#2 - Create an investment account
Updated: May 4, 2022
Last week we looked at the Russia-Ukraine situation and then how you invest in a broad index fund or ETF, in these times.
Let's continue a bit down that road. Dupti dub.
I would also like to say, that I'm very moved by the whole situation in Europe at the moment. I will stay on the financial side, but I hope you and your loved ones are all safe <3.
#2 - THIS WEEK'S TOPICS
Russia-Ukraine-NATO market situation
Actionable investment basics
How to create an investment account
What a diverse portfolio could look like
Let's go press that juice! 💸
Or RUN. That might be the word. At least that's what happening in the markets at the moment.
People are scared of the current situation, so they are running out of the markets (selling). That's why it's going down so much at the moment.
This is understandable. We have a Russian economy that is now down the drain, and almost all Russian international money is frozen.
Europe is also heavily dependent on Russia in terms of oil, gas, metals and so on. Not a good situation.
One of the leading stock indexes in Europe, the DAX (Germany's top 30 companies put together in 1 index) lost 17% in the last 6 months:
This is tough and especially in the last few days it dropped a lot when the war became more serious, and Germany announced that they would be upping their military expense.
If you want to check the temperature of the European stock market in general, the DAX index is one of the better indicators.
At the same time commodities (raw materials or agriculture products, like iron and wheat) rose a lot, especially the last week. This happened almost opposite to the DAX index.
I've compared them here: (Commodities in blue and DAX in yellow).
For newcomers to the investment markets, it's time to think about getting slowly into it.
When the markets are down, it's an opportunity as I've said before. Start slow, and buy more if they go further down.
For the ones that already started, it's time to create a diversified portfolio.
I will address both of these things below.
For newcomers: Investment account Creation!
Wherever you are, always check out the options closest to you. We have readers from all over the world, so I can't cover everyone.
I'm Danish, so I will shortly cover SaxoInvestor (international link), which is also an international option.
Go to their website and click "Open Account" (danish link)
Enter your details or choose "NemID" if you're in Denmark.
Go through the process...
Then wait 1 day for Saxo to do their thing.
Now you're SET UP.
Do this today. It's a safe process, it's free, and you will be awesome.
Then the next thing to do is to go to SaxoInvestor, where you now have a profile, log in, and then in the top right corner (Desktop) you click on the little man and choose "Deposits and Transfers". On the phone, you click "More" instead of the little man.
Here you choose "Bank transfer" and follow the process to transfer money.
You can start with just a little bit. Like €150.
It's really that simple.
Now you have an investment account with money on. YAAY.
If you're outside of Denmark, I would go check out InteractiveBrokers.
Here you also click "Open account" and go through the steps. Then transfer money to that too.
"I want to invest asap, Martin!"
Alright. In that case I would suggest that you start with a large ETF. We talked about this in the last newsletter. Check this link if you need further explanation.
Find an index, like the one I covered in this LinkedIN post.
Already started: A diverse portfolio
There are many ways to do this! It all depends on your temper, style, interest and so on. Not two investors have the same portfolio.
I've updated my portfolio the last days, and changed it up a little bit.
What I'm looking for, is to do something called hedging. This means that I'm looking for investment positions that are going against what is happening, to protect myself in this unusual situation.
Like we saw with the commodities in the top.
I'm not completely changing. Just tweaking a bit.
This means adjusting my portfolio, by moving money around. Not 50% of the entire portfolio, but more like 10%.
I've done these 4 things:
Put more money into my Commodity ETF
Bought this gold ETF
Sold a small percentage of my European bank stocks
Used that money to buy this World ETF
I'm doing this because the market is getting more volatile (uncertain, risky).
How do I know?
By checking the VIX index.
The higher the VIX number, the more uncertain. This is a good common indicator to check the volatility of the markets. You can also just see what's happening of course, or read the news.
Historically, a good hedge against volatile markets is gold.
Commodities have also proved to be a hedge now because we are in scarcity and Russia is a big player, who is now out. This applies pressure and the prices go up.
I sold some of my bank stocks because of the fuss around banks at the moment in Europe, with Russia being banned from SWIFT (the international trading system for banks).
So now I feel safe in a large world ETF, which follows the US market more.
Again, these are small changes.
So think about your next moves
Be careful to over-extend into one single stock. It's too risky. A lot of people are loosing a lot of money now. Diversify and don't panic.
And always remember:
You don't NEED to buy stocks. ETFs is a viable option too.
OKAY. I could go on, and on... but you have a life outside of this.
I hope today's topics were helpful :)
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