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Investing Fundamentals: These are the questions you should ask yourself

Savings book, overnight money, fixed-term deposits, stocks, funds or real estate: those who want to invest their money are spoiled for choice. But before you start investing, you should following question put:

The magic triangle determines investments

Return, security and liquidity: These three cornerstones are crucial for investing. It is also called the magic triangle. The following applies: Safe and liquid (liquid) investments generate less returns. If the return is high, the security or liquidity is lower. If an investment strategy promises maximum return, steady liquidity and absolute security, caution is advised.

Pay off your debts

Before investing money, it is advisable to pay off debts. Because Interest on loans or loans are mostly higher than the return an investment. The checking account or credit card should also not be overdrawn. Because the financial institutions often charge high interest rates for this.

Directly to the comparison calculators

In this guide we explain how you can find the investment that suits you and what is currently still worthwhile. We guide you Step by step through the basics of successful investments. If you already know what you want to invest your money in, you can jump to the relevant investment options here and Compare accounts, banks and offers independently and free of charge.

Do I value security or returns when investing?

There are 3 types of investors:

  • The conservative investor type attaches great importance to security. Classic forms of investment such as overnight money, savings accounts or fixed-term deposits come into question for him. When interest rates are low, however, money loses value in the long term.
  • The balanced investor type Both security and return are important. Low-risk and high-risk investments are balanced with him.
  • The offensive investor type wants to achieve the highest possible return. In doing so, however, he also risks greater losses.

This is also important when deciding on a safe or profitable form of investment Amount of total assets. If you already have a larger sum in your savings account, you can invest part of it in a riskier investment. If you have a smaller budget, however, you should rely on security. The continues to play Job-related situation a role. People with a secure income can take more risks than if they were threatened with unemployment.

First overview: which forms of investment are safe and which are profitable?

Safer forms of investment with little return

    Risky and high-return forms of investment

    • Exchange Traded Funds (ETF)
    • Derivatives or certificates

    You can find a detailed overview of all forms of investment in the section "Forms of investment: What are the options?"

    Wide spread protects against losses

    If you want to minimize losses, you should have your money Lay out as wide as possible. A part of the assets should always be invested in safe investments. In this way, the loss of a risky investment can be intercepted. So make sure that you choose different forms of investment combine sensibly with each other. Not all of your investments should be equally risky. Different running times also make sense.

    Investment horizon: How long will I invest my money?

    Do I need my money at short notice or can I put it on the high edge for many years? The period is decisive for the success of an investment. Because: the longer the investment horizon, the lower the risk of loss.

    Investment horizons are usually staggered as follows:

    • Less than 5 years - short investment horizon
    • 5 to 10 years - medium investment horizon
    • Over 10 years - long investment horizon

    Expert tip: rely on long-term investments

    In the case of high-yield and therefore risky investments, it is advisable to have a long period of 10 or 20 years to choose. Those who invest at a young age drive particularly well. If the wealth is higher, it pays off with part of it long-term investments how to bet stocks or funds. This is where patience pays off, as the markets are subject to fluctuations. “Don't panic when you lose money. They can be balanced out again over the years, ”says Sascha Riemann, our asset management expert. But goals and strategies should also be used for long-term investments checked regularly become. This is how you can react to changed living conditions or markets.

    How to manage your wealth through stocks

    Make sure you have a liquidity reserve

    But what if I am faced with unexpected costs and have tied up my money for 20 years? You should therefore make sure to leave a liquidity reserve for such expenses. Experts recommend a reserve of at least 3 months' wages. The money is quickly available, for example in savings or call money accounts.

    What are the investment options?

    Safe forms of investment:

    Those who invest their money securely are largely protected from total losses. However, the return is usually also lower.

    Forms of investment with high returns:

    With investments such as stocks, funds or derivatives, the return opportunities are higher. However, losses must also be expected - in the worst case scenario, investors could lose all of their assets.

    Call money account as an investment

    Savings books and call money accounts are safe investments. If the bank goes bankrupt, thanks are due Deposit insurance 100,000 euros per bank and customer protected. In a phase of low interest rates, however, the customer does hardly any profit. As with a savings book, money is also with overnight money always avaliable. With the latter, the interest rates are usually a bit higher. However, they are not fixed, they can vary from day to day. If you have children, you can also open a child account. For a limited amount, the banks lure you with an attractive interest rate.

