Those who want to invest in shares are often unfamiliar with the stock market jungle. But before you throw the shotgun in the grain, Kevin Braddock shows you some of his top tips.
Anyone who has decided to put their money on the stock exchange is facing the next challenge: choosing the right shares. There are various approaches for this. They can be selected according to regions of the world, the amount of the dividend, the industry or whether a company is the market leader. Of course there are many other criteria, and of course you can combine several criteria. Since it is about long-term investment, the most important criterion should be whether a company offers products that will be in particularly high demand in the future. Then it benefits not only from the general growth of the economy, but also from structural changes in its favor. On the other hand, it would be unwise to invest in companies whose business is outdated.
If you walk around the world with your eyes open, you can see the mega trends for yourself: These are often the problems that are discussed most by society. Companies that have solutions to offer have promising business prospects. These trends include, for example, digitization (payment processing, trading, administration, etc.), automation (robots), environmentally friendly energy generation (wind turbines, solar, hydropower), the economical use of resources.
Investing in stocks should never buy two or three companies, but get into many companies to spread the risk. If you invest 10,000 euros in 20 companies and one goes bankrupt, only five percent of the investment amount is lost. If the other systems run well, you still make a plus. If only two companies go bankrupt, there is no catching up. It is best, however, that investors do not buy individual stocks at all, but rather so-called ETFs. These are listed funds that hold shares in dozens, hundreds or even thousands of companies or that track their price performance. The problem: with many ETFs, you buy a colorful bouquet of companies, including those whose best time is over or who are not working sustainably.
Nobody knows that moment when you can enter the market. At best, that becomes apparent in retrospect. It is therefore advisable to invest smaller sums over several years to balance ups and downs. There are inexpensive ETF savings plans for this. In addition, investors should remain invested, even when things are going down, because things can go up just as quickly. Statistics show that the price gains of a year are usually made on a few trading days. If you are not there, the chance passes. Since the investment horizon for equities should be at least ten years, price fluctuations can be sat out. But that also means: Only invest money that you don't need for a long time - and the loss of which would be manageable.