When people whose everyday working life is a long way from Wall Street think of financial markets, a picture of a Gordon Gekko-type character with a sharp suit and overbearing attitude can be the image that springs to mind. Stocks and bonds nay seem to be for the kind of person who is a long way from agriculture, living in a completely different world.

This characterisation can serve as a roadblock for people who could potentially be doing more to protect their future and diversify their income through financial investments.

Financial investments are more accessible than ever before to everyone, and there are plenty of good reasons to put some money to work there. This guide will serve as an introduction to the world of financial markets and where, even a beginner, can get involved.

Before you start

If you find yourself with some extra cash, then there are a couple of housekeeping rules to be aware of before you think of dipping into the world of financial investments. First of all, make sure you have paid down any credit card and any other short-term high-interest debt.

Remember that agricultural merchants can charge very high levels of interest, meaning costs there can mount up very quickly. Paying down debt such as this which can cost over 20% per year in interest is the same as making an investment which guarantees a 20% return!

Once that is done, ensure you have enough money put aside for unexpected or emergency expenses. The usual guide is to have three to six months’ worth of living expenses in a readily accessible savings account.

Once you have those starting points sorted out, it is time to sit down and take a look at what options are available to earn some extra cash over the longer term.

Investment options

If there is extra income for investment, by far the most tax-efficient place to put it is into your pension fund. There are limits to what percentage of income can be added tax-free to a pension each year, with the amount growing as you approach pensionable age. The income used to calculate the tax-free allowance is also capped at €115,000, with any contribution above this amount having to come from after-tax income.

Whatever money is put into a pension plan is bundled together by the pension manager with numerous other contributions into a fund which invests in financial and other assets to provide a return over the longer term. According to the latest data released by the Irish Central Bank, total assets of the Irish pension fund sector rose by 2.5% in the first quarter of 2026 to stand at €148bn.

Most recent data from the Organisation for Economic Co-operation and Development (OECD) indicated that the value of pension savings and assets earmarked for retirement globally has reached $69.8 trillion (€61.25 trillion). This huge amount of money is the major driver of global financial markets.

The main asset classes in financial markets can be broken down into stocks, bonds and commodities. There is also a class of investments known as “alternative assets” which we will touch on later.

Stocks

The stock market is what most people think of when they think of financial markets. Investors buy shares in companies they think will go up in value in future and sell shares in companies they have less confidence in.

For individual investors, buying a single company stock and hoping it will rise over time is usually not the best way of making a long-term return and is certainly very bad risk management.

The better option for stock investments is to buy an index fund or an exchange traded fund (ETF) which targets a particular sector. Index funds do exactly what they say on the tin. They buy a stock market index, such as the S&P 500 (the US stock benchmark) or the Iseq Index (Irish shares). The value of the investment then rises and falls based on the movement of the share prices of the companies in the index.

Purchasing shares in an individual company is very risky as share prices can be very volatile. There is no guarantee that you will get your money back, and there is a risk that you could lose all of your money if the company runs into severe financial difficulties, as was seen in the case of some Irish banks in the wake of the 2007 financial crisis.

On the other hand, if an investor had put their money into a fund tracking the Iseq Index in 2007, they would have suffered significant financial losses in the following years but they never would have lost everything. If they continued to hold until June 2026, their holding would be worth 60% more than if they had bought at the 2007 peak (see Figure 1).

There are some advantages for purchases of stocks when compared to other asset classes. The higher risks involved generally mean that there are higher returns available. In many cases companies on the stock exchange also pay annual dividends to shareholders as a distribution of profits.

In recent years FBD plc, whose shares are widely held by Irish farmers, has been a stand-out example of this, with annual and special dividend payments over the last four years totalling €6.75 per share.

Bonds

Debt issued by governments and companies to the bond market is generally considered to be less risky than shares. Bonds pay an annual interest rate, called a coupon, and repay the amount outstanding on the bond at an agreed date in the future. The interest rate paid on the bond is fixed when the bond is issued, and usually depends on the risk profile and rating of the issuer.

The effective interest rate on bonds can change when those instruments trade on financial markets. Bonds always pay at “par” which means that they are expected to pay back all of the money borrowed. However, in markets they can trade above or below “par”.

