Expert warns: don't leave your money idle

Keeping money in a bank account may seem safe, but inflation causes savings to lose value every year. Arnoldas Antanavičius, Head of Development at Profitus, advises not to start investing with large sums, to first build a financial safety cushion, and to diversify investments in order to reduce risk.

– Some people say they do not invest because they are afraid of taking risks. But does keeping money in one place really mean there is no risk?

– At first glance, keeping money in a bank account and doing nothing may seem like a safe choice, but in reality it is probably not the best decision. Every year inflation erodes our savings, and this year it has accelerated particularly sharply and exceeds 5%. This means that our money loses value every year.

In other words, people who are afraid to invest and take risks for various reasons are already losing by doing nothing. It may not be visible on a bank statement, but after a year it will undoubtedly be felt in terms of purchasing power.

– Hearing figures like these and such encouragement may make you want to rush to the other extreme – to invest everything you have immediately. Would that be the right response?

– You probably should not swing from one extreme to the other. The truth lies somewhere in the middle. There may be situations where someone is offered what appears to be an exceptionally good idea, with promises of high profits and earnings, making them want to invest everything.

In such cases, you should be more cautious, ask questions several times, verify the information yourself, and also consult people who know more about the subject. This is exactly how people fall into scammers' traps – they are tempted by an extremely attractive offer and give away everything.

Investing always involves risk, so it is better to diversify and spread your investments.

– Many knowledgeable people say that if you have a financial safety cushion, investing is definitely worthwhile. But getting started is probably difficult and requires at least some knowledge and the courage to take the first step. Let's talk about getting started. What would be the three main steps or pieces of advice, and what should the beginning look like?

– There is probably a myth that investing requires special knowledge, large sums of money, or special preparation. There are various options on the market today, so you can start investing with relatively small amounts.

You can begin and gain practical knowledge by investing a small amount, for example €100. The Profitus platform operates on a crowdfunding principle. With €100, an investor can try out how everything works.

Of course, first of all you should have spare capital and have secured a financial safety cushion. You certainly do not need to invest all your money – some of it must be kept as readily available funds because various things can happen in life. However, it is advisable to invest the remaining free funds after deciding where, when, and how to do so.

When starting with crowdfunding, the process is very simple. You can register online; everything is digital, simple, and easy. All you need is a mobile phone and an identity card. Once your identity has been verified, you become a full member of the platform within a few to a dozen minutes.

Then you fund your account, for example with €100, choose the desired project on the platform, and invest in it. Interestingly, the first investment may even be the most profitable, because when investing a small amount you can use a bonus code that provides an additional incentive.

– That is interesting. Tell us more about the bonus code, because we have a large audience watching who may hear it and use it.

– There are actually two options. Existing investors can share information about the opportunity to invest along with their investment code. This allows them to receive a €25 bonus. New investors also receive a €25 bonus.

If you do not know anyone who already invests on our platform and could share their code, during August we are offering the code “Arnoldas30” for a first investment. It gives a €30 bonus on a new investor's first investment.

– What exactly does the investment journey look like? Let's say I became interested, used the discount code, and deposited €100. Where does the money go, and how does everything work on your platform?

– There are various options on our platform. It is important to note that the investments are secured by real estate. We lend to businesses that want to develop real estate projects. They usually receive a loan equal to 60%, 70%, or 80% of the property's value. In other words, the loan is always lower than the value of the property.

Businesses invest the money they receive in various projects. These may be projects in Lithuania's major cities or regions, as well as in Latvia, Estonia, or Spain.

Based on their priorities, people choose which project they find more interesting and attractive. Then, with one click, they choose to invest, enter the amount, and confirm it.

If the money is already in the account, it is invested in the selected project and nothing else needs to be done.

A record is made that a particular investor invested a certain amount. Interest is usually paid every quarter. Everything is determined in advance, with a predefined payment schedule.

At the end of the term, the person gets back the €100 they invested and decides what to do next – reinvest it or add more funds to the account and invest a larger amount. If they like this approach, the earnings accumulate and over time many investors build up a significant amount of money.

– Let's talk about risk. In any case, investing always involves risk. One hundred euros may not significantly change a person's life, but if someone wants to invest €2,000, is it better to put the whole amount into one very attractive-looking project or spread it out?

– I would say it depends on the investor's experience and priorities, but at least in the beginning it would be more appropriate to spread the money out. A new investor is better off investing smaller amounts in a larger number of projects.

Sometimes a person may really like one project and put all the money allocated for investment into it. However, as I mentioned, investing involves risk. The project developer may be late in completing the property, processes may take longer, and repayment to the investor may therefore be delayed by several weeks, a month, or two.

Eventually the process is resolved, investors are repaid, and in the event of a delay, higher interest is also paid. Nevertheless, the experience of waiting can be negative – the person invested in one project and the process did not go entirely smoothly.

However, if the amount is divided among ten investments and only one of them encounters certain challenges while the other nine proceed smoothly, the investor's experience is completely different. In that case, the desire to continue investing also remains stronger. I believe this is the more appropriate strategy.

Once you become familiar with how the process works and better understand what the different options offered on the platform mean, you can increase the amounts invested in projects you like and understand better. In this way, you gradually progress to the level of a more experienced investor.

Watch more: https://lnk.lt/straipsniai/verslas/ekspertas-perspeja-pinigu-nelaikykite-be-darbo/389302