How to invest in the Euronext 100 Index
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The Euronext 100 Index (N100) includes some of the largest companies in Europe, and investing in the index lets you benefit when they rise in value. In this article we’ll walk you through the entire investment process, so you’ll feel better prepared and more confident whenever you’re ready to get started.
Where can I buy into the Euronext 100 Index?
What is the Euronext 100 Index?
The Euronext 100 is a blue-chip stock index made up of 100 of the top companies (by market capitalisation) on the Euronext NV stock exchange. Companies on the Euronext 100 are based in several different European countries, including France, the Netherlands, Belgium, and Portugal. Car manufacturers, banks, fashion and apparel companies, and stocks from technology companies all appear among the Euronext 100’s highly diversified group of stocks.
Is it a good investment?
It definitely can be, but it depends on what your investment strategy is. If you’re looking for a way to invest in some of Europe’s most successful blue-chip companies, then the Euronext 100 is the best option around. Investing in 100 high-quality stocks at once gives you a combination of growth potential and risk management – as the diversification you get when investing in indices protects you from taking too hard a hit if one stock underperforms.
The Euronext 100 is certainly not a risk-free investment, though. All stock indices fall hard during bear markets, so it’s important to ensure the European market is looking bullish before you put your money on the line.
How do I invest in the Euronext 100 Index?
We recommend that you follow these three steps so that you make the most of your investment opportunity:
- Choose an investment type
- Use our top tips to succeed
- Choose a platform to invest with
1. Choose an investment type
There are multiple methods you can use to gain exposure to stock market indices, so you should choose the one that best fits your particular investing goals. Consider factors such as how important it is for you to trade with low transaction fees, as well as the level of customer service that you want from a platform. Here are some of the most popular ways to do so:
An ETF (exchange-traded fund) is an investment fund traded on a stock exchange. You can trade Euronext 100 ETFs any time during regular stock market hours, giving them an edge over some other investment methods which only trade once a day. Euronext 100 ETFs usually include numerous different assets at once, such as stocks, bonds and commodities. Or, it can be structured to follow an entire index such as the Euronext 100. An ETF can be a smart, low-fee way to tap into a diversified portfolio of 100 stocks while still giving you the flexibility of being able to trade your investment at any time on an exchange.
Just remember this: While diversification helps ETFs defray risk, it also means that investors are left holding both the best- and worst-performing stocks within a given index. As a result, more selective investors might favour the next investment method on our list.
An alternative option is to buy shares in all 100 stocks that the index tracks. This method allows you to evaluate each stock as you go, then decide which Euronext 100 stocks you want to keep longer-term and which ones you want to sell – a strategy you can’t pursue when you invest in the index as a whole. The problem with buying 100 individual stocks is that you must make 100 separate trades to buy each one, plus even more, when you offload the few you decide not to keep long term.
This investing method allows you to sample all 100 of the Euronext 100 Index’s stocks, then whittle down to the top performers you want to keep. Just be aware of the transaction fees and extra time you’ll need to use this strategy; beginner investors with smaller budgets might want to try a different approach.
The Euronext 100 mutual fund is a professionally-managed investment fund that collects money from many different investors, then invests that money into different assets. A Euronext 100 mutual fund (also called an index fund) enables you to invest in all the stocks in the Euronext 100 at once. Mutual funds can only be bought through a broker or directly from the company that administers the fund, and can only be bought at the end of the stock market’s trading day – unlike ETFs which can be traded at any point during market hours. Euronext 100 funds also charge higher fees than ETFs do, one of several reasons why Euronext 100 ETFs have gained in popularity in recent years.
A Euronext 100 Index mutual fund can be a workable option for investors who want to buy and hold for a longer stretch of time, since it’s more difficult and more expensive to trade than an ETF.
2. Use our top tips to be a successful investor
Before you start investing, check out our top investment tips:
- Do your research. There are no shortcuts to success. You need to put in the time and the work to succeed. In this case, that means evaluating all the pros and cons, and deciding whether that’s the best investment for your goals. Once you’ve done your research, you should formulate a sound investment plan. Having an investment plan will improve your chances of success and enable you to make informed decisions if and when markets become turbulent.
- Set a budget. The budget you pick should take into account your tolerance for risk as well as how much money you can afford to lose. Don’t sabotage your confidence or your ability to make future trades by risking huge, unnecessary losses.
- Select the right platform. When deciding on the right trading platform for your investing goals, consider factors such as transaction fees and the level of customer service and advice you feel you need. Shop around, and don’t be afraid to change platforms if you’re not getting what you want out of the experience.
- Grow your investments gradually. You can’t master all investing concepts right away. Once you accept that getting better takes time, you can apply the right budget to every situation too. Make smaller investments at first, then you can expand the size of your moves into the market as you gain experience and expertise.
- Think long-term. Euronext 100 investing can work well as a long-term strategy – if you buy in a bull market and are able to hold on through the typical bumps and bruises that even market uptrends dish out. Just make sure to assess the market before putting your money in, as if conditions are bearish, then indices tend to perform badly.
3. Choose a platform to invest with
Here are some of the best options:
- Brokers & trading platforms. Online brokers offer easy-to-use platforms with low transaction fees, but are usually lacking in terms of in-depth investment advice. So if you’re looking for more guidance to inform your investing decisions, try a different approach.
- Robo advisors. Robo advisors use algorithms to execute trades, meaning human beings don’t need to be involved. Some robo advisors will also allow you to discuss your investment strategy with an actual human advisor to help you make the right decisions. Combine this guidance and automation with relatively low trading fees and you have an attractive option for investors. Still, robo advisors aren’t the top option if you’re looking for personalised customer service. For that you’ll want to use a financial advisor.
- Financial advisors. Financial advisors offer the most help to investors. They will assess your financial goals in depth, and explain how each investment decision fits with those goals. It’s hardly surprising that, of all investment options, financial advisors charge the most for their services. While they can be worth the money when making complex investment decisions, a financial advisor might not be worth the cost in this case as it’s not difficult to do it yourself.
- Banks. If you invest through your bank, you can gain the convenience of having all of your financial instruments (such as your checking account, savings account, mortgage, and line of credit, in addition to your investments) in one place. The problem is that banks tend to charge high fees without providing the level of service that a personal financial advisor offers. So other than the convenience factor, banks often don’t provide a particularly attractive method of investing.
Here’s our top recommended broker
What should I do now?
Ready to get started? Go to your chosen platform’s website, type in the ticker symbol of the investment asset you want to use, then click Buy. Once you’re in, make sure to keep close tabs on your investment to give you the best chance at landing impressive gains.
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