If a company, or country, is seen as increasingly risky then investors will be less interested in holding those bonds which means the price can fall when they are traded. For example, if a company has a 5% five-year bond (one which pays 5% interest per year and will pay back in full in 2031) issued and it runs into financial difficulty, the market might start to price those bonds at 80c in the euro.

For the company, there is no change in its liability. It still has to pay 5% per year on the money borrowed and pay the bond back in full in 2031. But for someone buying the bond in the market, there has been a significant change.

Bond investments have advantages over stocks in that they generally have seniority when it comes to getting paid

They now only have to pay €80,000 to buy €100,000 of the bond. They will get €5,000 per year on their €80,000 investment. Plus, if the bond is held to maturity, they will get repaid the €100,000, providing an extra €20,000. In financial markets, these two numbers are added together and then annualised to provide a “yield to maturity” which is the return that will be gained from holding the bond until it is repaid.

The relationship between bond prices and bond yields is inverse – yields rise as bond prices fall, and vice versa.

Bond investments have advantages over stocks in that they generally have seniority when it comes to getting paid.

In the event that a company runs into serious financial trouble, or even goes into liquidation, the bond holders will likely get paid something, while shareholders generally get nothing.

Commodities

These are physical assets which can either be bought and held directly by investors, or traded through futures markets. Some assets such as precious metals like gold or silver can actually be purchased and kept in a safe at home.

Gold traditionally has been seen as a hedge against high inflation, a reputation it held onto recently as post-Covid inflation saw the precious metal rise from €1,500 an ounce in 2021 to €4,500 at the end 2025. Gold has fallen to nearly €3,500 so far in 2026 as global inflation concerns have eased.

Commodities do not pay a dividend or interest, so an investment in any commodity is basically just a bet on the future price of that commodity.

Most commodity trading is done via futures markets where people can buy or sell contracts to supply a product at a certain point in the future.

Almost all traders have no interest in buying or supplying the physical product, but instead are betting on price moves ahead of the close of the contract.

Commodity trading is used by large farmers, particularly in the tillage sector in the US, to lock in prices for future crops as it can be a mechanism for effective risk management.

However, for most other investors, commodity futures trading can be very risky and will need a significant understanding of how the markets work.

Buying precious metals is a much simpler way of investing in commodities, but there are risks involved in storage and volatile markets.

Alternative assets

This is a catch-all phrase which captures everything that isn’t a stock, a bond or a commodity. It encompasses things as diverse as cryptocurrencies, collectibles and private equity funds.

Everything in alternative assets carries its own risks, but often the chief among them is liquidity risk.

If there is no established market in an asset class then it can be difficult to sell the asset when the time comes to realise value. A stock can be sold at market price in seconds. A classic car can take months to sell.

In recent years the rise in cryptocurrencies has seen huge amounts of speculation in that space. While there are tales of early adopters making millions on bitcoin and similar digital assets, there are huge risks in the asset class. Digital currencies are not backed by any asset, and often trade on unregulated exchanges.

The price of the currency is set by a mixture of arbitrary supply constraints and demand driven almost exclusively on hopes of higher prices in future.

This is not a recipe for a stable, or even properly functioning market. It is hard to see an investment in cryptocurrencies as anything more than gambling.

Diversification

The critical thing to get right when building an portfolio is to make sure the investments are well diversified. Many Irish farmers hold shares in companies such as Kerry Group, Glanbia and FBD.

These holdings have performed well over the years, but they are also a huge concentration risk for those farmers.

There is no reason to have so much wealth tied up in a single company. Similar, or even better, returns can be received from diversifying holdings across a range of assets. Critically, this diversification should reduce overall risk of the holding.

The best place to start the journey into financial investments, if you feel it is the right thing to do, is to talk to a qualified financial advisor. When looking for a professional, make sure that they are regulated by the Irish Central Bank – there is a searchable database on the central bank’s website.

Also, make sure they are independent financial advisors who get paid for their time, rather than one who works on commission as they will try to sell you the best product for them, rather than necessarily the best product for you.

Any financial investment carries risk, and the general rule is that riskier assets have higher earnings potential. However, keeping cash on deposit at the bank also carries risk as there is little or no interest earned on that money meaning the purchasing power of it is eroded over time.

This means that when it comes to deciding what to do with extra money, there is also a cost in doing nothing.