Anyone investing in stocks makes long-term investments. In the fairy tale universe, pictures from movies like The Wolf of Wall Street" belong, even though they might be based on actual events.
We have gathered some information for you in order to make your entrance into the world of stock exchanges even easier. You'll learn on this page how to invest sensibly.
The price of defense varies gradually. Many variables depend on the supply and demand of a security and thus the price. On the one hand, that makes trading exciting, and on the other, risky. Investors will also benefit directly if they consider stock market investing as a long-term investment. Three opposing goals should be considered - seen in the investment triangle: yield, protection, and availability:
The magic investment triangle defines the three investment objectives: stability, income, and availability. It is evident from its composition that only two of the three objectives can be accomplished.
High-security investments and fast availability are not very profitable - e.g. B. Non-binding accounts for investments. High profitability and high-security investments are not available rapidly - e.g. B. Savings and bonds on long-term terms. And high profitability and fast availability investments are typically risky - e.g. B. Stocks and Choices.
The Road to Success: long-term commitment
The stock market can be downright risky if you are not a stock market professional and want to produce short-term profits. For example, the Nikkei index dropped 11.4 percent on October 16 during the financial crisis that began in 2007 - the second-largest daily loss in the index's history. With which you can mitigate your risk, you can learn about smart investment strategies.
9 tips on making healthy investments
1-Investing is worthwhile for the long term
Any overnight interest rate beats the growth of the DAX. This is why in times of low-interest rates, such as today, investing in securities is especially worthwhile. An example of a calculation: if you had invested 10,000 euros ten years ago in a call money account at 3% pa, you would have earned 13,439.16 euros at the end of the period. In the end, you would have gained about EUR 23,700 if you had invested the same amount in the DAX (observation period July 1, 2005, to July 1, 2015).
In such periods of time, however, losses - in some cases significant - are also probable. The DAX, for instance, halved from 8,000 to 4,000 points from July 2007 to February 2009. Fluctuations often occur frequently during shorter time periods. The entry time (time of purchase) and exit time (time of sale) are therefore definitive.
2-The risk of a stock market collapse is still there
The Dow Jones Index dropped by 508 points in one day in the event of a stock market collapse - within six and a half hours. On October 19, 1987, the "Black Monday" was the largest regular decline in the history of the stock market and meant a price drop of 22.6 percentage points. 15 months after the crash, at 2247 points, the Dow Jones had risen to its level before the stock market crash.
The DAX was introduced in Germany on 1 July 1988 - there have been many short-term crashes since then the last big one on 21 January 2008, when fears of a recession culminated in a 7.2 percentage point fall. The DAX has taken nearly four years to climb back to its old standard.
3-Typically high-risk investments return more than safe ones
When they take greater chances, investors expect a higher return. This may also be the case for stocks relative to bonds. You will produce higher returns in the long run. One thing applies if you choose to bet on bonds: the financial gain on your bonds can be small in the short term - owing to short-term market fluctuations. Long-term bonds can also be more worthwhile than short-term bonds for trading.
4-Earnings are the greatest factor affecting stock prices
Two sources of income are typically given by the stock: the dividend and the price benefit. If these rises or fall, often the share prices respond very quickly. Changing interest rates or investor sentiment are other variables.
5-A bad year for bonds is like good stock weather
Investors tend to take their money out of stocks as interest rates increase. They choose to spend it on bonds and other assets with fixed income. The reason: Compared to bonds, the revenue from it is more interesting and the investment risk is smaller. This causes stock prices to decline, while bonds are becoming more costly. On the other hand, investors usually bring their money back into stocks as interest rates fall again, with everything else remaining unchanged, and the previous pattern is reversed.
6-For bonds, rising interest rates are evil
As interest rates rise, bond prices decrease. This is because borrowers with a fixed interest rate of 6 percent pay less for an existing bond than for a new one, e.g. B. It brings in 7 or more percent. Conversely, bond prices increase at the same rate as interest rates decline This is most noticeable in long term bonds. Thus as interest rates grow, long-term bonds are more impacted than short-term bonds. Conversely, they benefit the most in value as interest rates decline.
7-The biggest threat to your long-term savings maybe is inflation
Inflation has caused your money to lose about 2% of its value per year in the past. And what is lost due to inflation, you rarely get back. That is why it is so important that for example, you invest in your old-age provision, where it can bring in the most in the long term: on the stock market. The risk of a stock market collapse lurks here, which could initially impact your shares in principle - but the stock market has consistently recovered and reached new heights so far. Predictions for the future, of course, are not realistic. It, therefore, relies on a balanced combination of personal knowledge, experience, and risk-taking ability.
8-Make your portfolio detailed
Diversification decreases the chance of losing money, spreading the money through various forms of assets. Even if some of your investments go down in value, others can go up in value and vice versa.
9-Index fund income also exceeds that of mutual funds with exchangeable portfolios by far
The fund manager brings his portfolio together with an index fund in such a way that it represents the market index (e.g. the DAX) rather than actively choosing the stocks to purchase. Experience has shown that the index funds in terms of results are always able to outperform the majority of funds actively managed. One explanation for this is that few actively managed funds can adequately outperform the market to cover the higher fees incurred. Below, we have outlined the most important facts for you about funds, stocks, and bonds.
In the universe of securities, stocks are just one type
There are a variety of other records, in addition to the classic security, the share. You will get to know the other forms of protection and their risks on this page. For example, bonds normally do not offer as much return as stocks in the short term but are associated with lower risk.
Best possible investor protection through risk classes
When you open a custody account, you will be asked to supply the following information:
- Your past Securities experience
- Your investment priorities
As part of the statutory investment security provided for in Section 31 of the Securities Trading Act, each custodian institution asks you these questions (WpHG). Maxblue can independently assess a risk class on the basis of your knowledge. All securities up to this risk class can then be purchased. The risk class is not considered when selling safe.
Securities lots, seven risk groups
Internal risk classes have been established by Deutsche Bank for financial instruments (investment financial products) that are used for advisory purposes, but also for other sales of financial instruments and are based on an internal risk measure set up by Deutsche Bank (private and corporate customer bank).
The risk groups are aimed at making the risk content of the
various financial instruments comparable. Accordingly, a financial instrument
assigned to risk class 5 has a higher potential for failure than that assigned
to risk class
In the case of risk classes, 1 to 5, the historical average probability for losses is used as a basis for the risk class classification. This is focused on past results. Past data is not a valid predictor of the potential for future losses. In specific, dangerous tools, such as B. On the basis of the historical loss potential, leverage items, options and futures should not be allocated to a risk class. Consequently, these are categorized into different risk groups 6 (increased risk of loss of capital) and 7 (potential of loss greater than the potential of the capital employed/security granted).
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