Investment 101

You’re ready to manage the now. But what about the future? In this session, we cover the basics from what is investing to risk tolerance. And for those who feel more confident and want to get beyond the basics of investing, we provide an introduction to diversification and how to invest sustainably.

So wherever you’re at, one thing’s for sure: The earlier you start in life, the better prepared you will be for managing your finances. 

Knowing you’ve invested in your financial future off the field means you can focus even more on delivering on the field, according to Olympic Champion in Javelin, Thomas Röhler.

So what is investing?

Put simply, investing is buying into something you think will increase in value over time. But as you’d expect, this chance to grow also comes with risks. 

As you hear repeatedly in the investment world, there are no guarantees, and you could get back less than you invest. In the worst case, you could even lose everything you invested. Therefore, before taking any important decisions about your savings, we would always recommend to consult an expert for advice.

If there are risks, why bother then? Putting your money into a savings account with a bank is the simplest form of investing. However, in the current economic scenario with inflation at a higher rate than the interest on a savings account, you run the risk of actually losing money.  Through a broader, more diversified investing, you can give yourself the chance of getting a better return while minimizing the risks mentioned.

Basics of investing

Getting started
Athlete in a wheelchair training with weights

When it comes to investing, starting can feel overwhelming. One thing that helps is being aware of your current and future financial responsibilities and having clear goals in mind.

  • Are you looking to finance a couple of gap months between the end of your sports career and the time your post-sports career takes of? 
  • Or perhaps you’d like to save for a longer-term goal, say financing your retirement in 40 years from now?

Knowing your timeframe makes a big difference in the choice of your investment strategy. Some investment opportunities are more appropriate to finance your short-term goals, others might help more to contribute to your long-term goals. Additionally, the risk of different types of investments can vary. Being clear on your goals will help you decide which level of risk you’re comfortable with.

Starting early, stay patient
Infographic The power of compound interest, compound interest versus simple interest. Amount on y-axis, year on x-axis. Result: When compound interest is used, the amount rises steadily, while with simple interest the curve remains at the bottom over the years.

The earlier you start in life, the better. Why? Even just a small amount per month accumulates over time and works towards your long-term goals. With compound interest (which will be explained below), you will receive a greater rate of return over time, as your accumulated investment increases.

When it comes to compound interest, patience pays off. Compound interest is effectively the interest you receive on your investment and interest of the past. This ultimately leads to an exponential growth of your initial investment. 

So, the earlier you start investing and the longer you invest for, the more likely you are to see a benefit over time. This is where even starting with small amounts can make a difference over time.


Year one = 1000 x 1.02= 1020

Year two = 1020 x 1.02= 1040.4

Year three = 1040.4 x 1.02= 1061.21

Year four = 1061.21 x 1.02= 1082.43

Year five = 1082.43 x 1.02= 1104.08

For more, why not give our retirement income calculator from Allianz Life a try?

Try again.
Try again.
Know your risks

One topic that is closely connected to any form of investment is risk. When we talk about risk, we predominantly see two aspects:

Once you’ve decided to invest, you’ll almost always be asked to check your risk tolerance. You should only take risks you’re comfortable with. Determining your risk appetite can be rather tricky. It is not only about how much you’d be prepared to lose, worst case. It’s also the ability to withstand market turns and the inability to predict what’s ahead. In other words: how high is your comfort level with uncertainty.

Infographic: Take the right financial risks - your goals, timing, and risk tolerance will help you decide.  Four circles can be seen from left to right: While the investment risk increases from left to right, higher profits can be expected analogously. From risk-averse: a high-yield savings account to highest growth: often more shares and real estate, and few bonds.

Your risk capacity, or how much investment risk you are able to afford, is determined by your individual financial situation. Risk capacity is more flexible and changes depending on your personal and financial goals—and your timeline for achieving them. 

If you have your own business, kids approaching college or elderly parents who depend on you financially, you may be less likely to comfortably ride out a weak market (given your constant income needs) than if you're single and not holding any major financial obligations.

In addition, an unplanned financial shock—like job loss, an accident that comes with expensive medical bills, or a windfall by e.g. winning a major competition and receiving a large price sum —can also affect your investment decisions by altering the amount of risk you're able to afford.


Putting all your eggs in one basket is seldom a good idea. Mix it up. Be aware of the challenges that could hit you – not only on the financial markets but also on the personal side. 

Generally speaking, by diversifying you can reduce your investment risk. You can diversify your investments across different types of asset classes (stocks, bonds, real estate), industries, or parts of the world. If one part of your portfolio doesn’t do so well, you haven’t lost it all and some parts of your portfolio might even mitigate the losses of another part. Through diversifying you can also mitigate the liquidity risk since some investments can be transferred to cash easier than others.

Infographic: Put your eggs in different baskets. Diversifying your investments means you can minimize risk and maximize rewards. Shown are different baskets with the same amount of eggs. From left to right: Inflation-linked bonds, Defensive stocks, Nominal bonds, Real estate, Growth stocks

It’s also good to be aware of our own overconfidence. Naturally, we look for the best in life and the best possible outcome. But do check the rational side of your brain before plunging into your dream investment opportunity.

