Unit 1 · Level 1 · Why invest at all
Safety net first
Before a single euro goes into the market, you need a cash cushion: an emergency fund covering roughly 3-6 months of living costs, sitting in an instantly accessible account. The car breaks down on its own schedule, not the market's. Investors without a buffer get forced to sell investments at the worst possible moment, turning a temporary dip into a permanent loss.
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What you get asked
What should be in place BEFORE you start investing?
The emergency fund is the foundation everything else stands on. It's what lets you leave investments alone through a crash instead of raiding them.
Put the classic money priorities in order
Expensive debt often costs 15-20% a year, so paying it off is a guaranteed 'return' no market can reliably match. Then the cushion, then the investing.
Where does an emergency fund belong?
The job of this money is availability, not growth. Locked away it can't help you; in stocks it might be down 30% on exactly the day you need it.
Money you'll need within the next few ___ belongs in savings, not in the stock market.
Markets can drop 30-50% and take years to recover. Rule of thumb: stocks are for money you can leave alone for 5+ years, while savings handle the short game.
Why is investing your emergency fund a trap, even though savings accounts pay less?
Job losses and market crashes love arriving together; 2008 proved it. Saving protects your present, investing builds your future, and you need both, in that order. 🐜
The rest of this unit
Inflation nibbles while compounding snowballs. The case for putting money to work.