Starting to invest often seems complicated, but in practice it is based on a few clear principles and well-thought-out steps. In this article, Kristiāns Purviņš, Head of the TWINO investment platform, shares a practical perspective on how to start investing and build long-term financial security.

How to invest money and build passive income?

Investing allows you to use spare funds more effectively than simply saving, gradually building financial security over the long term. Today, private investors have access to several regulated solutions – securities accounts at banks, licensed brokers, and investment platforms that provide access to various financial instruments.

Simply put, starting to invest means allocating part of your spare funds to financial instruments with a clear goal and time horizon, while being aware of possible value fluctuations.Regardless of the investment method you choose, it is essential to understand the risks associated with investing, the costs (commissions, currency conversion), and the investment time horizon. Short-term fluctuations in financial markets are normal, so sustainable results are usually achieved through a long-term approach and disciplined action, not by trying to predict market swings.

What does “starting to invest” mean?

Starting to invest means consciously building the habit of regularly allocating spare funds to financial assets that may contribute to capital growth or generate passive income over a certain period of time. Investment assets can include, for example, securities, investment funds and ETFs, bonds, real estate, loan portfolios on investment platforms, or even cryptoassets.The goal of investing is usually one of the following:

• Capital growth by increasing the value of investments over the long term

• Passive income, such as interest or dividends

• A combination of both approaches, balancing growth and cash flowIt is important to distinguish income from the overall investment result. Income is a regular cash flow, while the investment result reflects changes in the value of your investment portfolio over a certain period of time.

Where to invest: the most popular investment types

Private investors have access to various investment instruments that differ in risk level, liquidity, and potential return. The overview below helps you understand which investment types may be suitable for beginners and which require more experience.For beginners, diversified investments such as funds or ETFs are usually more suitable, as they help reduce the impact of a single company or sector on the overall portfolio result and allow the investor to grow together with the market. Higher-risk instruments can offer higher potential returns, but they require more experience and the ability to tolerate portfolio value fluctuations or take on specific risks.When choosing where to invest, always consider:

• How much risk you are willing to take

• How quickly you will want access to your money

• What your investment goals are

Building a safety buffer – the first step before investing

Before making your first investment, it is important to build a stable financial foundation. New investors often ask how to invest, but it is even more important to understand with what funds to do it. If you invest money that you may need in the near future, there is a risk of making rushed and unfavorable decisions.

A financial safety buffer usually means savings that cover 3–6 months of regular expenses. Such savings allow investors to maintain a long-term perspective and avoid impulsive decisions during market fluctuations.

Another important factor is the time horizon. Funds that may be needed within the next 1–3 years are usually allocated to low-risk instruments, while for long-term goals (for example, retirement or capital accumulation) you may choose assets with higher growth potential.To keep investing thoughtful and safe, use this short checklist:

• Safety buffer: keep part of your funds always available in savings, an account, or a highly liquid investment

• Time horizon: when do you plan to use the invested money?

• Contribution regularity: how much and how often can you afford to invest?

• Risk tolerance: how much portfolio volatility can you accept without losing calm and your plan?

• Fees and terms: make sure you understand transaction costs and the terms of investment products

How to choose a reliable investment service provider?

Investors can choose between commercial banks, licensed brokers, and regulated investment platforms. The main differences between these solutions relate to fees, available financial instruments, user experience, and the regulatory environment.

When choosing a provider, it is essential to ensure that it is licensed and supervised in accordance with applicable regulations.

Before opening an account and transferring funds, it is recommended to check:

• License and supervision: whether the company is registered and regulated

• Costs: transaction fees, account maintenance, and currency exchange costs

• Money safety: segregation of client funds and withdrawal procedures

• Product transparency: whether it is clear how returns are generated and what the possible risks areYou should also expect

• AML/KYC checks, which include confirming identity and providing information about the origin of funds. These procedures are a mandatory security requirement in financial markets. On unregulated platforms, registration is often very simple and little information is requested, but this also means a lower level of investor protection. On regulated and supervised platforms, registration takes more time because security requirements are significantly higher.

Which investment instruments are suitable for beginners?

For beginners, the most important thing in investing is not a specific trade, but a structured and understandable approach. Instruments with high diversification allow you to gain experience while keeping risk at a controllable level.

• Broadly diversified funds or ETFs are one of the most popular solutions for beginners, because with a single investment you can participate in the growth of many companies. This helps reduce the impact of a single company or sector on the overall portfolio result.

• Meanwhile, bonds and money-market instruments usually serve as a stabilizing element in a portfolio. They provide a more predictable cash flow and can help you maintain a long-term strategy even during periods of market volatility. As an investor’s experience grows and a diversified base portfolio is established, it may be possible to consider investments in individual company stocks, while acknowledging higher volatility and risk.

In practice, these instruments are used through investment platforms or accounts that serve as an environment for making and managing investments. A platform itself is not an investment instrument, but a tool that allows access to various instruments, tracking a portfolio, and reviewing terms in one place. For beginners, this often makes the first steps easier because the process is structured and clear.

How to start investing – step by step

After choosing the most suitable investment instruments, the next step is practical action. Beginners are advised to start with small, regular contributions and avoid rushed decisions driven by emotions or short-term market swings.A simple and clear investment plan:

• Set a goal and time horizon – for example, long-term capital accumulation or building passive income

• Choose your first investment product – a diversified fund, an ETF, or another understandable instrument

• Make regular contributions – for example, once a month on a specific date

• Review your portfolio periodically – for example, a few times a year, rather than reacting to every market move

• Develop a contingency plan – what you will do during short-term declines to maintain a long-term strategyAt the beginning, the main goal is not maximum profit, but building a disciplined investing habit that can deliver stable results over the long term. And this can be done with small amounts—for example, on the TWINO platform it is possible to start investing in asset-backed loans from as little as €1, which lowers the entry barrier and allows you to focus on the habit itself rather than the size of your starting capital.

Taxes – what new investors should keep in mind?

Tax rules for investment income vary by country and may differ depending on the instrument, account type, and how income is received. In some cases, tax is withheld automatically; in others, income must be declared by the individual.

If you use an investment account regime where it is available, tax may apply only when you withdraw more funds than you have paid in, which can allow you to reinvest for longer. Income from abroad may be subject to double taxation rules, so it is important to keep statements and ensure that documentation is available on your investment platform.

The most common investing mistakes to avoid

One of the most common mistakes is investing without a clear plan—making trades driven by emotions, frequently changing strategy, or selling during short-term market declines. This approach often negatively affects long-term results.

A significant risk is also underestimating costs. Transaction commissions, currency conversion costs, and other fees can substantially reduce overall returns in the long run, even if investment choices were successful.

Special caution is needed with offers that promise guaranteed or unusually high returns. In financial markets, higher potential yield is always associated with higher risk, so before investing it is important to fully understand the structure of the offer.

Next step: choose a start that feels clear to you

Investing becomes easier to understand when you start with a clear goal, time horizon, and a simple plan. Before making a decision, it is recommended to review the platform’s materials on first steps, costs, and risks.If you want to learn more, check the FAQ and tutorials section on the website or contact customer support if you need clarification.

Email: [email protected]

Address: Pērses iela 2A, Rīga, LV-1011, Latvia

This material is informational and is not an individual investment recommendation.