Additionally, we should be aware of loss aversion. This refers to a phenomenon where a real or potential loss is perceived by individuals as psychologically or emotionally more severe than an equivalent gain. For example, the pain of losing $100 is often far greater than the joy gained in finding the same amount.

Try again.
Correct! Both offer the same average return ((10+6)/2=8) vs ((12+4)/2=8). But there is just a 4 percentage point difference between the outcomes for Project A (10-6=4) versus an 8 percentage point for Project B (12-4=8).
Try again.
Invest sustainably
Wind turbines in a field between clouds from above

When it comes to investing, you can also think sustainably. That includes for example caring for our planet. 

Thus, when looking to achieve a return on your investment, you can also consider the environmental, social and governance (ESG) factors involved. For example, at Allianz, we drive positive outcomes and embed sustainability in our core business processes to manage risks and capture opportunities. We exclude certain sectors, companies and sovereigns from our businesses e.g. companies involved in coal-based business models. 

Why not ask your bank or insurer which sustainability initiatives they’re supporting? So that’s some basic guidance on how to start.

Possible investment opportunities
Share graph with different rash

We’ve covered a bit the what and the why, so now it’s time to explore some potential approaches to investment. All of the following financial investments together might build a basis for your financial portfolio.

As previously mentioned, a saving account is a simple form of an investment. But there are many more possibilities (“asset classes”) you can use to build a diversified financial portfolio:


A bond is an investment that pays a fixed income. Basically, you lend money to a company and, in return, they pay you back a fixed amount until the maturity date, which is the date when the money you originally invested is paid back to you. 

Government bonds and corporate bonds are the most common types of fixed income products. The government or company will pay you interest for the life of the loan, with rates depending on inflation and the perceived risk of the loan (e.g. that the company you invested in won't pay back the loan).


Trading stocks involves buying and selling shares in publicly-traded companies. When someone buys shares of a company, they effectively become a small part-owner of that company and have some claim on its assets and earnings, in the form of dividends and/or capital appreciation. The other way to make money from stocks is that you sell the shares at a higher price than you paid for them. 

But the market can change. Share prices have been known to go up and down and some companies can even go bankrupt - so you could even lose your investment.


A mutual fund pools money from different investors in one large pot. The fund manager takes advantage of the larger amount of money in this pool he is able to invest and distributes the money in different types of assets including stocks, bonds, commodities, and/or real estate. This is in line with the concept of diversification, as mentioned earlier in this module.

Exchange-traded funds (ETFs)

ETFs, which are a subset of funds, will track a particular index, sector, commodity, or other assets. But unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can since they only copy an already existing fund.

Real Estate

Real estate is considered to be its own asset class. One of the key ways investors can make money in real estate is to become a landlord. A couple of the big barriers here are the comparatively high amount you need to start your investment, as well as the liquidity of your money while being tied down for a long period of time. But if you have the means to invest in real estate, it might be a great way to secure your future long-term.

Additional fees

When building your investment strategy you should also be aware of the investing costs (e.g. expense ratios, market costs, custodian fees, advisory fees, commissions …). These costs vary across the market and it’s important to research those costs in advance, so that you minimize investment costs and maximize your gains.

Deep dive

PDF title cover saying Future Workout Deep Dive #02 Investment 101
Explore the module content in further detail by reading through the Investment 101 PDF. Increasing the difficulty of your workout is key to improve! The deep dive content is designed to provide more depth and test your boundaries.

Top three takeaways

So there you have it. Investment 101. As with all of this, start by thinking about your current situation. And remember the following:       
Teaching icon
Check icon
Running shoes icon

Next up

Week 3: protect

We get it. You get to week three, having yawned your way through personal finances and investment, and then we hit you with insurance. 

But as any good sportsperson knows, having teammates who’ve got your back and coaches who prepare you every step of the way can make all the difference to how you deliver on the pitch. 

And it’s the same with insurance. So get ready for both the sprints and the recoveries by knowing you’re covered for exactly what you need. No more, no less.

Any questions or additional support?

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. Information available here is not to be relied upon as professional advice or for the rendering of professional services. Certain links in this Site connect to other Web Sites maintained by third parties over whom Allianz SE has no control. Allianz SE makes no representations as to the accuracy or any other aspect of information contained in other Web Sites.

Cautionary note regarding forward-looking statements
This document includes forward-looking statements, such as prospects or expectations, that are based on  current views and assumptions and subject to known and unknown risks and uncertainties. Actual results, performance figures, or events may differ significantly from those expressed or implied in such forward-looking statements.

Deviations may arise due to changes in factors including, but not limited to, the following: (i) the general economic and competitive situation in the Allianz’s core business and core markets, (ii) the performance of financial markets (in particular market volatility, liquidity, and credit events), (iii) adverse publicity, regulatory actions or litigation, (iv) the frequency and severity of insured loss events, including those resulting from natural catastrophes, and the development of loss expenses, (v) interest rate levels, (vi) changes in laws and regulations, including tax regulations, and (vii) the general competitive conditions that, in each individual case, apply at a local, regional, national, and/or global level.

No duty to update
Allianz assumes no obligation to update any information or forward-looking statement contained herein, save for any information we are required to disclose by law.

Privacy note
Allianz SE is committed to protecting your personal data. Find out more in our Privacy Statement.