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Sophie and Marc are delighted to announce the birth of their daughter Lily! While the couple is on cloud nine, they already have quite a few questions about...
Marc spends twice as much time on his smartphone ever since he started investing. With all the videos, blog articles and websites specifically dealing with investment, he has been learning non‑stop and can even be said to have found a new calling. Indeed, he can thank his childhood friends for that!
You see, Marc celebrated another birthday last month, and since he couldn’t invite his friends over to his place to share a meal, he had his favourite restaurant deliver meals straight to their homes and invited them to join a group call on Messenger at 7.00 p.m. sharp. Just because we have to practice social distancing, it doesn’t mean we can’t see each other - virtually speaking of course!
As they enjoyed a few drinks before dinner, Marc and his former schoolmates talked extensively about the last year.
It had been over a year since they could only catch up with each other occasionally by phone, but for this virtual birthday party they were able to spend three solid hours online enjoying the meals Marc had arranged to be delivered and just shooting the breeze. They talked about everything: new girlfriends, plans and achievements...the evening did them all a world of good.
Marc was amazed by his friends, who had literally just started investing, and more importantly investing eco-responsibly!
The first of Marc’s friends is a chiropractor, the second an interior designer and the third an advertising sales rep. What really surprised Marc was that his friends, who shared vastly different opinions at the time, all seemed to agree when it came to their responsibility to the environment.
They talked about everything and nothing all at once, so he couldn’t remember exactly how the subject was brought up, but eventually they ended up talking extensively about investments.
The four lifelong friends, each of whom had taken different paths in life, earning different levels of income and with very different personal lives, had long held preconceptions about the types of people who could afford to invest. For the longest time, they thought investing was just not made for people like them. Why like them? Because up to that point, they thought investing was only for people who: had a six-figure bank account, were highly skilled in finance (or perhaps even worked in the industry), or ran companies doing very good business. Fortunately, the most knowledgeable of the four friends took the opportunity to give a quick improvised masterclass, worthy of a webinar!
There were four key take-aways for Marc:
Marc learned that the amount he invested had to stay in a securities account for several years in order to gain value. The idea is not to simply buy and sell stocks one right after the other. Marc is not an investment expert, nor a fortune teller when it comes to the future of the stock market; he keeps his feet firmly planted on the ground because he knows that the past performances of a given investment product are not a reliable indicator of future returns.
Marc has EUR 25.000 in his savings account, which he managed to save from childhood up to now. He plans to leave part of the money in his savings account and invest the rest.
EUR 10.000 will stay safely tucked away in his savings account and EUR 15.000 will be invested.
Because Marc is worried about the future of the planet and does not want his daughter Lily, or any other children for that matter, to have to struggle with exceedingly heavy environmental impacts in the near future (global warming, deforestation, pollution, resource depletion...), he would rather go the responsible route.
He currently leads a relatively environmentally-friendly life, but he firmly believes he could always do better. Accordingly, he has decided to invest in green investment products, i.e. products serving to fund responsible projects as opposed to projects with no environmental objectives.
Mindful of how low (or non-existent) inflation and interest rates currently are, Marc knows full well that his EUR 10.000 will dwindle down to EUR 7.000 over the next 18 years. Marc did the math on Inflationsrechner using an inflation rate of 1,5%.
To be clear, the EUR 3.000 difference will not simply vanish from his account. He will still have EUR 10.000 in his savings account years from now, it’s just that things will grow more and more expensive over time. To put it in another way: he could buy a car today with his EUR 10.000, but in 18 years, he would probably have to pay EUR 13.000 to buy the same type of car. That’s the whole problem with inflation, if Marc doesn’t try to increase the value of his money!
Rather than putting all your money into the same fund, or buying shares from just one company, investors are advised to diversify. That means investing some of your money in shares, some in funds, and taking it one step further by choosing a variety of sectors.
In Marc’s case, he would rather stick with green investments. His plan is to buy stocks in companies that develop products and services in accordance with CSR criteria, while also investing in eco funds, such as LUX-EQUITY and LUX-BOND Green.
All in all, Marc will have a 100% green, diversified investment portfolio.
Marc contacted his Personal Banker to create his portfolio, who explained to Marc that, once his securities account had been created, he would be able to use the search feature in S-Net to buy the stocks he wants.
Now that he understands the basics of investing, opened his securities account and bought the stocks he wanted, Marc can keep track of his investments using S-Net Mobile.
It was not the usual birthday for Marc, but he enjoyed it nonetheless. It even occurred to him that he and his friends should do this more often, since they really took the time to talk and share what was going on in their lives. He also ended up learning a lot, and will share all the details with Sophie. After all, if you can explain something you’ve learned to another person, isn’t that the best way to test your own knowledge?
So his next task will be to explain to Sophie how she too can invest part of her savings.
This article is provided for information purposes only and has no contractual value. The content of this article shall not, under any circumstances, constitute or be equated to an investment recommendation, within the meaning provided under the regulations on market abuse, investment advice or an offer of purchase or sale. Said article may not, under any circumstances, be used or construed as a commitment from Spuerkeess.
Readers must form their own opinion about the information contained in this article and, to help them do so, they are free to contact their usual advisers if they have any investment-related questions.