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Created on 16.07.2020

Newcomer to investment? PostFinance has the answers to your questions

The world of financial investment can seem a big and complex one. It’s little surprise that people considering investment for the very first time have lots of questions. You’ll find the answers to key questions here.

Would you like to get more out of your money and are you thinking about investing but don’t know how? Do you feel you don’t know enough about financial matters? And do you quickly get confused by technical terms like investor profile, yield, funds, portfolios and diversification – not to mention compound interest?

That’s completely normal and no reason to give up. If you take a bit of time to get familiar with the key investment terms and topics, you’ll soon discover that it isn’t actually that complicated. Here you’ll find the answers to the questions that most newcomers to investment ask – and you’ll soon become an investor too.

  • Saving money is important – for example, for emergencies, big-ticket items, holidays or your retirement provision. But interest on savings accounts is very low. That means you get little return on the money you deposit with your bank.

    If you invest your money in companies or states instead of lending it to the bank, you’ll have a better chance of achieving higher returns. Yet, investing generally also means taking on more risk. The higher the risk, the greater the chance of making gains. If you’ve set some of your assets aside for saving, it’s usually worth investing the rest – allowing your money to work for you.

  • The amount of money you can invest depends on how much you need to maintain your standard of living, how much you’ve already saved and how soon you need the money you wish to invest back again. But you can also generally invest small amounts too, as you’ll discover in the article “Investing money with small amounts of money”.  A long investment horizon is ideal. It means you can invest your money long-term (ten years and over) without having to access it during this period.

    Your investment advisor can help you to work out how much money you can invest and for how long. This is not just based on your current financial situation, but also on your plans for the future. Perhaps you’d soon like to buy your own home, become self-employed or start a family? Major changes in your life are just as important in your decision about how much money you can invest as your current personal circumstances and income.

  • Saving is easy: you simply transfer your money to your savings account and leave it there. Investing money is a bit more complex – but only slightly. Once you’ve given some thought to your current financial situation and your plans for the future, you can make an appointment with your advisor at the bank. You’ll then define your investor profile together (more on this under the next point) and map out your investment strategy accordingly. You can then make your investments, such as in investment funds or shares, based on it. You’ll open a custody account with your bank and then pay money into it to purchase securities. Regularly review your investment strategy with your advisor and make changes if necessary.

  • A word you’ll often hear in the world of investment is diversification. Diversifying your investment means spreading the money you invest across various asset classes, countries, currencies, regions and themes etc. That way you’ll minimize your risk – investing all your money in a single share means there’s a danger of losing it all. The broader your investment, the less risk you assume. You’ll find more about this in the article “Diversification – why you shouldn’t put all your eggs in one basket”.

  • Opportunities to generate high yield generally entail greater risk and/or restrict liquidity. Conversely, highly secure financial investment means you can’t expect huge returns. There’s basically no ideal investment option that’s optimal in every respect. Money lies in a “magic triangle” between liquidity, yield and security. Find out more in the article “The magic triangle of financial investments”. This means the investor profile and investment strategy based on it are key elements of investment. If you’d prefer to adopt a more cautious approach to investment, your advisor will help you to select low-risk investment products – by focusing on lower-risk securities, such as bonds, for example. The longer you hold onto your investment, the more you can offset short-term price fluctuations and assume higher risks. Find out more in the article “Long-term investment – why it’s important”.

  • Whether you invest money regularly or make a one-off investment is entirely up to you. The funds saving plan is a good way of investing money regularly. It allows you to pay money into a fund of your choice each month for example. At PostFinance, this option is available from just CHF 20 a month. The funds saving plan is an ideal option if you don’t wish to invest a large amount of money all in one go, but would prefer to accrue assets long-term by investing small amounts.

    Getting to grips with investment is a major challenge for many people – you’ve taken the first step and now know the answers to the key questions. If you’d like to explore the topic of investment in greater depth, you’ll find lots more information in our comprehensive guide “Investment – how does it work?” . You can also contact your customer advisor at any time, who would be pleased to assist you.

  • Your investor profile is the basis for all investment decisions that you make with your advisor. It takes account of various factors, such as your personal (financial) requirements, the goals for your investment and your investment horizon. Two key elements of the investor profile are your risk capacity and risk appetite. Your risk capacity provides information on how much risk you can assume financially. Questions on this include:

    • What level of loss can you sustain in a crisis situation?
    • Is financially dependent on you?
    • Do you have a financial buffer?
    • Is your current situation in terms of income and assets?

    Meanwhile, risk appetite provides an indication of your emotional attitude towards risk and is determined by your answers to questions such as:

    • How would you cope in the event of sharp price fluctuations?
    • What would you do if the value of your investments rose?
    • How would you react if your investments fell in value?
    • Which level of return would you be satisfied with?

    The investor profile, determined during this process, forms the basis for your investment – and ensures you invest in a way that avoids assuming any risks that you can’t or don’t want to take on.

Funds, shares, bonds and ETFs

You can invest in a wide range of financial products. These are divided into asset classes and differ in terms of their nature and type of risk. Buying shares, for example, means you hold an equity stake in a company. Watch our explanatory video entitled “What is a share?” to find out more about it. Investing in bonds means you hold fixed-interest securities – so that you as an investor receive a pre-defined coupon on a regular basis. You can read more about bonds in the article “Bonds – What are they?”.

Whereas bonds are seen as a lower-risk investment, share prices can fluctuate significantly which essentially means they are higher risk – you generally have a greater opportunity to achieve gains with shares than with bonds. Funds and ETFs (funds traded on the stock exchange) are one of the most popular asset classes as they combine various investments (such as shares or bonds) in different companies, markets or themes, spreading the risk of individual investments. There’s more on that under the next point. Read more about funds in the article “Which different types of funds are available?”

As well as funds, ETFs, shares and bonds, investors can invest in a variety of different products such as options, structured products or commodities. Newcomers to investment are well advised to firstly familiarize themselves with the main asset classes.

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