How to Start Investing in Europe with Just €100: Step-by-Step Guide

I learned investing on Wall Street 17 years ago I co-founded a European Investment Company which today has

140,000 clients my personal Investment Portfolio is over a million euros and here's how I would start investing if I

had to start over again with just €100 so you've got some money sitting in your bank account and you would like to start

investing maybe you've read that if you invested €5,000 in Nvidia 10 years ago today that would be worth 1 A5 million

or you've heard about ETFs the passive investment which allows beginning investors to beat season experts while

spending just a few hours per year but you've probably got many questions what are the best investments to choose which

platform or Investment app can you trust and do you have to pay taxes on your Investments when you Google how to start

investing all you find is advice for Americans or sketchy videos about getting rich quick if that sounds

familiar then you're in the right place I've put together a simple practical step-by-step guide to new investors

living in Europe we're going to cover how to choose the best investments how to make investing automatic so it takes

just a few hours per year and I'll even do a live demonstration of how I invest my own money and to start let me show

you how to select reliable Investments so you can avoid dangerous gambles that could cost you money when you're just

starting out it's kind of confusing because everybody gives you different advice your aunt says buy real estate

maybe your cousin says buy Bitcoin someone else says look at peer-to-peer platforms or stocks or bonds or options

or Forex or day trading so what is a reasonable investment that's going to make you money and what is just a

dangerous bet I actually had the same exact problem so I grew up in Eastern Europe my parents were teachers we had

no money nobody knew anything about investing then I moved to America I got a job on Wall Street I got my first

bonus $10,000 and I wanted to start investing but my degree was in physics I got hired because I could do math I

didn't know anything about stocks and bonds and all the stuff but I had one unfair Advantage I was surrounded by

successful millionaire investors and one of them my mentor he asked me Tom if you're going to fly in an airplane do

you want the airplane to have one engine or two engines I said well obviously I want two engines if one breaks I'm not

going to crash right and he said the same exact thing holds true when you're choosing Investments there are a lot of

Investments out there which have only one profit engine you buy it and you hope for the price to go up if it does

everything is wonderful but if it goes down well you're screwed that's the only way you can make money this kind of

invest is called speculation because you're just guessing about what the price is going to do instead of that

what you want is a twin engine investment so one profit engine is the price going up and the second profit

engine is cash flow from the investment okay the best investments give you cash they give you income they create wealth

if the price goes up you're happy but if it goes down that's fine as well because you still have some money coming in it's

a simple analogy but when you look at the data it actually separates out the best investments so you have a lot of

popular single engine Investments like gold or silver or currencies or whatever where if the price goes up you make

money if it goes down you lose and what the data shows you is that most of these Investments are poor bets over the long

run for example gold has had a fantastic 20 years okay but before that it had a terrible 20 years and long term the

price of gold has barely beaten inflation by contrast if you look at the two most profitable invest ments over

the past centuries they are both twin engine Investments and these two Investments are real estate and Stock

Investing in the case of real estate you buy an apartment you rent it out you can make a profit if the price goes up and

you also have rental income in the case of Stock Investing you buy part of a company if the price of the stock goes

up it's fantastic but you also get dividends you get part of the profit that the company makes so as a beginning

investor I would first look at real estate or stocks but these two Investments are not created equal and

there is one issue which can really screw up your lifestyle if you don't think about it ahead of time so growing

up I had a cousin whose family owned some real estate they had this big apartment building and I just loved

going on sleepovers because I mean it was a huge building we could explore it it was fun but every single time that I

visited I heard my cousin's mom complaining how like somebody's toilet broke a window was broken the roof

needed to be replaced some tenant got drunk and trash the apartment somebody else refused to pay and they had to go

to court I quickly realized that real estate is not passive income it's a lot of work it's a lot of stress for most

people I mean you're probably busy at your job maybe you have kids you don't have time for managing real estate you

want a passive investment so is Stock Investing the answer well kind of but it's not that simple now of course if

you buy some Tesla stock then Elon Musk is not going to call you up in the middle of the night and say look we had

a pipe burst at a factory come and fix it it is passive in that sense okay a company is managed by management it's

got employees nobody's going to ask you to do any work but the real challenge is picking the right stocks to buy because

sure the stock market as a whole has been incredibly powerful it has created trillions and trillions and trillions of

wealth for investors but something that most people don't realize is that stock market profits are actually concentrated

in just a few winning stocks there was an interesting piece of research from Arizona State University it said that

over the past 90 years there were something like 26,000 different stocks in the US market out of those 26,000

stocks just 83 stocks gave you half the profit so talk about finding an needle in a hay stack it is extremely difficult

to find the winning stocks for example let's take a look at this so here's a list of the S&P 500 components so the

