Hi, I am a young Italian (I guess the "poste Italiane" gives it away uh) and I plan to make my fist small experiments to understand how buying stoks and ETFs works.
I tried to look around what all those acronyms and big words mean but usually the definition and explanations I found use other acronyms and big words and end up being mentally exhausting to follow.
As far as I understand An ETF is a group of companies that share a market and by shoving money in there (investing in the found is the right phrase I guess)
you either buy stocks
(which are just money you give the company to spend and after the profit is made it should give it back with a certain interest I think, right? How much interest and how often is a great mystery I have yet to solve)
or fractions of stocks
(what is the point of a stock being a certain price then???? If i can just buy a small piece of it???)
from one of the companies in the found
(randomly I guess, or according to a broker whims maybe idk)
and when the dividends are paid you can either get some money back or reinvested in the found.
Those ETFs are apparently more secure because they spread your money around multiple companies within multiple fields and I feel like I should invest more in those then in singular companies, is that right?
Also I'm planning to start with 50€ each month but if I feel comfortable enough I plan to rise the investment to maybe 300€ monthly, but I often see people saying that for those amounts of money (which are a fuckton to me) you should just dump in a single ETF and forget about it for like 10 years, but it feels so wrong to put so much money into something with risks attached to it and then ignoring it, is there something else I'm not getting? (As opposed to all the other things I'm understanding perfectly, right?)
You should only invest in things you understand!
When you buy a stock you don't just give said company your money. You actually own a piece of that company. When said company has more money than it needs it could pay out dividends to its shareholders. And then you get your percentage of that total dividend.
How often these payments happen depends on the company and if there is a crisis they will stop completely.
ETFs are basically groupings of things. EG there are ETFs that follow the MSCI World, but theoretically there could be an ETF for "Italian companies that sell green Keyboards" or any other rule/grouping you could think of.
If you buy ETF you buy a share of said ETF. So not any stocks of random companies. The ETF then uses your invested money to invest according to what it specified in its description. When those Investments gain money your share gains value, when they fail your share loses money.
There are 2 types of ETFs: accumulating & distributing. They distinguish what happens with dividends. (& have other implications e.g. with taxes)
I think if you buy less then 1 share you dont actually own a part of the company. Someone owns the share of which you bought the part of and that someone then has to give you your part of the dividend they received from the company.