential:
- SRI life insurance
- Green ETFs
- Green PEA (Share Savings Plan)
- Green bonds: bonds intended to finance ecological projects
- Sustainable real estate crowdfunding: participatory financing focused on sustainability allows for the financing of environmentally friendly real estate projects.
- Greentech FCPR: funds specialized in innovative companies in the ecological sector.
Homaio: Investing in the Carbon Quota Market
Homaio is an investment platform specializing in the European carbon quota market. This mechanism is based on a simple principle: capping CO2 emissions from large companies and allowing the exchange of emission rights.
Why invest with Homaio?
- Attractive returns as quota prices have risen sharply.
- The investor has a direct and concrete environmental impact; since each quota purchased and not used limits CO2 emissions.
- Another advantage: accessibility. Homaio democratizes a market previously reserved for professionals.
Can You Invest with a Small Budget?
This is a question everyone considering starting to invest asks: Is it possible to invest with a small budget? The answer is simple: yes!
Because contrary to popular belief, investing is not reserved for an elite. The democratization of access to financial markets and the rise of digital tools make it possible to invest with as little as 50 euros per month.
Several solutions indeed allow you to start building a diversified investment portfolio, even with what might seem like a modest initial outlay. This is particularly the case for ETFs, which replicate a stock index and are available via a PEA or a life insurance contract.
What matters when you start investing is not so much the initial sum but opting for a strategy that leverages the effect of compound interest, a regular savings effort—ideally monthly—and diversification of vehicles.
In short, even with little money, shaping your financial future is not only possible but even guaranteed in the long term. To achieve this, it's imperative to clearly define your objectives, know your investor profile, and identify the right financial products.
To start investing, defining your goals and selecting investment vehicles that align with your profile and values is key. This way, a beginner investor can build lasting wealth.
FAQ – How to Start Investing? Frequently Asked Questions
1. Do you need a lot of money to start investing?
No. It is entirely possible to start investing with small amounts. Some ETFs or diversified investment plans allow you to invest from €50 per month. The important thing is to start, even modestly, and to be consistent.
2. What is the best investment for a beginner?
There is no single "best" universal investment, but diversified ETFs, accessible via a Share Savings plan or life insurance, are often recommended for beginners. They combine simplicity, low fees, and exposure to many markets.
3. How do I know if an investment is too risky for me?
It all depends on your investor profile: your investment horizon, your tolerance for losses, and your objectives. If volatility keeps you awake at night or if you need your money in the short term, favor cautious and liquid investments.
4. Is sustainable investing truly profitable?
Yes. Contrary to popular belief, SRI and ESG funds offer comparable, and sometimes even superior, performance to traditional funds. Furthermore, companies selected based on these criteria are often more resilient during crises, as their offerings naturally adapt to economic and geopolitical uncertainties.
5. At what age can you start investing?
The sooner, the better! This allows your capital to grow over the long term. It is advisable to start investing as soon as you enter professional life, although you only need to be of legal age to access investment platforms.
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