cross-posted from: https://lemmy.blahaj.zone/post/46894980
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?)
I am not an expert, so this is just my understanding and view from limited personal interest and activities.
It's typically said to invest what you can let sit for 10 years because that reduces risk through the assumption that downfalls will recover and gain long term. Stock market, including ETFs, do have a risk attached. A broad financial crisis can crash the stock market in broad ways. And we may be right before a crash. It remains to be seen how other markets, the US market in particular, will influence the EU stock market and economy. The EZB has already warned publicly about the situation (AI company overvaluation IIRC).
You will have to decide how much trust you want to put into the long term / 10 year market always rises / neutralizes inflation. When you look at the past, it's generally true, at least.
You can also question the stability of all monetary systems we depend on, which is even more frightening, tbh.
ETFs track multiple stocks, and consequently spread risk. The broader the spread, the less risk, supposedly, and the less chance of outlier gains.
You can play around with stock, maybe companies you want to support, but if your goal is investment and gain, and you want to go stock market, your best bet is broad ETFs. If you go for fractions of shares, that's fine in general. Just beware that neobanking can mean the bank you interact with is not the one holding the money. It's other banks. The US recently had a case where people did not get their money back after their bank defaulted, not sure about the specifics, and I certainly hope it'd be better in EU either way.
Of course, broad ETFs include companies you may not like, given what you wrote.
Buying government debt is an alternative. You should use stable enough countries, though.
The current interest given by the EZB is also quite good and can neutralize inflation, if you want to go that route instead. Unfortunately, most banks don't pass them on for held money. Trade Republic does.
Fixed time and interest is not worth it currently, given the high general interest rate if make use of it.