Create Your Money – The Guide for Investment
Lately, I have been approached more often by friends and acquaintances on the subject of investment:
Tell Oliver, you know your way … I want to invest some money now, but I have absolutely no idea about the subject. Do you have some tips for me or can you tell me what to invest in?
Maybe you feel the same way. You’ve saved a little bit and your account has accumulated a nice penny that you are currently not using. Maybe someday you will buy a house or save it for the pension. Anyway. At least it would be good if the money increases somehow !
You are determined to finally do that. But stupidly, this whole story of stocks , funds and deposits isa bunch of Bohemian villages for you. How should one go through there?
So Oliver, help me! How do I put my money on the best ?
The two most important questions when investing
The principle of investing money is always the same: instead of having to spend your savings on mini-interest on the account, you send it to work. This means that your money creates added valueanywhere in the world . For example, a clothing manufacturer could build a factory that produces and sells shoes. Or someone builds a house where people can live for rent. If that works, then you as an investor get something off the added value. You get more money back than you invested and your fortune grows. This win is a reward for taking a risk with your investment . For higher earnings prospects, you also have to take a higher risk.
But wait, that can not be easy. As an investor, do not you have to constantly study the current economic situation and know the latest stock market trends? Only the pros can do that, right?
Many believe that you have to be a banker or have studied economics in order to successfully invest money. I can reassure you: that is not the case. I think investing money is more like swimming or cycling: you learn what it takes, and then the box runs. You do not have to be the same as Michael Phelps or Lance Armstrong among investors.
Many also shy away from investing because of ignorance. That’s all rip-off then it says, and you could only lose as a normal citizen on the financial markets anyway . Such statements are above all one thing: Unqualified bullshit .
On a long-term average, companies in the world generate a return of 6 to 7% per year . And as a normal investor, you can get just as much of these profits as the pros. Me and many others do it too. You do not have to be a Schlip carrier and you do not have to watch stock market TV.
When it comes to investing, two questions come first. And surprisingly, they have nothing to do with the current economic situation or the stock market news:
- What do I want to achieve?
Do you want to save for old age, save on a house, or retire at the age of 40?
- What risk can I take, so that I can still sleep well at night?
Are you more of a shaky type or do you have nerves like wire ropes?
Do you need your money tomorrow, or can you take advantage of fluctuations for a few years?
These are the core questions. It’s all about this. Essentially, investing money successfully means that you are thoroughly engaged with these two questions. The rest is then almost only detail work.
Why are these questions so important? Quite simply: It depends on you in which asset classes you should invest at all. Tagesgeld, shares or dear real estate? Which is the best form of investment is determined not by the stock market situation or Donald Trump, but by your personal goals and how much risk you can take .
That’s why no-one can say in a nutshell which investments you should invest best. If a friend or advisor recommends investing in stocks, funds, or anything else without consulting you about your goals or your personal risk tolerance, then such a recommendation is definitely dubious !
For example, if you plan to buy a home from your money within the next 10 to 15 years, investing in stocks or stock funds is in any case taboo. Stock prices fluctuate strongly and can also be in the cellar for ten years.
Over a longer period of 20 or 30 years, stocks are again the asset class with the best return ever. So, if you spend your money on old-age provision, you do not really get around stocks.
However, you also have to bring a bit of mental strength with you. If a sudden stock market crash sends stock prices down for some time, you must not panic and sell everything. Such strong fluctuations are quite normal. Only those who can stand this, will be rewarded with a hefty return. You get sweats in such a scenario? Then it may be better to invest part of the money in safer investments from the outset – but then they will not generate such high returns.
So you see, investing has less to do with the market or the stock market, but rather with yourself and your life situation . If you know your goals and your willingness to take risks then that’s half the battle.
Only then does it go to the concrete implementation:
- Which asset classes are there anyway? And in what should I invest?
Stocks, bonds, overnight money or real estate? Single stocks or funds? Maybe even raw materials or gold?
- How do I choose the right products from the financial jungle?
Which call money account, which shares, which funds should it be exactly?
- How do I correct an account? How do I buy and maintain my equipment?
Where do I open my deposit? At what intervals do I invest? What should I pay attention to with the tax?
Great, thanks Oliver! I understood everything. But how exactly do I answer all these questions now?
