How Investing Works

01

Bull and bear markets describe the direction the market is moving. Here is what each one means and how to think about them.

02

Volatility describes how much and how quickly prices move. Here is what it means for you as an investor.

03

Risk tolerance is how much uncertainty you can handle as an investor. Getting this right is one of the most important things you can do.

04

Risk management is deciding, in advance, how much you are willing to lose. Here is what that looks like for an individual investor.

05

You do not need thousands of euros to start. Here is what actually matters when you are getting started with a small amount.

06

A watchlist helps you track companies you are interested in before you decide to buy. Here is how to build one and why it matters.

07

An ETF lets you buy a basket of investments in a single trade. It is one of the most useful tools available to ordinary investors.

08

A mutual fund pools money from many investors to buy a collection of assets. Here is how it works and who it is designed for.

09

ETFs and mutual funds are both ways to invest in a collection of assets. Here is how they differ and which might suit you better.

10

Investment fees are one of the biggest factors in your long-term returns. Here is what to look for and why it matters more than most people realise.

11

A dividend is a payment a company makes to its shareholders out of its profits. Here is how dividends work and why they matter.

12

Compound interest is the process of earning returns on your returns. It is one of the most powerful forces in investing.

13

Dollar cost averaging means investing a fixed amount regularly, regardless of what the market is doing. Here is why it works.

14

Diversification means spreading your investments across different assets to reduce risk. Here is why it is one of the most important principles in investing.

15

Asset allocation is how you divide your portfolio between different types of investments. It is one of the most important decisions you will make as an investor.

16

Investing for retirement means thinking in decades, not months. Here is how a long time horizon changes the way you invest.

17

Passive investing tracks the market. Active investing tries to beat it. Here is what the difference means in practice and what the evidence says.

18

Value investing means buying stocks that appear to be trading below what they are actually worth. Here is the idea behind it and where it comes from.

19

Growth investing focuses on companies expected to grow faster than the market. Here is how it works and what makes it different from value investing.

20

Sustainable investing weighs environmental, social, and governance factors alongside financial returns. Here is what that means in practice.

21

Not all investing information is created equal. Here is how to separate reliable sources from noise.

22

An annual report is a document a company publishes every year to explain how it has performed. Here is what it contains and why it matters.

23

A 10-K is the formal annual financial filing that American public companies submit to the SEC. Here is what it contains and why investors use it.

24

An earnings report tells you how a company performed financially over the past quarter. Here is what it contains and why markets react so strongly to it.

25

Revenue and profit are both measures of a company's financial performance, but they tell very different stories. Here is how to tell them apart.

26

Knowing when to buy a stock is only half the job. Here is a framework for deciding when it actually makes sense to sell.

27

Most investment losses come from investor behavior, not from the market itself. Here are the most common mistakes and how to avoid them.

28

Mr. Market is a metaphor created by Benjamin Graham to explain how the stock market behaves. It is one of the most useful ideas in all of investing.