How to Start Investing from Scratch (Even If You Know Nothing About the Stock Market)

Investing feels a little daunting at first. Some people put it off for years because it seems too complicated, too risky, or too much of a “rich person’s game”. Meanwhile, their money has been quietly losing purchasing power sitting in a current account.

This article is for that person. No unnecessary jargon, no promises of magical returns, and no hidden sales pitch.

Why invest if I already have savings?

Because money sitting idle in a current account loses value over time. If inflation runs at 3% a year and your savings earn nothing, in ten years your purchasing power will have dropped significantly, even though the number in your account stays the same.

Investing doesn’t mean “speculating on crypto”. It means putting your money to work in a reasoned way so that, at the very least, it doesn’t lose value.

First things first: the emergency fund

Before you invest a single penny, make sure you have an emergency fund covering between three and six months of your fixed expenses. That money needs to be accessible at any time, not invested.

Why? Because if the market drops right when you need cash, the worst thing you can do is sell at a loss. The emergency fund is what prevents that from happening.

What are your options for investing?

When you’re starting out, you essentially have three broad families of products:

Fixed-term deposits

These are the simplest and most predictable option. You lend your money to a bank for a set period, and in return, they pay you a fixed interest rate.

The good: you know exactly how much you’ll earn, and your capital is protected up to €100,000 per institution (thanks to deposit guarantee schemes: in the EU it’s the Deposit Guarantee Scheme; similar protections exist in the US through FDIC and in the UK through FSCS).

The not-so-good: returns tend to be modest. Before comparing offers, look at the effective annual rate (sometimes called APY or AER), not just the nominal rate: here we explain the difference and why it matters. Deposits are perfect for money you’ll need in the short term (1–3 years), but not the best vehicle for the long run.

Bonds (fixed income)

When you buy a bond, you lend money to a government or a company in exchange for periodic interest payments. At maturity, you get your capital back.

The good: often more profitable than a deposit, especially with longer-term bonds.

The not-so-good: if you need to sell before maturity, the price may have fluctuated. It’s not as straightforward as it looks. For most individual investors, the most practical way to access bonds is through investment funds.

Investment funds (especially index funds)

An investment fund pools money from many investors and uses it to buy a basket of assets. You buy shares (or units) in the fund, and your return depends on how those assets perform.

Among funds, index funds deserve a special mention.

What is an index fund?

An index fund simply tracks a stock market index. If the index goes up, the fund goes up. If it goes down, the fund goes down.

For example: an index fund tracking the MSCI World buys shares in the largest companies across developed countries. There’s no manager trying to “beat the market”. The fund simply is the market.

This has a very important consequence: fees are extremely low. An actively managed fund might charge between 1.5% and 2.5% per year. An equivalent index fund might cost between 0.10% and 0.30%.

Doesn’t sound like a big difference? Over 30 years, that fee gap can amount to tens of thousands in lost returns.

What about actively managed funds?

Actively managed funds have a team of analysts who try to pick the best stocks to beat the market. The problem is that historical data consistently shows that the vast majority of active funds fail to outperform their benchmark index over the long term, especially after fees.

That doesn’t mean no active fund is ever worth it, but for someone just starting out, the logic behind index funds is hard to argue with.

Deposit, bonds, or index fund? A practical summary

The key is your time horizon. Money you need in two years shouldn’t be in the stock market. Money you won’t touch for ten years probably shouldn’t be in a deposit.

Where do I start?

A reasonable strategy for someone just getting started might look like this:

1. Emergency fund (3–6 months of expenses) in a savings account or short-term deposit.
2. Medium-term goals (a house, a car, a trip) in deposits or conservative bond funds.
3. Long-term savings (retirement, financial independence) in global index funds, contributing on a regular schedule.

Regular contributions have an important psychological advantage: you’re not trying to guess the best time to enter the market. You buy every month, whether the market is high or low. Over time, the average price of your holdings tends to be reasonable. This approach is often called “dollar-cost averaging”.