    Compare call money accounts now for free

    The Test winner 2021 from Stiftung Warentest, Ökotest and Focus Money in comparison.

    Fixed deposit account as a financial investment

    A little more interest than on the savings book or overnight money are in the fixed-term deposit account, on which the savers have money certain period invest. During the term of 1 month to 10 years they cannot fall back on their money. The longer the investment, the higher the interest. This is guaranteed and assets of up to 100,000 euros are also protected in the event of a bank failure. There is also the option of investing overnight and fixed-term deposits abroad at higher interest rates than in Germany.

    Compare fixed-term deposit accounts now for free

    The Test winner 2021 from Stiftung Warentest, Ökotest and Focus Money in comparison.

    Invest money with a home loan and savings contract

    A home loan and savings contract is primarily used for building finance. If the customer has saved a certain amount after a few years, he can pay a favorable interest rate that was agreed at the start of the contract Building society loan receive. The home loan and savings contract is only conditionally suitable for saving, especially in a phase of low interest rates, because the Credit interest lower than with other systems.

    Endowment life insurance as an investment

    Investment and protection: This is what the endowment life insurance offers. The terms are mostly long. When the contract expires or in the event of premature death, the insurance pays the agreed final amount to Bereaved. However, insurance against the risk of death is not free, which reduces the savings again.

    For whom is endowment life insurance worthwhile?

    Bonds and Pfandbriefe

    Bonds are Securitieswhere a company or government borrows money from the buyer. In return, there is interest. In phases of low interest rates, however, these are correspondingly low. An investment in bonds is then hardly worthwhile, although the security of this investment is high. Usually it earns a little better interest than the bond Pfandbrief. This is a bond that is issued by a Pfandbrief bank.

    Tangible assets as an investment

    Real assets are becoming increasingly popular and attractive as a form of investment. These include, for example:

    • Works of art
    • Antiques
    • Gold and jewelry
    • Valuables (e.g. luxury watches)
    • Wine
    • Collectibles of all kinds

    There is no interest on property. However, they are considered reasonably safe. If the Value increases over the years, high profits are quite possible. However, it takes luck, sufficient capital and enormous expertise.

    Real estate as an investment

    You can also invest your money in real estate. This is currently considered to be particularly attractive, since a property can be acquired as a capital investment, but also for personal use. Real estate asset management is not free from risks and the financial burden is high. Nevertheless, real estate is considered a safe and lucrative investment, especially if you buy at the right time.

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    Investing money in stocks and funds

    Shareholders buy one Share of a company. They make a profit on the share when the value of the company increases. They also receive an annual dividend (bonus). If the company does badly, the share loses value. Are in a fund multiple stocks contain. The risk on the stock exchange is therefore smaller, since hardly all stocks lose value at the same time. Shares and funds can be managed via a custody account.

    Anyone who wants to invest in stocks should take enough time Capital market and its developments understand. Also the Companieswhose stocks are to be invested in should be considered carefully.

    Invest money in funds and ETFs

    For ETFs (Exchange Trades Funds), also called index funds, there are no costs for the administration. Form ETFs the development of stock market indices such as the Dax or Nikkei to. So there is no manager behind it who actively analyzes market developments. The return expectations are just as high as with actively managed funds. Investors can even small amounts invest less than 100 euros. ETFs are also managed via a custody account.

    Compare deposit accounts now for free

    The Test winner 2021 from Stiftung Warentest, Ökotest and Focus Money in comparison.

    Derivatives and certificates as investments

    Derivatives are only for experienced investors recommendable. Derivatives are Bets on the future development of stocks, commodities and foreign exchange. The best-known derivatives include:

    • Options
    • Futures
    • Certificates
    • Swaps

    Fast and high returns are possible with these types of investment, and that is correspondingly high risk.

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    What alternative forms of investment are there and how do you save for old age?

