Only one person has ever directly asked how much money they can expect to make from investing given that my beginner investing course itself costs 525€ which isn’t pocket money. What they’re really asking is: what’s the ROI on investing in my course? (ROI = return on investment).
It’s a great question.
One without a straightforward answer so I’m going to give a few different answers that illustrate how investing is working for me.
My ROI on investing
A big chunk of my invested money is in non-stock market investments that pay out interest.
With those, I invest in things that pay out 6-15% and make about 250-300€ a month in passive income that I reinvest.
Here are two examples of how some of those have done:
On one that started with about 8100€, I’ve made 1100€ in approximately 2 years (they’ve been deducting some withholding tax for the last several months at rates I can’t remember offhand.)
On another, I realised that if I had 10,000€ in there, I qualified for a bonus additional interest rate. So, in May last year, I added some money to take me just over the 10,000€ threshold.
The account passed 12,000€ without me adding to the balance myself and I now skim money off it to invest in other things.
How much I’ve saved
Another way of looking at this question is what have I saved by having accounts that charge 0% management fee.
I’ve got about 27,000€ in them and, let’s say I’d had these accounts for 12 months.
If I’d been paying 0.5% (half a percent) management fee, it would have cost me 135€ in fees in the past year.
If I’d been paying 0.7% in fees per year, that goes up to 189€ euros. If I’d been paying 1% that would have cost me 270€ euros.
During the time when I’d been thinking about going with a financial advisor, I was going to pay £750 for them just to set up my accounts. They were then going to charge me 0.8% in management fees. I was also planning to choose an investment fund that charges 1.12% on top of that.
For the sake of argument, let’s assume she wouldn’t have told me what that would cost me or that I wouldn’t have realised how important it was.
Total fees 1.92%.
So my saving there would be £750 ie approx 840€ at last year’s exchange rate, plus 518€ because of the 1.92% management fees. Total saved 1358€.
Lucky I was too cheap to part with cash for them to set me up, eh?
I went off and spent 6 months learning how to invest instead.
The opportunity cost of not investing
That’s another way of adding up the ROI on investing in my course, using my figures. 27,000 euros not invested for 6 months while learning about investing if I compare with the 6-15% I’m earning cost me between 810€-2025€.
What about my ROI on investing in the stock market?
If I look at my stock market investments, it’s a bit more complicated because the stock market has ups and downs.
2022 was one of the worst-ever years for both the stock market and the bonds market.
You need to know how investing works to really understand what is a “loss” and what is just “volatility”. (I’ve got a course about that!) Anyone who has a private pension may have seen that their returns are down this year, by quite a chunk, whereas 2020 and 2021 were bumper years, despite Covid.
My stocks and bonds investments of approx 23,000€ are down about 5%.
But the stock market is long-term investing. I’m not panic-selling any of it so I’m not making “on paper” losses.
History has shown markets recover and usually go on to climb higher than they were before the crisis/crash/depression/recession/war.
When’s the best time to start investing?
Right now it’s like buying during a Christmas sale when prices are super cheap but the products are exactly the same.
This is the best time to start investing (lucky you!) because you’re then poised to gain when the markets recover.
So am I, because I’m continuing to put money in every month. But I won’t do as well as you will because I started in 2021, during stock market highs.
YOUR ROI on investing in my course
YOUR ROI on investing 525€ in my beginner investing course and learning how all of this works is based on two things.
- How much you’re going to put in (as a lump sum from saving and/or steadily over the years, month by month from your job).
- How many years you’re going to invest for.
There’s no guarantee of the rates I’ve described, of course. There’s always some risk involved though I choose low-risk investment types for the ones that pay out regular interest and I’m not trading or speculating.
The stock market may have further to fall (and so even cheaper prices and an even greater potential when it recovers).
It has started going up again since the beginning of this year (like it did during Covid, or after the 2008 financial crash, or after the 2001 dot com bubble – making a lot of people a lot of money) and if it carries on it will become more expensive to start investing in.