Investment myths part 1: I have to be good at math


Do I have to be good at math to invest?

When we launched Finelles, women told me that they do not invest because for doing so, they had to be good at math.

No, you do not need to be genius in math!


How come?

Well first of all the most important decisions when it comes to investing are not math driven.

When you start investing, you need to decide upon the following:

  1. Which investment strategy to choose? Active vs passive investing. If you are a beginner we recommend to choose a passive investing strategy using ETFs (see article on investment strategy: here).

  2. How much risk (potential loss) are you willing to take and how much return would you like to gain? This is personal and should be evaluated by generating your risk profile.

  3. How long do you want to invest? Ideally long term (20-30 years), but 10-15 years is also fine. Below this time period, we would not recommend to invest money you need.

  4. How much money can you invest as a one-time sum or on a monthly basis? Ideally you save up to 20% of your net income, pay off your debt first and create a cushion (emergency fund) of 3 months worth your salary. Then you can choose how much you want to invest. We recommend to invest as much as possible but only money you do not need in the next 10-30 years.

Let’s look at an example: Eva, a passive investor:

Eva wants to a) invest passively, has b) a medium risk tolerance. The recommendation is that she invest around 50% in growth assets (e.g. stocks, commodities, real estate) and 50% in secure assets (e.g. AAA bonds, cash). She wants to invest c) 15-20 years and has d) 10.000 € to invest and another 200 € per month.


What's next?

First Eva needs to know how many ETFs to buy in terms of cost and sufficient diversification.

According to Morningstar (an investing news and analytical website) you should invest in 1-2 ETFs for invested assets of 50.000 € or less (link: Hence, Eva should invest in 1 to maximum 2 ETFs given her initial investment capital of 10.000 €.

Given her savings amount, the golden rule is no ETF below 100 € savings sum per month.

As she will only invest 200 € per month, she could invest 50% or 100 € in an equity ETF (for her growth bucket) for example a MSCI World ETF and 50% or 100 € in an AAA bond ETF (for her security bucket).  

Depending on your asset allocation this might vary. If you are an aggressive investor and you want to invest 80% in the growth bucket (stocks, commodities, real estate) and 20% in the security bucket, than 80% of 200 € would be 160 € and 20% of 200 € would be 40 €, in this case it would be advisable to only invest in 1 growth ETF (e.g. MSCI World) with 160 €. Put the 40 € in a call money account (German “Tagesgeldkonto”), as it does not make sense to invest 40 € per month. An alternative option consists of investing the accumulated amount (3 x 40€=120€) every three months into the security bucket (e.g. AAA bond ETF).

Eva has decided in favor of 2 ETFs, a stock ETF and a bond ETF. As she cannot include other asset classes as commodities and real estate to diversify her portfolio, she selects a very diversified stock ETF (either the MSCI World or the MSCI ACWI) and a bond ETF (here she selects a government bond from a reliable country e.g. Germany).


Is that all!?

Yes, as you were able to see there is not a lot to calculate. The only calculation is to understand that the more ETFs you have, the more costs you generate, this means the more you reduce your return. Therefore I like to rule to say, save a minimum of 100 € per ETF per month. Take a quick look at your asset allocation (you can use the strategy builder by justETF to calculate it: to calculate it. If one ETF is below 100 € either you stick to less ETFs or you invest the accumulated amount on a quarterly basis.

How was that for you math requirements? We think this should be manageable.

Written by Clara Creitz
Finelles Founder. Coach and Consultant (UBS, Towers Watson). 



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