Just make money with stocks? The basics of stock investment strategy

Good money can be made with stocks on the stock exchange, which at the same time also offer better protection against inflation than is often the case for sure believed savings book. However, it is important to know the basics.

Is the pension still secure?

We were once told by our politicians: The pension is safe. But is that true? If you take a closer look, you get the opposite impression. financial experts criticize increasingly the policy of the central banks. So the value is ours money – and with it the value of insurance policies, savings accounts and pension entitlements – in danger, indeed the entire financial system has been under massive threat. The experts see the reason for this in the massive money creation by the central banks after the financial crisis, which created a flood of money that is now leading to ever-increasing inflationary pressure.

If you still want to protect yourself, you have to do it privately investto secure his pension. And not in Riester contracts, which are becoming increasingly unprofitable. But myself and with a certain Risks on the stock exchange. Because only real assets such as stocks, but also gold, offer a certain protection against inflation. The financial experts have calculated a simple formula for calculating this private pension: According to the experts, you must have a assets of at least one million euros. This should make it possible to double your capital every few years with an average return of 8-10 percent.

Mind Games on the Stock Market: Withstanding the Pressure

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Sounds easy at first glance, but as is so often the case, there is the famous catch: the stock market can fluctuate greatly. And that's not for the faint of heart. To stay invested in the stock market, one must understand how stock prices differ from stock fundamentals Companys differentiate. For example, you have to be able to ride out the emotional ups and downs of the market, because that's when you have the most opportunities to buy low and buy high merchandise.

André Kostolany, the well-known investor, recommended buying blue-chip stocks and going to the pharmacy to buy sleeping pills. Then, after five or six years of sleep, you would wake up and enjoy a nice win. His advice was psychological, a way to protect yourself from the bad explained above Behavior to protect.

Understand the basic principles of investing

But investing isn't just about putting your money in the stock market and hoping for the best. It's also important to understand the basic principles of investing, such as diversification, in order to find the right stocks for your portfolio. when you start Online- Visiting investment platforms, you can see on every page that there are many different investment strategies and different types of financial products. You don't know where to start and how to deal with all this.

If you are about the stock market, than the stock market, in a company invest, you want stability. One way to achieve this is to invest in companies you trust. That's why it's important to invest in proven companies. On the other hand, you should not invest in stocks that are currently popular but untested or that are trending, such as: B. raw materials or renewable energies.

Long-term returns instead of hype titles

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The reason: You can look at such hype titles fast burn your fingers. The financial sector probably also has certain vested interests in the emergence of such hypes or euphoric phases. Especially inexperienced private investors and impulse buyers verlieren then cash quickly when sudden price slides lead to panic selling - and they just as quickly miss the good opportunities to re-enter.

You don't have to be a brilliant investor to make money in the stock market. And even the best known and best investors sometimes make mistakes. You can earn on real assets, on productive capital, on the vehicle that gives you a share in economic growth. Monetary assets -- bonds, time deposits, or insurance products -- won't produce this type of return. Stocks, on the other hand, are productive capital. They give you shares in a company and its earnings. And as a result, her wealth also grows.

You most important ingredients of a good investment

Investing in stocks is one of the best ways to build wealth. But the most important rule to remember is: “Don’t lose money.” You can keep your money on track by investing in reliable companies like. These companies have long histories, often spanning centuries, and employ tens of thousands of people. But that's not enough to make money. You also have to buy your shares at the right time. If you had invested in such companies, you would not have made much or even any money a few years ago. It is important to buy them at the right time and to use them when needed merchandise. Only then are stocks real useful.

So patience is important. Because your capital investment only grows and prospers over time. Also, there are some helpful tweaks that will help you in the long run successfully to be by paying small, regular amounts into a savings plan. There are two main methods you can use to make your investments more effective. Quantitative easing (compound interest effect) and cost-average effect (cost-average effect) help you get more out of your investments.

How to double your wealth

Stocks of good companies are productive and real assets with inflation protection. When evaluating stocks, however, a thorough fundamental analysis should always be carried out and it should be determined whether the company is undervalued or overvalued on the stock exchange. Warren Buffett, who has grown his fund by an average of 22 percent per year since inception, does the same.

Even if you only use Kostolany's "sleeping pill strategy" you can make extraordinary gains - compared to a savings account. Depending on the type of title, it can be around 8-11 percent. You can even double your money every seven to nine years. Jeremy Siegel of the University of Pennsylvania studied stock market returns over the past two centuries and found that the real return on stocks - after adjusting for inflation - was between 6,6% and 7%. Before inflation, stocks would have returned 10%.

Invest regularly with a fund savings plan

The easiest way to invest is with a stock fund savings plan or ETF: If you save regularly, ie once a month or every 3 months, you invest in a fund with a monthly amount. Most banks and investment companies offer savings plans from a monthly amount of 50 euros. This money goes into the fund and you get a share of the fund at the current price.

Many banks also offer savings plans with which you can invest regularly from as little as 25 euros a month. If you don't want to do it yourself, you can use a financial advisor or an automated investment service called a roboadvisor.

How does a stock fund work?

One of the most common investment products is a mutual fund. A mutual fund is a collection of stocks from different companies put together by a fund manager. A fund managed in this way is a collection of stocks selected by a fund manager.

The manager selects and sells stocks based on their own analysis, expectations and valuations. He can flexibly shift the positions of his stock portfolio. The Objective of the fund manager is to increase the value of the fund increase, by picking stocks that can rise in price. If the fund manager is successful, the value of the fund increases and with it the value of your shares, which you buy through a regular savings plan.

Get rich in planning: Build up a fortune with small amounts

Nothing illustrates how well capital generation and wealth accumulation work with relatively small monthly savings sums like the legend of the invention of the game of chess:

Once upon a time there was a wise Brahmin named Sissa who invented a game - chess. He gifted it to the tyrannical ruler Shihram to correct him on his flawed thinking I aufmerksam close. The ruler was so impressed that he granted Sissa a wish. Sissa wished for grain: one grain on the first square of the chessboard, two on the second, four on the third, and so on—each square doubling from one to the next.

Wisdom cannot be bought

Shihram was both amused and angry at Sissa, but he agreed to help. But he had made a mistake by underestimating the exponential functions. The required amount of wheat could not be found throughout his kingdom. To fill all 64 squares of the chessboard with wheat, you would need over 18 trillion grains - that's about a billion tons of wheat.

Not only had the scholar taught his king a lesson, namely that wisdom cannot be shared with anyone wealth of Welt can buy. The story also illustrates very nicely how the compound interest effect works:

Get rich with the interest compound interest effect

Assuming that instead of the 100% interest that the scholar Sissa demands, you "only" get 10% more per field or per year for your capital, then not only does your initial investment grow by 10% per year, but so does your profit. After a year, your initial investment has grown from 1.000 euros to 1.100 euros. After two years, the increase is 1.210 euros. After three years it is 1.331 euros.

And so it goes on: In the tenth year, your starting capital has grown from 1.000 euros to more than 2.600 euros. Even though you only received 10% interest per year, your starting capital has increased by 160%, that is 16% per year. The reason for this is that you not only received 10% interest per year on your invested capital, but also on the interest paid in the previous year. This is an exponential growth curve.

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