The Finance Sisters approach to investing is a "Do it Yourself" approach. This means educating yourself, developing your own strategy, researching Index Funds to buy and then buying them on a trading platform. Of course all of this is also based on the self-knowledge of your risk profile, which dictates your strategy.
When you sign up for an online trading account (we use DeGiro from Switzerland), you need to answer a set of questions. This is to ensure that you have a basic level of knowledge and also to highlight and ensure that you are aware of the risks associated with investing in the stock market.
We recently completed this test again, and although we did not have time to write down all the answers, here is the list of questions for you to contemplate and research if you do not know the answers.
Note that off the top of my head I would not be able to answer all these questions myself. Certainly having the answers presented as multiple choice makes things easier. I remind myself that my strategy is very simple and I am only buying traditional broad-based ETFs. I am not interested in bonds or in a money market fund either, so I do not know a lot about them.
We hope you find this an interesting starting point for you, as one of the biggest barriers to starting to invest is the fear of not having enough knowledge. This comes out quite clearly during every session that we hold.
1. What do you hold when you hold a stock?
2. An an owner of shares, what can you profit from in addition to dividends?
3. What is the risk of investing in shares?
4. Where are shares traded?
5. What can impact the price of a share?
6. What do you hold when you hold a bond?
7. What can you profit from with bonds apart from "coupons"?
8. What is the risk of buying bonds?
9. What is the difference between a share and a bond?
10. What can influence the price of a bond?
11. Why do bonds have a credit rating?
12. What is an ETF?
13. What is the main benefit of an ETF?
14. What are the characteristics of an investment fund?
15. What's the difference between ETF and investment funds?
16. What is a money market fund?
Which questions do you need to research more?
Financial terms alert.... we use some terms here that you may not be familiar with. Please look them up on places like Investopedia if you don't understand them. As we are just starting out with the blog we cannot cover them here now but we will strive to do so in the future.