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When people talk about “investing,” it can sound like a complicated world full of jargon and numbers. However, the truth is that investing is simply putting your money to work, rather than leaving it in your bank account, where it does very little.
In this fifth article of our Beginner Investor Blog Series, we’ll explore the main types of investments, how they work, and the trade-off between risk and reward. This way, you can start building confidence as a beginner investor.
Missed the previous Beginner Investor Blog Series? Read it here:
- Guide to Investing in Ireland
- Grow Your Money with Compounding
- What Is Risk Tolerance?
- Mistakes First-Time Investors Make
Savings Accounts (The Starter Option)
Before you dive into the world of investing, most people begin with savings. Think of this as the “training wheels” of money management. Your money is safe, and you’ll earn a small bit of interest. The downside? Inflation (prices going up) often eats away at that interest, so your money doesn’t grow much.
This option is perfect for emergency funds and short-term goals, such as car breakdowns, a broken dishwasher, or an unexpected bill.
Stocks (Owning a Piece of a Company)
When you buy a stock, you’re buying a small share of a company. If the company does well, the value of your shares can go up. Some companies even pay you part of their profits through dividends.
The catch is that stocks can go up and down a lot. They offer the chance of higher returns, but they’re also riskier.
This option is good for long-term growth if you’re comfortable with ups and downs.
Bonds (Lending Your Money Out)
With bonds, you’re basically lending money to a government or a company. In return, they agree to pay you interest. Bonds are generally considered safer than stocks, but the returns are usually lower.
This option is suitable for diversifying your portfolio and adding stability.
Mutual Funds & ETFs (A Basket of Investments)
Instead of buying just one stock or bond, you can buy a fund that holds lots of them. Think of it as a “basket” filled with different investments.
- Mutual funds are managed by professionals.
- ETFs (Exchange-Traded Funds) are similar but usually cheaper and trade like stocks.
This is a simple way to spread your risk without having to pick individual companies.
This option is ideal for beginners who want diversification without doing all the research.
Property (Bricks and Mortar Investing)
Property is a popular choice in Ireland. Owning a rental property means you can earn rental income and (hopefully) benefit if property values rise.
However, it requires a lot of upfront money, and being a landlord comes with responsibilities (and sometimes headaches).
This type of investment is suitable for people who want tangible assets and are prepared for the commitment.
Be smart with your money. Get a personalised quote today!
Pensions (Future You Will Thank You)
A pension is a long-term investment for your retirement. The good part is that you receive tax relief on the money you invest, which makes your money work harder for you.
It’s perfect for anyone considering long-term financial security (yes, that means you, even if retirement seems far away).
Understand Tax Relief on Pensions
One of the advantages of pensions is the tax relief you get on the money you put in. In simple terms, the government gives you a “top-up” by letting you claim back tax on your contributions.
Here’s how it works:
- If you’re paying tax at 20%, every €100 you put into your pension only costs you €80.
- If you’re paying tax at 40%, every €100 you put in only costs you €60.
That means your money is working harder from day one. Add in the fact that your pension investments can grow tax-free over the years, and it’s easy to see why pensions are such a powerful long-term investment tool.
Additionally, at retirement, you can take up to 25% of your pension as a tax-free lump sum, giving you a helpful cash boost for big goals, like clearing a mortgage chunk, renovating the house, or treating yourself to a well-earned trip. That’s why pensions aren’t just about saving for the future, they’re also one of the most tax-efficient ways to invest your money today.
Learn more by reading our Guide to Pension and Retirement Planning.
Children’s Savings Plan (Monthly Saver for Their Future)
A Children’s Savings Plan lets you put aside a set amount every month into an investment fund for your child. Over the long term, it has the potential to grow more than a standard bank savings account because the money is invested rather than just sitting in cash.
You can usually change the amount, pause, or top up when you like, and the plan is designed for 5–10+ years, so you can ride out market ups and downs.
It’s perfect for parents or grandparents who want a steady, hands-off way to build a fund for future expenses, such as college, a first car, or a house deposit.
Children’s Investment Trust (Lump Sum Gift in Your Child’s Name)
A Children’s Investment Trust lets you invest a lump sum and name your child as the beneficiary. The money is invested in a fund, giving it time to grow while you, as trustee, typically keep control until they’re older. It’s a simple way to gift now and let compounding work over many years.
It’s perfect for one-off gifts from parents or grandparents that you want to grow for the long term.
Learn more by reading our article on: Build Your Child’s Future with an Investment Trust Fund
Alternative Investments (The “Extras”)
This can include items such as gold, art, or even cryptocurrency. Some people like these as “add-ons” to their portfolio. They can be exciting, but they’re often high risk.
This option is suitable for experienced investors or individuals willing to take calculated risks with a small portion of their investment.
Understanding Risk & Reward
Here’s the golden rule of investing: the higher the potential reward, the higher the risk.
- Low-risk investments (like savings accounts or government bonds) usually give smaller but steadier returns.
- High-risk investments (like stocks, property, or crypto) have the potential for bigger rewards, but also bigger losses.
For example, if you’re saving for retirement 30 years from now, you can afford to take more risk. But if you need the money in two years, a safer option is better.
Investing is a trade-off: you take on risk (prices can go up and down) in exchange for the chance of reward (growth over time). In the short term, markets can feel like a rollercoaster, with lots of bumps. Over longer periods, they behave more like an escalator, still experiencing a few stops and starts, but generally moving upward.
That’s why it’s usually best to leave your money in the fund for as long as possible, so you can ride out the short-term dips and let compounding do the heavy lifting. Markets wobble from month to month, but over more extended periods, those ups and downs tend to smooth out, and the growth you earn can start earning growth of its own.
The key is to keep your emergency cash separate, invest the money you won’t need for years, and stay consistent. Time in the market beats trying to time the market.
As a beginner, it’s smart to:
- Spread your money across different types of investments (this is called diversification).
- Match your investments to your goals (short-, medium-, and long-term).
- Keep an emergency fund separate so you’re not forced to sell investments at a bad time.
- Start small and automate a monthly amount (this smooths the ups and downs, euro-cost averaging).
- Choose low-cost, broadly diversified funds where possible; lower fees = more of your return.
- Review once a year and rebalance back to your target mix.
- Avoid timing the market, stay consistent and think long term.
Know your risk comfort; if big drops would make you panic, pick a more cautious mix.
Be smart with your money. Get a personalised quote today!
Get a Savings & Investments Quote
Investing doesn’t have to be overwhelming. The key is understanding the basics, starting small, and building your knowledge over time. Remember: you don’t need to pick just one type of investment. Many investors mix and match to create a balance between growth and safety.
At LowQuotes, we’re here to make investing simple. Need help getting started or reviewing your existing investments? Get a Quote today!
Our next Beginner Investor Blog Series post will dive into Responsible Investing: Can You Make Money and Do Good? Stay tuned!
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