Stock gains on the stock exchange are pain and suffering. First comes the pain, then the money. Fancy a taste of this stock market wisdom? Just take a look at the year 2020. For example, if you entered the market at 12,000 DAX points in winter, you were quickly around 30% in the red. At the end of the year, however, there is an increase of 10 percent and thus more than would have been possible in an average share year. The most important asset, i.e. the most important virtue for a stock market operator, especially at the beginning, is patience. Hyper-nervous trading back and forth will not help, meaningless setting of so-called stop rates was a safe bet for losing money in 2020. A good plan and stocks and products that you understand are enough and you can get started. What to Avoid Buying traditional investment funds is almost always not advisable because they usually have high sales charges that are paid in addition to the fund manager’s fee.
The way to the so-called advisor in the Sparkasse or Volksbank is also expensive, because of course the advisor wants to be paid. Thinking for yourself saves money, informing yourself brings more returns. In addition, it is imperative to forego certain promises of returns and lure services according to the motto “secure 50 percent a year with hot tips”. Crash prophets, who supposedly protect money from loss in a downturn and otherwise promise returns, should also be avoided as a matter of urgency. Anyone who designed their depot 2020 in this way earned nothing and watched the century rally from March. Because crash prophets all too often have a negative worldview and that rarely helps for stockbrokers. That alone underlines the long-term development of stocks whether in the S&P 500 or the DAX.
Therefore, the motto is to act courageously but prudently and to build up long-term wealth. Even in 2020, shares are unfortunately still not one of the most popular investment opportunities, at least in Germany. Only around 16 percent of all Germans own stocks or index funds. But something is happening, as underscored by nearly a million new securities accounts with brokers like Smartbroker. Low fees when buying shares help you get started, unlike in the 2000s when Sparkasse or Postbank still had to pay 20 or sometimes 30 euros for a 1,000-euro securities order. Fortunately, those times are over.
The profit lies in purchasing
So only those who do their homework before the first trade have a good chance of success. Informing, reading, building up knowledge and finding a good broker are the be-all and end-all. The latter is basically simple: With just a few clicks, a deposit account can be opened online or via a smartphone, the money transferred and, after legitimation, trading can begin. But the risks are in the details.
First of all, it should be clear which requirements the broker must meet. If over-the-counter trading is possible, foreign stock exchanges are also on offer, there are savings plans – the list can be supplemented as required. With savings plans, investors can invest money in a fund or ETF every month. It starts at 25 euros. ETFs are exchange-traded funds that are usually cheaper than a comparable fund. Above all, newcomers to the stock market should look at the price tag and compare the conditions of the various brokers. The amount of the transaction costs depends largely on two factors: the stock exchange and broker fees.
Very active investors weight the selection criterion order fees more heavily than investors who rarely trade. The higher the transaction costs, the more profit it takes to make money on the stock market. The old business adage that “the profit lies in purchasing” has not lost its relevance.
Not only the most attractive fees are important, but also reliable order processing. Especially in stormy phases on the stock market, such as the last time in spring, it is crucial that buy and sell orders are carried out at all times. New brokers like Trade Republic looked anything but good in the spring and customers weren’t very satisfied. Onvista and DKB also showed considerable weaknesses.
When you have found your way to the stock market, the psychologically most important rule still applies: no matter how tempting the returns: Only use capital that you can get over losing. Last but not least, there is one thing to be aware of when investing: The days of risk-free interest are over, there remains interest-free risk, if at all, not only in Portugal or Spain. And this risk is flanked on the stock market with good potential returns.
Daniel Saurenz runs the stock exchange portal Feingold Research with his team. It offers a daily market letter that you can test free of charge for 14 days. Depending on the variant, this is aimed at long-term investors and beginners in the branded portfolio or at more active investors in the classic subscription to traders in the rather offensive turbo service. Register at www.feingold-academy.com/boersendienst or get more information at firstname.lastname@example.org. You can find training days as learning modules for viewing and coaching NEW at feingold-academy.com