Basic knowledge of investing


The days when a savings or time deposit account yielded a small fortune in the form of interest are over. Today, you hardly get any interest on credit balances, because the key interest rates of the European Central Bank are in the cellar and the credit interest rates of the credit institutions are based on this.

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If you want to invest your money sensibly today, you can hardly avoid investing in the stock market. In this article, you can read about the basic investment forms, how to put together your portfolio and how to minimize the risk.

What forms of investment are offered by the capital markets

There is a wide variety of securities. In order to find the most suitable ones, you should take a look at the most important asset classes ("assets"):

Shares are company shares. As a shareholder, you own a fraction of a company. This protects you against inflation, because shares are tangible assets. But stock investments are also subject to certain price fluctuations. Stock gains come from a rise in the share price. But that's not all: dividends paid out on an ongoing basis (profit sharing by shareholders) also contribute a large part to your stock gains. Stocks are considered comparatively risky. Prices can rise, but they can also fall.

Bonds - also called annuities or fixed-income securities - are a type of loan that you as an investor give to a government (government bonds) or a company (corporate bonds) when you buy these securities. You earn money primarily from the interest that is usually paid out annually. That's why you look at the interest coupon on bonds, i.e. the percentage rate at which your investment earns interest each year. During the term, certain price fluctuations are also possible. However, these are usually much smaller than with shares, and at the end of the term the price is generally the same as at the beginning. Bonds are therefore considered a much lower-risk investment. But beware: Bonds also include highly speculative and therefore risky securities. Namely those of potential bankruptcy candidates.

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Funds - or more precisely open-ended investment funds - are an asset class in which the money of many investors is collected through the sale of fund units. This money is then used to buy stocks, bonds or other investments. This reduces investment risk because it is spread across multiple securities. Depending on the fund, the portfolio contains a majority of stocks ("equity funds"), bonds ("bond funds") or a mixture of both ("mixed funds").

Certificates in and warrants are only recommended as a temporary addition to the portfolio. Ideally, they can be used to boost performance. There are a wide variety of certificates - from very safe to extremely speculative.

The most important points at a glance:

    Investment forms: The most important securities are shares, bonds, funds and certificates. But it also depends on the right mix.
    The older you are, the smaller the proportion of risky securities in your portfolio should be. The younger you are, the longer you have time to wait until interim price losses are recovered.
    You should make your portfolio crisis-proof: through the right mix and by adapting your portfolio to the phase of life you are currently in.
    Always consider how much risk you can bear and what mix of securities suits you.