Getting Started


What is Investing?

A little bit of history

So, you want to get started with investing. Because a lot of people around you are talking about it, because you think it wise to save for later (spoiler – it is), or because you simply want to play the biggest game in the world. Whatever your reasons may be, you’ve come to the right place. But… What is investing? And how do you start doing it? Hopefully, at the end of this guide (which should take you about 50 minutes to follow from start to end) you’ll be able to answer those questions yourself. While I do sometimes provide links to additional resources, they are not required for following along – they are simply there for your reference in case you want to learn more. 

Since this is a getting started guide, let’s begin at the beginning with a little bit of history. Imagine you lived in the 15th century Italy and wanted to start a pizzeria. Back in these days, you were in a bad spot if you wanted to get financing for your new business. People generally believed that times past had been better than their own times and that the future would be worse, or at best much the same. To put that in economic terms, they believed that the total amount of wealth was limited, if not dwindling. Economies were believed to be zero-sum games. Of course, the profits of one pizzeria might rise, but only at the expense of the pizzeria next door. The king of the Netherlands might enrich himself, but only by robbing the king of Belgium. You could cut the pie in many different ways, but it never got any bigger.

If the future will not be better, and the global pie stays the same size, lenders have no incentive to extend credit to borrowers (in this case ‘credit’ is a simple loan from person to person – I am deliberately using financial terms to get you acquainted with them). You can see credit as the difference between today’s pie and tomorrow’s pie. If the global pie stays the same size, why would you extend credit to someone? Therefore, it was hard to get a loan in the pre-modern world, and when you got one it was usually small, short-term, and subject to high interest rates. Moreover, you were personally liable for any loan you took – so if your business failed miserably, you yourself would be in big debt.

Then came the scientific revolution and the idea of progress. People started to believe the future. They started believing in the notions of capitalism of economic growth. For instance, one could open a new pizzeria specializing in quattro Stagioni pizzas without pizzerias specializing in Margherita pizzas to go bust. Everybody would simply develop new tastes and eat more. I can become wealthy without you becoming poor. The entire global pie can grow. This caused people to loan out money easier.

Then, in 1602, the Dutch came up with an exciting idea. To finance their overseas conquests of Asia, the Dutch East-India Company started selling shares in their businesses. These shares would represent a small piece of ownership in their company.

But what does this mean exactly? If you buy a share, you basically own a very small piece of that business. This also means that you are entitled to a small portion of the profit that the business makes. In modern days, this portion of profit is paid periodically, and we call it dividend.

More and more companies started to follow the lead of the Dutch East India company. Shares that you bought in a company could be freely bought from and sold to other people. As computers didn’t exist yet, centralized places to trade stock of companies emerged – called stock markets. If companies did well, their profit would increase and therefore the dividend on a share would increase as well, in turn making the share worth more. If companies did poorly, their profits would decrease and dividends would decrease too, making shares worth less. Not surprisingly, people made a sport out of picking the right shares (the ones that rise in price), only to sell them for a profit later. The art of investing was born! Fast-forward 420 years and the same principles still apply today!

Needless to say, stock markets have evolved a lot over time. Much more exotic investment products now exist too. However, since this is a getting started guide, I will not touch upon them. The important take away here is that, even though the world of investing is surrounded by complex jargon and economic terminology, it is this principle of rising/falling share prices that is still the beating heart of capitalism to this day.

Now you know the basics of investing, let us briefly touch upon some other important categories of financial assets (also called securities). The goal here is not to explain them in full detail – I provide these definitions so you at least should have some general idea what people are talking about when they use these terms. 

What are the most important asset categories?
  • Bonds. A bond represents a loan made by an investor to a borrower. In bonds, an issuer (debtor) owes the holder (creditor) a debt and is obliged – depending on the terms – to repay the principal (the amount borrowed) of the bond at the maturity date as well as interest. Interest is usually payable at fixed intervals (for example annually). Typically, borrowers that issue bonds are big corporates or governments
  • Currencies. Just like one can hold stocks as investments, one can also hold foreign currency. For example, imagine that you live in the Netherlands but believe the dollar will do well compared to the euro. You can buy dollars with your euro’s now, stash them for a while, and trade them back to euro’s later (for more euro’s than you initially paid). In finance, the foreign currency exchange market is often referred to as forex.
  • Commodities. A commodity is a certain raw material or primary product. Typically, we distinguish between hard and soft commodities. Hard commodities include natural resources that must be mined or extracted – such as golf, rubber, and oil, whereas soft commodities are agricultural products such as corn, coffee beans and sugar. Instead of trading these goods physically, commodities are typically traded through future contracts
  • Real estate. Just like the abovementioned categories, real estate can also be seen as a financial asset. One can buy a house as an investment – to rent out and gain “interest” (which in this case is the rent a renter pays). Also, if house prices rise, you can sell the house you invested in for a profit. One can also invest in real estate without buying a the actual property, through Real Estate Investment Trusts (REITs)


What kind of investing strategies exist?

