Topic

Investing

Compound interest, long-term saving and first steps in investing without taking on more risk than you need.

Articles

Investing: what to know before you start

Investing is a way to make money work over the long term when deposits are no longer enough to stay ahead of inflation. An investor's main ally is not picking the “right” stock but time and compound interest: income that is reinvested and earns income in turn.

depositsinterest10 years: UAH 204,845deposited 120,000 · interest 84,84520 years: UAH 759,369deposited 240,000 · interest 519,36930 years: UAH 2,260,488deposited 360,000 · interest 1,900,488
Regular deposits of UAH 1,000 a month at 10% a year, compounded monthly. The longer the term, the larger the share of the result that comes from interest. WM² calculation.

Before your first investment

  • Build an emergency fund so you never have to sell investments at the worst moment.
  • Pay off expensive loans: their rate is usually higher than the return you can expect.
  • Invest only money you won't need for the next 5 years or more.
  • Don't trust promises of guaranteed high income: that is a sign of fraud, not investment.

How compound interest works and why time matters more than amount is explained in “Compound interest”, and you can run your own numbers in the calculator.

FAQ

How much money do I need to start investing?

You can start with small regular contributions. Regularity and time matter more than the starting amount: UAH 1,000 a month at 10% a year turns into UAH 759,369 over 20 years, of which UAH 519,369 is interest.

When should I start investing?

Once you have an emergency fund and no expensive debt. Investing is for money you won't need for 5 years or more, because over short periods the value can fall.

Can I invest without risk?

No. Any return above a deposit means risk. Diversification, a long horizon and ignoring promises of guaranteed high income help reduce it.