    • Anyone looking for an alternative investment can, for example, in Bitcoins invest. It's a virtual currency on the internet. High profits are possible for a short time, but also high exchange rate losses. (Can you insure bitcoins?)
    • Investments in Fintech startups (Financial technology) or for the environmentally conscious in Green bonds. These bonds invest the money in sustainable projects, such as the construction of a wind turbine.
    • Alternatively, you can also Shares of cooperatives acquire. These usually offer higher interest rates than overnight money or fixed-term deposits and are considered relatively safe.
    • There are also many ways to get around to save for old age. In addition to statutory old-age provision, there are numerous forms of private old-age provision. A company pension is particularly worthwhile for both employers and employees. Such a retirement plan is one of the few ways to retire earlier.

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    What are the costs and fees for investing?

    Overview of administrative costs

    For Call money or time deposit accounts banks usually do not charge any fees. It looks different with managed funds off: Here, 2 percent of the investment amount can accrue per year, which reduces the return. Are cheaper Index funds (ETFs, Exchange Traded Funds). The portfolios are managed automatically. This saves administrative costs.

    Robo-Advisor helps with creation

    You can also get help from a robo-advisor when creating. By means of a software funds are invested and managed in securities (mostly ETFs). Before investing, the robo-advisor asks about the client's financial background and risk tolerance and then recommends a portfolio of securities. The providers charge a fee for the digital service. Usually this is loweras if someone were managing the fund.

    More on how Robo-advisors work and when it is worth it, you can find out in our article on asset management:

    This is how automated asset management works

    Invest cleverly with vB-Invest

    The digital asset management of our colleagues also works online vB-Invest. The customer can do this in a few minutes vb-invest.de open a digital depot. In contrast to pure robo-advisor solutions, however, people are responsible for the system: over 600 Analysts and experts invest the money in a globally diversified portfolio of ETFs and funds. You continuously decide which asset classes have to be weighted and how strongly for consistent risk and return management, and you can react in good time to changes in the market. An annual fee of 1.2 percent of the invested assets is required for this. The assets are available to the customer at all times.

    Further asset management options

    How do high and low interest rates affect the investment?

    When it comes to investing, the decisive factor is whether interest rates are currently high or low. In theory, phases of high and low interest rates alternate cyclically.

    How was it in times of high interest rates?

    The last phase of high interest rates was in the 1990s. There were also classic investments such as savings books, overnight money or bonds 9 percent interest inside. Accordingly, much was asked for borrowing - the Lending rates were accordingly high.

    How is that in the current phase of low interest rates?

    The opposite is true in the phase of low interest rates, which has lasted around 2000:

    • Borrowers benefit: Lending rates are low
    • Savers have to reckon with losses: Most banks tend to have interest rates around them, especially with safe investments such as savings books, overnight deposits or fixed-term deposits 0 or 0.2 percent
    • Some financial institutions even charge one Negative interest, that is, savers pay on top. Negative interest rates can also apply to loans at the same time, from which borrowers in turn benefit.

    Either way: even with low inflation the assets steadily lose value. The following calculation example shows what this means.

    Sample calculation: This happens with 1,000 euros in the low interest rate phase

    • Lying in the savings account 1,000 euros, the interest rate is 0.2 percent.
    • After a year, the assets have grown to 1,002 euros.
    • Due to the inflation but it shrinks anyway.
    • For example, the inflation rate in Germany in 2019 was 1.4 percent.
    • The purchasing power of the savings is therefore only at 988 euros.

    How do you invest your money sensibly with high and low interest rates?

    While savers with secure investments such as savings accounts or bonds are well advised during periods of high interest rates, their assets hardly grow during periods of low interest rates. Despite the low interest rates, you don't have to spend your money too quickly.

    “You can invest it profitably,” says our expert Sascha Riemann. A is suitable for this Mix of real estate (funds), investment funds and stocks. “But it is worth getting help from experts,” says Riemann. Because the markets are extremely complex and fast-moving. The amount of assets and the willingness to take risks are also decisive when making an investment.

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    How much money can you invest and how?

    How do you invest a small fortune?

    Saving is worthwhile even with a small budget. With digital asset management vB-Invest is already from 50 euros per month long-term asset accumulation possible.The return develops differently depending on the willingness to take risks and the economic situation. VB-Invest distinguishes between 7 risk levels. If the risk is low, the majority of the money is invested in bonds; The 3 sample calculations show how an investment of 100 euros per month over a period of 20 years can develop.

    Overview: The development of the system at 100 euros per month