Getting advice from an independent source and comparing offers: That is the be-all and end-all when investing. What else is important when investing.
Despite the rising price level, some Germans still have money left over at the end of the month. Such an amount can possibly be well invested in order to gradually save for certain goals – be it for travel, for your own retirement or for building wealth. Seven tips on what to consider when investing.
1. Always keep a nest egg
The smartphone is on strike, the washing machine has to be repaired and the car won’t start anymore. Unpredictable things like this happen quickly. Arm yourself for these and other emergencies by putting aside a nest egg. “Three to four net monthly incomes are ideal for this,” says financial expert Uwe Zimmer from Cologne. Only those who have this nest egg together can think about investing.
2. Definitely get out of the overdraft facility
If you overdraw your checking account, you automatically take out an overdraft facility from your bank. However, the interest rates are usually comparatively high. “It gets really expensive for everyone who regularly overdraws their account,” says Zimmer.
So before you invest money, you should organize your own finances and divide the available money in such a way that overdrawing your checking account is a thing of the past. Claiming an installment loan, at least temporarily, can be cheaper than overdrawing the current account.
3. Get independent advice
Get independent advice. Advisors in financial institutions and other financial intermediaries generally receive a commission for the financial products they sell. That’s why they often recommend products from certain companies – “or products from which they earn the most money,” says Ralf Scherfling from the NRW consumer advice center in Düsseldorf.
A good point of contact is, for example, independent fee-based investment advisors. A register of such advisors can be found on the website of the Federal Financial Supervisory Authority (BAFIN). The consumer advice centers also offer independent advice on financial matters.
4. Compare offers, be critical
Act prudently and calmly compare several offers with each other before you invest. “It is important to take the time to critically question all the points in an offer,” says Scherfling. You should also keep an eye on the costs associated with investing. “High costs reduce the return,” says the consumer advocate.
And don’t let yourself be blinded. Just because a stock or mutual fund’s price has risen in the past doesn’t mean that positive trend will continue. “No one can seriously predict that,” says Scherfling.
Another tip from him: you should only invest in a financial product if you understand it: “Understanding here means being able to explain it to others and knowing how it has to work in order for the product to make a profit.”
5. Spread your wealth widely
“When investing money, don’t put all your eggs in one basket,” says financial expert Zimmer. On the other hand, it is ideal to spread the assets as widely as possible – for example with a mix of your own home, overnight money, fixed-term deposits, investment funds, bonds and, as an admixture, precious metals.
Consumer advocate Scherfling also relies on a broad distribution of assets. “How the mix is ??best put together depends on the individual case,” he emphasizes. Let us advise you.
6. Invest regularly and don’t lose your nerve even in times of crisis
Corona crisis, delivery bottlenecks, war in Ukraine: times are turbulent. This is also noticeable on the capital markets. For investors, however, the motto now is: keep investing, don’t lose your nerve. After all, there have always been ups and downs on the capital markets. History shows that even sharp slides in prices are made good again over time.
“The price fluctuations are currently enormous, you have to be able to endure it,” says Uwe Zimmer. It is all the more important to invest in products that you believe in. Deal regularly with your investment strategy and get advice at regular intervals on how you can shift your investment if necessary, advises Zimmer.
7. Invest in yourself
The best investment? “Invest in yourself,” says Zimmer. That means: spare no expense for professional training, regularly expand knowledge and skills. Because well-trained people usually have well-paid jobs and only then are they financially able to invest money and provide for old age.