Now we’ve treated basic security classes, let’s talk a bit more about investing. As said, it’s all about picking the right securities (i.e., the ones that rise in price). But how does one do this? Since no one is able to know for sure what is going to happen in the future, picking the right stocks can be a difficult endeavor. Most people don’t sit around all day, to watch markets go up and down. Nor do they spend their time researching intimate details of public companies. To this end, mutual funds were born. A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. So, instead of investing yourself, you simply pool your money with thousands of other investors – and hire some specialized people to invest for you. This is typically what happens when you invest with your own bank, or funds like ROBECO and Peaks. However, as you can imagine, those specialized people come at a cost. They are typically very well-paid investment professionals – and the deduction of their salary from the profits of the investment fund reduces your profits. Moreover, there are indications that even the investment professional does not easily beat the average market returns.

Therefore, there are also those who choose to ride the average market return instead of trying to beat it. Instead of picking winners, they simply try to hold all the stocks in a given market – and expect the average market to go up over time (because of economic growth; the pie getting bigger). But how does one “ride” the market? You cannot simply buy every share that exists in a given stock market, right? This is where Exchange Traded Funds (ETFs) come into play. Let’s explain this term a bit further. Similar to mutual funds, an ETF is an investment fund (the F in ETF), for which shares can be bought and sold (traded) on stock exchanges (Exchange Traded, so ET in ETF). But how does this help with riding the market? Typically, stock markets around the world have their own respective stock market index, which can be thought of as some kind of ‘average score’ of all the stocks in that market. For the Netherlands, this index is called the AEX. For the United States, you have the S&P500 and the Dow Jones, and the NASDAQ for tech companies. And In Japan, this index is named the Nikkei225. ETFs typically replicate a stock market index, by investing in the respective companies in an index in the right ratio (read more about replication here). 

Buying a share in an ETF works very similar to a share in a regular company. However, instead of investing in one single company, you now invest in an entire market index, and hence you are diversified over a lot of companies at once. And therefore, buying ETFs is how you “ride” the market. Riding the market is more formally called passive investing, and it is what I do. The beauty of passive investing to me is that it is very cheap, easy to do, and you don’t have to watch markets closely all day long. It is investing for lazy people, and I like it! You can read all about the difference between active investing (picking winners – what mutual funds often do) and passive investing (riding the market – what I and tons of other people do) in this blog post. 

There we go! You now know the basics of the stock market and investing and are ready to buy your first share. That wasn’t too bad, right?

Buying your first share

Selecting a broker

Now you know the basics of the investing world, it is time to get our hands dirty. Let’s buy our first share! Since it is impossible to buy shares of stock directly from stock exchanges (at least for you and me), you will need a broker. A broker is an intermediary  between you and the actual stock exchanges that takes care of fulfilling your buy and sell orders. The broker I personally use is DeGiro. The steps shown here will use this specific broker. However, other brokers should have similar steps. Take care though! Carefully select which broker you will use. Brokers like Robinhood, BuxZero and Plus500 typically advertise with zero transaction costs whereas in DeGiro, you do in fact incur some transaction fees. So why would one use DeGiro then? Always remember that nothing in life is truly free. I’m not saying you shouldn’t use brokers like BUX . However, there are important differences between brokers like DeGiro, where you buy actual shares, and BUX, where you buy contracts for difference (CFD’s). Since this is a getting started guide, I won’t go into detail here. However, If you’re interested, wrote a blog post about the difference between brokers and their respective advantages and disadvantages. 

With that out of the way, let’s dive into creating our broker account. The first step is to go to and click ‘open account’.

Creating a  DeGiro account 

Follow the account creation wizard and confirm your e-mail address. You are then asked to log in to complete the registration process. When you log in to your account for the first time, first you will be asked for a lot of personal information. Fill this in truthfully. Then you will be asked to download the DeGiro app on your phone to verify your identity. Download the DeGiro app, and in the meantime, start searching for your ID-card or passport. A driver’s license is not sufficient!

The process of identity verification can take a few minutes up to a couple of days. After verifying your identity, you can move back to the desktop interface, or complete the registration process on your mobile phone. I completed the process on my phone, so the screenshots in this guide will show you the phone interface. However, the desktop interface should be similar. Once your Identity is verified, the fun truly starts. You will have to fill in a bunch of tax forms and lawful agreements. Basically, you sign a user agreement with DeGiro, specifying that they are not responsible or liable for any losses you incur. 

After this process is finished, you will have to go through a wizard where you open a bank account with DeGiro. This bank account is very similar to the one you’re currently using – it also has its own IBAN. You use this bank account to deposit and withdraw funds into/from your DeGiro account.