There I see two possibilities:
- Option A: You are looking for a professional adviser
- Option B: You take the scepter into your own hands and become a do-it-yourself investor
Let’s take a look at the two ways in detail.
Option A: You use a professional adviser
First a warning. What exactly is meant by a professional consultant ? Maybe the nice gentleman from the Sparkasse, where you have been a customer for so long? Clear answer: No, definitely not !
Never, and at no time in your life, can you use the services of a regular bank or insurance advisor. These people are not really advisers, they are salesmen .
Their goal is not to increase your money, but to get as much profit for you and your bank as possible. With the bank’s typical investment products, you can easily shed tens of thousands of euros in commissions and hidden fees over time. They walk out of your pocket into the bank and this money is missing in the end. So go away!
Even if you think that you can trust your personal banker, or maybe even a friend of a friend: Often these sellers do not even know how bad the products they sell are because they are trained by their bank or insurance company and they lack the comparison to really sound advice for the customer.
Also, I was once already pulled by such a nice gentlemen of the bank almost over the table. Luckily I was able to back down in time. Today, I’m not going to let that bank sellers beat my ear.
As a rule of thumb, remember: never seek advice for which you have not paid any money. Such “free consultations” are actually sales pitches where you are almost always turned on useless or even dangerous financial products.
What you are looking for is a fee-based consultant . He works for no bank and may not collect any commissions for his recommendations. He works independently and for a fixed hourly wage. That is: Such a consultation costs money – up to $500 you probably have to plan already. That sounds like a lot, but compared to the “free” bank advice is a good deal: In the end you have saved thousands of dollars in hidden fees and commissions.
Above all, a fee consultant should be a kind of financial psychologist. He goes through your financial situation with you and discusses your goals. He finds out what kind of risk you can take. His job is to clarify the two most important questions with you.
It also helps you choose appropriate asset classes and set up an investment plan. Also in the concrete implementation, such as the establishment of the accounts or the purchase of securities, a fee-based consultant can support you.
Unfortunately, we live in an upside-down world: while teeming with dangerous bank sellers on every corner, fee-earners are a rare species. And if you have found one, then it is not even guaranteed that this is also a good adviser. For fee consultant no training occupation, such as carpenter or industrial clerk. For this reason, fee-based consultants in Germany do not have to prove any special qualifications or take an aptitude test.
I myself have not used any fee counseling, as I manage my finances myself. This of course costs a little more time, but is cheaper and I learn something new for life. A professional advice I would use in your place only if you absolutely can not get excited about finances, but still want your money working for you.
Option B: Become a do-it-yourself investor
That’s the way I went too. You do not have to worry about taking your finances into your own hands. A financial adviser can not do it better than you do. Investing is all about you and your life , and that’s why you’re already a specialist (or a specialist) anyway. The concrete implementation you can read yourself on a few weekends from one or two books yourself.
Luckily, I do not have to write these books myself, because other people have done that very well for me. Especially a gentleman I would like to warmly recommend to you: Albert Warnecke.
In this book, the Finanzwesir rattles once from all important questions and topics. It starts with the two most important questions : What do I want? And what risk can I take?
He explains the basic fundamentals: What are stocks , funds and dividends ? And he goes into typical mistakes that you better avoid as a beginner. The book is not limited to the gray theory, but also provides concrete practical tips for implementation. Starting with the compilation of the asset classes, over the fund selection up to the establishment of the securities depot.
Professionally the financier has nothing to do with finances – he’s an engineer – but that’s exactly what makes him so likeable in my opinion. What I like most: His pragmatic approach, scientifically sound and free of hocus-pocus and marketing jokes. Exactly what you need as a normal gas investor.
I think the book is a very successful entry-level project for anyone who wants to invest their own money. It is not a dry textbook, but written understandable and entertaining, even one or the other joke builds Warnecke.
Whether the book is something for you? At Amazon, you can take a look at the book and read the first pages for free.
You have already read the book? Then your opinion would interest me burning. I’m looking forward to your comments!
Investing money is a great thing to have on it – just like swimming or cycling. You send your money to work and it multiplies without you having to do anything about it.
It can even go so far that at some point you can quit your job and live alone on the returns of your investment . What are you waiting for?