Many people would like to invest money – in stocks or maybe even fixed-rate bonds and alternative investments. However, they often have too much respect for investing on the stock exchange and other asset classes that go beyond saving money in the checking account or savings account.
Invest, Save, And Spend
Equity investments, in particular, have so far achieved significantly higher returns in the long term compared to the interest on savings deposits, even with a low-risk investment strategy. It is wrong to think that only professionals or rich people can invest money in the stock exchange. Of course, the decision and implementation of these investments take time and initiative – but anyone can muster that.
Do you know that insurance companies are also investing in the stock exchange, particularly non-traditional insurance policies? Not though that burial insurance may not follow the same route and so you have to consult with a professional insurance consultant for more queries.
Which investment class is the right one to invest money also depends on the investment objective. For example, the money for old-age provision should be invested as safely as possible.
What are the best ways to invest money?
There are many different investment products on the stock exchange in which you can invest money. They can be divided into:
1. ETF (Exchange Traded Funds)
Beginners are often recommended ETF, also called index funds. These are equity funds that are not actively managed by a manager, but passively invest in an equity index – such as the DAX – and thus replicate a market as a whole. With an ETF, the investor benefits from a positive overall development of the market – and does not work “against” the market like a fund manager.
ETFs are also comparatively cheap due to their low (administrative) costs. In addition, they are associated with little effort and relatively low risk.
On the other hand, if you want to try to beat the average return on the market, you can invest money in an (actively managed) fund. This represents a basket of selected investment forms, so to speak, and is managed by a fund manager.
Depending on which financial investments are bundled in the respective investment fund, it is referred to as an equity fund, mixed fund, real estate fund, etc.
If you prefer to choose your own shares, it makes sense to invest money in individual stocks. Here you have to be careful, however, that you spread the risk on securities of several different companies and achieve a sufficient spread of the risks within the investment.
In addition to stocks, money can also be invested in individual bonds. These are not listed company shares, but rather fixed-interest bonds from companies or countries (e.g. federal bonds). Profits are not generated with dividends or exchange rate fluctuations but are paid on the borrowed money like a loan.
If you want to build up your own equity or bond portfolio, you should be a bit familiar with the stock market. In addition to the profits, you should always consider the transaction fees incurred as well as the time-consuming depot compilation and maintenance.
5. Leveraged products
For speculators who are willing to take higher risks when investing and play more intensely with their luck, leverage products such as derivatives, certificates or futures can be interesting.
This type of investment is particularly risky and many a trader has already lost a fortune with complex financial products. Therefore, when investing, you should deal very intensively with the trading strategies and test them in demo accounts or sample portfolios before investing real money.
Tip: There are also good and above all profitable investment opportunities outside of the stock exchange: For example, you can invest money in real assets such as real estate or new types of investments such as crowd investing in real estate or startups. Through crowdlending, investors can now even invest money in personal loans. In the following, however, we want to concentrate on exchange products.