S&P 500 right it's it's a list of the 500 biggest companies in America and and you probably know the biggest names like

apple Microsoft Nvidia Amazon but there's a problem with just buying these big successful stocks and the problem is

everybody knows about them right so there's a big chance that you are late to the party the stocks are already

expensive to be really successful at Stock Investing you would have to go far down this list and guess which companies

will succeed in the future and here we have hundreds of different stocks like do you know what Raymond James Financial

does for example or Cardinal Health or ancis Inc or lenar Corporation probably not okay so what do you do I mean if if

you're a busy professional you don't have any background in finance you want to invest in stocks like what's the

solution I mean 50 years ago there was no solution if you wanted to have success in investing you had to be a

professional or you had to pay really huge fees to Bankers who knew what they were doing right but um as of 50 years

ago there is actually a solution which makes Stock Investing really easy for regular people Warren Buffett actually

said if you follow this strategy a no nothing investor can outper for most investment professionals it's been

recommended by Nobel Prize winners like Paul Samuelson and Eugene farm and I discovered it in a book and the book was

written by the innovator of this strategy by John C Bogle it's called the little book of Common Sense investing 17

years ago this book had just come out and I was super excited to read it because in it I discovered the index

fund okay so Jack bogle's Insight was that instead of trying to find the needle in the Hast stack you could just

buy the whole haste that instead of trying to find the best stocks out of the thousands in the market which is

extremely difficult you can just buy a little bit of every stock in the market now when you first hear it it it seems

kind of crazy like like there's thousands of professional investors who spend all their lives going to the

office and reading Financial reports and looking for the best stocks to buy and then Jack Bogle says well forget all

that just buy all the stocks but actually when you think about it when you look at the data it's incredibly

smart so let's go back to the S&P 500 all right so we've got 500 different stocks to choose from if you look at the

track record of professionals they suck at it okay there's a famous piece of research called the spiva from standard

and pors so let's open it up and look at the data so what it says here is that over the past 10 years

85% of professionally managed investment funds underperformed the S&P 500 okay so there's a whole bunch of professionals

out there who were going through this list looking for the best stocks to buy they made their choices and over 10

years they got worse results than if somebody just bought all the stocks on the list and this is not an exception

over the past 10 years I mean it's been true every single decade since index funds were created now the most popular

kind of index fund that's available in Europe it's called an ETF an exchange traded fund I'm not going to get into

the technical details I have other videos about that but the difference between an ETF and an index fund is

basically like iPhone and Android okay you have a different user experience but the profits the results they're

basically the same so for this video ETFs and index funds is the same thing so when you buy an index fund you

actually outperform the vast majority of professional investors who sell their services which leads us naturally to the

next question how much money am I going to make because I mean presumably if you are going to beat most professional

investors it will be a nice result right well when you look at Global index funds so these are index funds investing in

stocks all over the world the long-term average has been like 9% per year and with new investors I get two reactions

some people think that's a lot other people think it's too little myself 17 years ago I had $110,000 saved so 9% of

that that was $900 and I thought like is it really worth investing if 9% is all I get I actually asked this of a senior

Banker that I knew at UBS where I worked and Well normally I don't tell people this but he said Tom you're an idiot

didn't you study math in school didn't learn about what Einstein called The Eighth Wonder of the world compound

interest so if you invest $10,000 and you get 9% per year in a year you will have 10,900 doesn't seem like a lot but

then you're going to make a profit of 9% based on 10,900 so your profit for the next year is going to be bigger and you

will end up with $1,881 and every year the profit is going to get bigger and bigger and in

the beginning it accelerates slowly and then it really speeds up that's compounding interest 20 years down the

line suddenly you have $56,000 in your account so to me it was hugely helpful to understand the power of compound

interest early on and I warmly recommend use compound interest to your advantage start investing as early as possible and

give it time so that it can grow your wealth but there is one big problem with all this that we've been ignoring one

big elephant in the room and of course it's risk now fortunately index funds and ETFs protect us to some extent

because any ETF will buy hundreds of different stocks now some companies can always go bankrupt but the market as a

whole will never go bankrupt but we all know that the market goes down sometimes there was the big do crash in the early

2000s there was the big financial crisis when the stock market fell by 50% there was the big covid crash in 2020 from

time to time the market just collapses and if you've got your money invested in a stock ETF at that moment you will see

losses in your account well I don't have a crystal ball I can't predict exactly what's going to happen in the market in

the next few months or years but I can share something I learned from a really really painful mistake in my own

investment career back in 2007 I had a new job on Wall Street and I was super excited to start investing but that's

exactly when the big financial crisis started every other week there was a new article in the Press about how my bank

