I’m sure you’ve asked yourself at least once in your life: how do I earn money by investing, without knowing much about finance? Is that even possible?
Well, the good news is that yes, there’s a way to earn money investing your savings, and yes, you do not need to be a financial expert, neither start investing a huge capital on day 1. You don’t even need to go to a bank, and ask for a financial advisor, who inevitably would sell you whatever financial product that will let him earn some commissions.
So basically you can start earning even if:
- you don’t have big capital to invest on day 1
- you don’t understand much about finance or investments
- you don’t have much free time to follow your investments
- you don’t want or you can’t go to a bank to agree on your investments
- you don’t own any expensive trading account with your bank.
Why should you start investing today?
Unfortunately I have to tell you: the good old times of “working hard to save money and then retire” are way over. Nowadays Central Banks can print as much money as they want, generating a huge inflation which will make your savings worth less and less over time.
You should rather invest your savings, and beat at least the inflation every single year: if the inflation over a year is at 3%, you need a ROI >3% to be able to say the investment made sense.
Another valid reason to start investing today, is the magic of compound interest. Albert Einstein called it the 8th wonder of the world: “He who understands it, earns it…he who doesn’t…pays it”. Warren Buffett on compound interest: “My wealth has come from a combination of living in America, some lucky genes, and compound interest”.
If you’re able to beat the inflation every year, your capital will constantly grow, as well as the nominal amount behind a certain ROI: if you earn 10% during your first year on 10.000 euro, you earn 1.000 euro. Following year, you will earn another 10%, but this time on 11.000 euro, so 1.100 euro. Now imagine different starting amount and different ROI, and you’ll soon understand how many investors got rich.
But I understand that investing is not for all: you probably prefer to spend all of your savings in cars, smartphones and holidays. Then one day you may lose your job, and have nothing invested, nothing to live from, no cashflow. If you like this approach, good luck! You can stop reading here an go buy the latest Iphone, which by the way you don’t even need. Instead, if you want to change your life forever, keep reading.
Step 1: how do I start?
I have a very good news for you: you can open your free demo account today with eToro, one of the best brokers in the world, and start copying some professional traders with your $100.000 in the free account. You can access the so called eToro Copy Trader, and automatically copy all transactions. I recommend you to spend some weeks or months copying traders with your “fake” money in the demo account, so you won’t have to risk real money without having perfectly understood the logic.
First step: open your account for free
Now that you have your account, you can login and click on “Copy people”, as shown in the picture below.
You’ll now see several traders, divided into different categories: Editor’s choice, most copied, trending, top investors, lower risk score, medium risk score.
You can also filter at the top: for example you’re interested in investors from Germany, that invest in all markets, and gained at least 20% in the last 2 years. Here you go:
This is what you’d see on August 14th 2020:
Which trader would I pick from this list? The best is to choose one with risk max 4. A trader investing more in cryptocurrencies would have a higher risk value, for example from 5 to 7. Of course it also depends on what returns you’re aiming at, but as you can see, there are several traders who earned money in the last 2 years, without risking too much (risk max 4).
Step 2: invest your first real money
Now that you’ve simulated investments with your demo account, tried to copy different traders, it’s time to invest for real: my suggestion is to start with at least 500$. Of course if you can and want, you can start with much more, but 500$ is the minimum recommended amount for Copy Trading. You can start with less though…
Step 3: keep investing
At this point, you’ve most probably understood how the Copy Trader works, you’ve probably earned a nice 5-10% on the initial investment, and it’s time to invest seriously: my recommendation would be to invest 5%, or up to 20% of your monthly income into Copy Trading. Remember: your goal is to grow the capital and the ROI every year, and take advantage of the magic of compound interest.
I wish you good luck! Please keep me updated on your Trading experience.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.