What happens when the market crashes?

It crashes. It always crashes again. And that’s exactly what makes long-term investing profitable: when prices drop, your regular contributions buy more units at cheaper prices.

The biggest mistake a beginning investor can make isn’t picking the wrong fund. It’s panicking when the market drops and selling at a loss. Global markets have fallen many times throughout history, and so far they have always recovered, and gone on to surpass, their previous highs.

The only real trap is needing the money right when the market is down. That’s why the emergency fund matters so much, and why you should never invest money you might need in the short term.

A note on taxes

The gains you make when selling fund shares or earning interest from deposits are subject to income tax, typically classified as capital gains or investment income. Tax rates vary by country; in many places, they range from around 15% to 30% depending on the amount.

Investment funds have an important tax advantage over holding individual stocks in some jurisdictions: you can transfer money from one fund to another without triggering a tax event until you finally cash out. In Spain, for example, this is known as a “fund transfer” (traspaso de fondos). Check whether your country offers something similar: it can make a real difference over time.

In the next article on this blog we go deeper into the tax side of investing.

Remember

Investing isn’t complicated if you start with a solid foundation. You don’t need to follow the stock market daily or understand every product out there. You need a simple plan, a clear time horizon, and the discipline not to touch your money when the market gets jittery.

And, of course, keeping your finances in order. Knowing how much you earn, how much you spend, and how much you can afford to invest each month is the starting point of any sensible financial strategy.

How does Cuéntamo help with all this?

Cuéntamo puts your investments right next to the rest of your accounts. You don’t have to log into your broker every time you want to check what your positions are worth: they show up alongside your bank balance.

When you record a purchase, Cuéntamo looks up the ticker or ISIN in its catalogue and, if it wasn’t there yet, fetches the current price and up to a year of historical data on the spot. The cash outflow is recorded in your brokerage account, so your balance always matches reality. If your fund pays a monthly coupon, you set it up as a recurring item and it gets confirmed only when it actually arrives.

Stocks, ETFs, index funds, crypto, deposits, treasury bills, and bonds all live in the same place. For each position you can see the current value, the unrealised gain or loss in green or red, and its weight within your portfolio.

The Cuéntamo Mas plan adds what a more seasoned investor needs: real performance metrics (TWR to benchmark against an index, MWRR to gauge whether your contribution timing has been good, and annualised return), a portfolio evolution chart with stacked areas by position, and a detail modal showing the instrument’s price history and your investment’s evolution on the same time axis. If you’re coming from DeGiro or Trade Republic, you can import their CSV in one click: Cuéntamo detects the format, auto-matches the destination account by IBAN, and separates trade operations from cash movements.

In the next article we get into how all of this translates to your tax return.

Frequently asked questions

How much money do I need to start investing?

Investing isn’t just for the wealthy. What matters isn’t the initial amount, but first having an emergency fund of three to six months of expenses and then starting with regular contributions, however small.

What should I do before investing my first euro?

Make sure you have an emergency fund equivalent to between three and six months of your fixed expenses, accessible at any time and not invested. That’s what stops you from having to sell at a loss if the market drops just when you need the money.

What is an index fund and why is it recommended for beginners?

It’s a fund that simply tracks a stock market index: if the index goes up, the fund goes up. With no manager trying to beat the market, fees are very low, and over the long term that cost difference can add up to a lot of money.

Deposit, bonds, or index fund: which do I choose?

It depends on the time horizon. Money you’ll need in one to three years fits better in deposits; medium-term money in conservative bonds; money you won’t touch for seven years or more, in global index funds with regular contributions.

What do I do when the market falls?

Don’t panic or sell at a loss: that’s the biggest beginner’s mistake. With regular contributions, downturns let you buy more units cheaply. The key is not to invest money you might need in the short term.

This article is purely educational. It is not financial advice. Before making investment decisions, consider consulting an independent financial adviser.

Figures for 2026.

This article is checked against official sources and reviewed periodically. If you spot anything out of date, email us at [email protected].