If you plan on investing with your Estonian e-Residency company (which you definitely should), read this investing guide first to get an overview.
Next, you need to apply for a LEI code (required). Whether or not you also need to submit the W-8BEN-E form depends on the securities/ETFs which you wish to purchase.
If you want to buy U.S. securities (simply put, ETFs from the American stock market), then you need to submit this form to your bank first.
Then you are all set for some investment action. Chances are you don’t know where, what or how and it all seems overly complicated.
Don’t worry! I’ll show you an easy way of getting started.
Your Very First Investment Order
You can implement your entire investing strategy at once or (do what I recommend) start with 1 or 2 orders first to familiarize yourself with the process, the platform and so on.
When you first place a buy order, you receive an email notification.
Another notification follows once that order has been filled.
You will then see your ETF(s) and the current value listed in the Internet banking dashboard (alongside any cash you might hold).
That way, you see the total value of all your business assets at a glance.
Once you have placed one or more orders and understand how the system works, what’s next?
Start Your Investment Portfolio
Granted, this topic is highly complex and there is no one-size-fits-all investment strategy. There is lump-sum investing, Dollar-cost averaging, active and passive trading.
I don’t want to go into the details but instead will show you how to use the limit buy and sell order functionality.
Limit orders are a great way of buying low and (ideally) selling high. Fully automated.
You simply tell the trading software at which price to buy and at which price to sell.
Simply put …
- Buy order = an order for the bank to buy a certain investment.
- Limit buy order = an order for the bank to buy a certain investment at a certain price (or lower).
Easy to understand, right?
This means, you can set up limit buy orders that will automatically be filled if the price goes down.
That way, you don’t need to invest in say an ETF while it’s high and can hope it drops at a certain point.
You can do the same in reverse – by using a limit sell order. In such a case, you would automatically sell an investment for a certain price.
Limit Order Example
If you’re still confused, here’s a practical example.
Say, I have decided to invest in an ETF that tracks the S&P500, such as the iShares Core S&P 500 UCITS ETF (Ticker SXR8).
I look up that ETF and see that it’s current price is 247,68€.
Also, I see that it’s price is at an all-time high. Maybe not the best time to buy right now.
So, what I can do is speculate on a dip, such as this one …
I can decide NOT to buy right now and buy during the next dip (assuming one is coming). The price at which I want to buy, I need to decide for myself.
For some investors, a dip to 200€ will be enough, others decide to buy only if price drops to 150€ (unrealistic).
Let’s go with the 200€ and let’s assume at that price, I am willing to invest 5.000€ in total.
This is how I would set up the limit buy order.
Here’s what I’m telling the system with this order:
Buy me 25 shares of the SXR8 at a price of no more than 200€ per share – and do so at any time.
That’s one way of using the limit order functionality – you don’t need to constantly check charts and wait for that one perfect moment to buy or sell – the system does it automatically!
By the way, with your Estonian company, you can also invest in cryptocurrencies/altcoins. Either directly or indirectly (via an ETF).
If you remember anything from this tutorial then it should be that you must take action, or else inflation will slowly eat away your money!