Many know that they should do it, but it doesn’t really happen after all: dealing with one’s money seems too exhausting for many. It is extremely important here. Here’s why.
The answer is very simple: so that your money grows. Or to put it another way, so that you can also afford your goals and wishes. Because of course it shouldn’t be an end in itself to amass money – it is a means to make your life safer, more independent and free.
Perhaps you dream of traveling the world for a year. You may want to finance the education of your children or grandchildren. Or maybe you just want to be able to continue living in old age without having to make any compromises.
All of this costs money. And in very few cases do you earn enough to finance your wishes simply by putting the money on the high edge. And in many cases the statutory pension alone will not be enough if you want to maintain your current standard of living.
So you should take action yourself. But what do you do?
Negative interest rates and inflation are gnawing at savings
Savings books, current accounts, fixed deposits and the like are considered safe. Today, however, you no longer generate income with this type of investment – in the case of a savings book or current account – or hardly any more, for example with a daily or fixed deposit account.
On the contrary: some banks even charge negative interest rates if you “park” your money with them in this way. This means that not only do you get no interest on your savings, but you also have to pay something.
In addition, inflation is gnawing at your wealth. So the money becomes worth less and less over time. It is all the more important to invest some of your money in such a way that it generates income, also known as returns.
Spread your money widely with equity funds
As a rule, there is no avoiding stocks. But that doesn’t mean that you have to invest in individual stocks. Equity funds that bundle many different stocks are less risky. You can spread your money widely even with small amounts. So you don’t put everything on one card – and thus protect yourself to a certain extent against losses.
Index funds, also known as ETFs (“Exchange Traded Funds”), are particularly recommended. In contrast to classic equity funds, they don’t have a fund manager who manages the composition of stocks and tries to beat the market with his fund – i.e. to be better than a comparable stock index.
ETFs simply create one using a computer algorithm Stock index such as the Dax. That is, they develop in parallel with the index that they are based on. Such “passive” equity funds are significantly cheaper than actively managed equity funds and therefore have to generate significantly fewer profits in order to make a profit on the bottom line.
Now you know why you should invest. However, there are a few things to consider.