This can also take some time, ranging from a few minutes up to a few days. Didn’t I say that creating an account would be a lengthy process? Finally, you will be asked to complete a knowledge test. DeGiro does this to make sure you know what you are doing. The goal of the test is to see how much investing experience you have, and to make you aware of the risks that come with investing. Below you will find the answers to the questions:

  1. What do you own when you have a share in your portfolio? “You own a share of the company that issued the shared, which represents a piece of ownership in the company.”
  2. What are the risks when investing in shares? “The risk that the price of the share decreases”
  3. What do you own when you have a bond in your portfolio? “As bondholder you own a proof of debt that is mostly issued by entities like governments and companies”
  4. What are the risks when investing in bonds? “The risk that the issuer of the bond cannot repay it’s debt”
  5. Most investment funds are not traded on a continuous basis on the stock market. However, ETF’s are. What is another difference between ETF’s and investment funds? “An investment fund is usually actively managed, whereas an ETF is passively managed”
  6. What statement related to the costs of ETF’s is correct? “A portion of the costs are processed into the ETF itself”


Buying your first share

Congratulations! You now have a fully functional DeGiro account, and we can get started with investing! Let’s buy our first share. I assume that most of you will use the desktop interface to buy/sell shares – so I will show the steps to buy a share through the desktop interface. Again, steps should be similar on mobile! For the purpose of this guide, I will show you how to buy your first share in an ETF. Specifically, I am going to buy a share in the so-called Vanguard all-world ETF. This ETF is managed by the asset-management company Vanguard, one of the world’s biggest providers of ETF’s. The index that this ETF replicates is the FTSE All-world index. FTSE stands for Financial Times Stock Exchange (group), and they are the maintainers of this all-world index. The FTSE-all world index contains 4130 companies from 6 continents! This means that, when you buy just one share in the Vanguard all-world ETF, you indirectly invest in 4130(!) companies. Talk about diversification! To buy a share, log into your DeGiro account and locate the search bar. 

Then, type ‘VWRL’. You will get multiple search results with lengthy names. The ‘Vanguard FTSE All-World’ and ‘ETF’ parts of the name I already explained. But what do UCITS, USD and Dis stand for? UCITS is a regulatory EU framework to which ETFs have to comply. USD means that the fund is denominated in U.S. Dollars. This basically means that all transactions inside the fund are done with dollars and dividends are payed out in dollars. However, there is no need to worry about this. Because you will purchase your share on the Amsterdam stock market, you will buy pay for your share and receive your dividends in euro. The currency in which an ETF is denominated does have consequences which are important to understand, but out of scope for a ‘getting started’ guide. I wrote a blog post about ETF’s and currencies that you can refer to if you want to find out more. The ‘Dist’ means that this funds distributes (i.e. pays out) dividends. You also have ‘Acc’ (accumulating) versions of ETF’s which immediately re-invest the dividend back into the fund. If you want to learn more about distributing versus accumulating ETF’s, or about the reason why we are getting so many results for one specific ETF, refer to the FAQ. Now, select the ETF with ‘EAM’ in it’s name. EAM stands for Euronext AMsterdam, and it is an abbreviation for the Amsterdam stock market, which is where we will buy our ETF.

This will take you to the page of the Vanguard All-World ETF. Here you can find price history, news, documents and many other things related to this specific ETF. Take notion of the right portion of the screen. This is where you can place orders to buy and sell shares, which is exactly what we will do. There are different types of orders, which all work a bit differently; find out more here. For now, we will place a market order, which basically means that we wish to purchase a share at current market price. For quantity, select ‘1’ as we wish to purchase just one share. In case you want to know more about what the numbers under ‘price data’ mean, start with learning about bid-ask-spread and google the other terms – most of them are quite easy to understand. Finally, click place order and click confirm in the next interface. 

Final words of wisdom

Congratulations! You are now the proud owner of a share in the Vanguard All-World ETF, and are thereby investing in 4130 companies at once! That wasn’t too hard now, was it? Before I let you go  your way, some final words of wisdom:

  • Don’t buy products that you don’t understand. You just signed an agreement that states that DeGiro is not liable in case of losses, and you yourself are liable. This basically means that your local tax authority will be able to find you if you mess up. Moreover, there are products where you can lose more money than you invest! Be aware such products do exist and always tread carefully. That being said, if you use common sense and follow my advice you will stay far from these products. Additionally, you will have to complete additional knowledge test to be able to trade in them.
  • Watch DeGiro’s core selection. DeGiro has a core selection of stocks and ETF’s that you can purchase without transaction fees. Always keep an eye on those and try to buy as many ETFs you can without incurring transaction fees. For example, the share we just bought is in the core selection so you don’t incur any transaction fees for purchasing it. 
  • Only invest money you can miss. While this might be a no-brainer for some, I think it is important enough to mention. 


You’ve made it to the end and are now officially ready to play the biggest game in town! Good luck in the investing world – don’t hesitate to contact me if you still have any questions, and make sure to visit my insights page where I go much more in depth about all kinds of topics related to passive investing!