UBS was going to fire 2,000 or 3,000 or 5,000 people so I thought I'm going to lose my job and then the market was just

crashing and crashing and crashing so I was kind of proud that I had not started investing I felt smart about it but uh

one day I was talking to a really experienced investor at UBS who kind of cut me down to size so he told me listen

man I've been in the market for 30 years I've seen seven of these crises and every time a lot of people get scared

they say I'm not going to invest okay and they wait for the market to recover and then the market recovers it goes

back up but people are still scared they keep waiting and the market keeps going up and they keep waiting and then

eventually they see everybody else making a ton of money so they say I'm going to jump in now but by that point

it's time for the next Crisis and they don't make any real money so that was really wise advice it made a lot of

sense so of course I listened to this experienced investor and I started investing right well no that's the

biggest mistake I ever made I was too scared I did not invest dur during the financial crisis it was an opportunity

to buy stocks when they were really cheap and I missed it but I learned from that and ever since then I've never

tried to time the market again there's a reason that Nobel Prize winner Robert C meron says Market timing is a Fool's

errand people who keep waiting for the perfect moment to invest they often wait forever because it never feels like a

perfect moment it always feels risky whereas if you simply start investing and you keep investing you will almost

certainly do great okay so hopefully now you're excited about investing in stocks using index funds right but uh how do

you actually do it where do you find these funds if you live in Europe the problem is that the big popular ETFs

that everybody recommends online like spy or vo or QQQ well those are American ETFs and you actually can't buy them

here in Europe so instead of that what you need to buy is ETFs which are based here in Europe and to find those ETFs

you want to go to a website called just etf.com okay I actually have a full guide to just etf.com in my channel so

hit subscribe watch some other videos uh here let me just show you quickly so this is a database with thousands of

different index funds thousands of different ETFs that you can buy here in Europe when you click on Equity here

that gives you stock funds okay so ETFs which invest in stocks and um just to do a quick demonstration I'm going to find

the biggest Fund in Europe so I'm going to click on fund size and that's the I shares core S&P 500 us its ETF USD

accumulating now don't get scared by the complicated name it's just an ETF so a type of index fund that buys every

single stock in the S&P 500 so this Fund invests in the American Market it's the European equivalent to spy or vo of

course choosing the best ETF for your goals for your situation for the tax rules in your country it can get a

little bit tricky this is something I talk a lot about in my videos but right now I'm just going to do a demonstration

so this is not a recommendation for you it's just a demonstration of how this works we're going to buy this I share

score S&P 500 ETF okay so I'm going to copy the name and I'm going to go to a brokerage website now I'm an investment

trainer I've got like 13 different brokerage accounts this is not my main account this is trading 212 I use it for

demonstrations because it's really simple so it's easy for beginners to understand what's a brokerage well I

mean basically it's like a supermarket for Investments now of course you want it to be a licensed Supermarket so that

your money is safe but that's the basic idea there are many different brokerages many different supermarkets out there

now every brokerage has a different user interface so for example trading 212 when you log in it shows you top winners

like stocks that are going up top losers stocks that are going down uh the most traded stocks you can ignore that if

you're buying ETFs and just go to the search bar so let me paste in the name of the ETF we're looking for okay and we

get a few hits and this actually shows you why investing from Europe can be a little bit tricky and and sometimes you

need to learn a little bit because I can buy different versions of the fund like the accumulating and distributing

version I can buy it in different currencies on different stock exchanges for this demonstration let me just use

this one the German Stock Exchange zitra um so let's click on this and let's click buy now you might be a little

concerned this says that the price of the ETF is € 611 and I said that I'm going to show

you how to start from €100 well the good news is that many brokerages these days allow you to buy what are called

fractional shares so I don't have to buy a full share I can just buy part of it so I'm going to Simply put in €100 here

and I'm going to hit review order and basically I'm buying around .16 shares of this ETF for a total value of €100 in

this case there is no fee that I'm paying okay everything looks good I click Send by order it says order place

and instantly it says I bought. 16 3558 shares at € 611 per share right and it's that simple

so think for a moment what just happened in just a few moments with a few clicks I invested my money in hundreds of the

biggest companies in the world 50 years ago the richest person in the world couldn't do this and today anybody can

so if you came into this video knowing nothing about investing you are now ahead of 90% of amateur investors

because you know the most important principles just start investing invest in stocks using inex funds and ETFs and

just keep buying every month the only real challenge is how do you get started because here in Europe every country has

different tax rules different Investments different regulations so picking the best ETF or index fund and

choosing a brokerage that you can trust and dealing with taxes it can be a little bit tricky so how do you solve

this well I've got an in-depth video on this topic that's in the comments