If you have enough knowledge of investing, you can trade in shares and investment funds yourself without any advice. This is called execution only and it is by far the cheapest way of investing. The other side of the coin is that it is entirely your own fault if things go wrong. Who is execution only investing for? And is it possible to invest in online brokers vergelijken in The Netherlands.
Three ways to invest
If you want to start investing, you can choose from three ways: asset management, investing with advice and execution only.
- With asset management, you completely outsource the investment, but you do agree with the asset manager what goal you want to achieve and how much risk you are willing to take. This is the most expensive form of investment.
- When you invest with advice, you invest yourself, but you get advice from an expert. It is up to you whether you follow that advice. The investment institution passes on the costs of the advice to the investor, but on average this is less than with asset management.
- With execution only, you determine all your purchases and sales yourself. You do not receive any advice, at most general information about investment instruments, price charts and sometimes course material. This is the cheapest form of investment.
For whom is execution only?
Before you can start investing without advice, you need to complete an (online) questionnaire about your knowledge and experience with investing. The investment institution is obliged to submit such a questionnaire to you. Based on your answers, you will receive an advice or execution only that suits you best. If you pass the test, the investment institution may assume that you have sufficient knowledge and insight to invest independently.
- You are then fully responsible for your own investment decisions. If the test shows that you know too little about investing, the investment institution will advise you another way of investing or saving. You do not have to follow that advice. If the investment institution allows you to open an investment account with which you can trade on the stock exchange yourself, you may simply do so. The danger is that you will buy something on the stock exchange that does not suit you, for example because it is too risky. If you lose money as a result, you cannot turn to the investment institution to claim compensation.
Execution only and investing in funds
If you do not have enough knowledge and time to invest on the stock exchange yourself, you may be able to participate in investment funds without advice. In this way, you can invest in several shares or bonds at once, so that the spread is well-regulated. Even then, you still need knowledge and time to choose one or more investment funds that fit your purpose. But that is easier and less risky than investing in separate options like Apple aandelen kopen in 2021.