With the current low interest rates paid on savings accounts and bonds, there is practically no way around stocks for savers. But how does investing in shares actually work and what should you bear in mind? We have summarized the most important stock tips for you.
A share is a security. By purchasing a share, you become a co-owner of a corporation. This grants you a number of rights. For example, as a shareholder you can participate in the annual general meeting and have a say in the company's policy. Obviously, the more company shares you own, the greater your influence.
Major shareholders are those who own at least a two-digit percentage of the stock corporation. Small shareholders use their shares primarily as a short-term financial investment. If the company makes a profit, the value of the share increases. The goal for small shareholders is to sell their shares at a later date at a higher purchase price.
In addition to the increase in value, the so-called dividend is also relevant for investors. This is a share of the company's profits that the company pays out to its shareholders when business is going well. Whether or not a dividend is paid out is decided jointly by the shareholders at the annual general meeting.
A distinction is made between Registered shares and Bearer shares. As the name suggests, a registered share has the name of the shareholder listed in a register. This offers companies the advantage that they can contact their shareholders directly. In addition, only those shareholders who are entered in the register can participate in the Annual General Meeting.
In the case of a bearer share, on the other hand, no such register exists. Every share owner automatically has the right to attend the Annual General Meeting. For shareholders, this offers the advantage that they are not recorded by name. Conversely, it is more difficult for companies to contact their shareholders.
There are also preferred and common shares. Holders of preferred shares receive a higher dividend, but have no voting rights at the Annual General Meeting. Holders of ordinary shares, on the other hand, are entitled to vote.
If you want to save effectively, it's not much use just storing the money in your checking account. There it increases only marginally, if at all. Stock tips are therefore a way to maximize your wealth with little effort. On the risks, which are associated with this, we will go into more detail later. First of all, we would like to highlight the advantages.
By spreading your savings over different stocks, the compound interest effect increases enormously. In recent decades, it has been shown time and again that a broadly diversified stock portfolio can achieve a significantly higher average increase in value than money in a savings account. As a result, stocks are considered a relatively crisis-resistant and high-yield investment.
There are countless stocks. It is not possible to predict with certainty which share will perform best. Basically, all forecasts are to be considered as speculations, which in turn are based on developments and experiences from the past. The ultimate stock tips can therefore not exist.
Nevertheless, based on experience, specific recommendations can be made as to which securities account providers are a good choice for you as an investor. You can find recommended securities accounts with low fees at the following providers, for example:
If you value a particularly wide range of services and personal advice, we can recommend the following providers:
It's no secret that investing in stocks comes with certain risks. The returns are high, but where there are big gains, there are also potentially harsh losses. The value of stocks can fluctuate significantly. If a stock price collapses for any number of reasons and you haven't diversified your portfolio enough, such a loss can hit you hard financially.
This risk cannot be avoided, but it can be managed. We have already mentioned the golden rule: make sure that you do not only own shares within one sector, but that you are broadly positioned. The technical term is Diversification the talk. If one industry records losses, this can be offset by gains in other industries.
Another option you should know is the so-called stop-loss order. When you buy the share, you already determine a lower price limit. If the share falls below the value you set, a market order is automatically generated to sell the share immediately at the best possible price. In this way, you can better calculate possible losses and keep them low.
If you want to invest in shares in the short term, you should sell them again as soon as the price is high enough. The decisive factor is that you sell the stock at a higher price than the original purchase price. Since stock prices fluctuate a lot, you should not be hesitant in this case. This is one of the most important stock tips for short-term investing.
In addition, it is of course possible to use your shares as a long-term investment. Be aware that long-term investing covers a period of five years or longer. So only use savings that you don't need in the short term.
Only over the course of several years and, of course, with a diverse portfolio, it is realistic that you will balance the fluctuations in the stock market and achieve a satisfactory return. Furthermore, you should consider the following stock tips for a long-term investment:
The share price is significantly influenced by external factors. On the one hand, these include factors at the company level. If the share price of a well-known company collapses because the expected profits were not achieved, the industry peers are inevitably expected to follow a similar trend. Consequently, the entire industry is affected.
Another factor is political events and economic factors. A current example of this is persistent inflation, which minimizes demand for shares. Investor sentiment also plays an elementary role: If the underlying sentiment is positive, investors will stick with their investments, while a poor market phase offers the possibility of a sudden upswing.
The topic of diversification is so fundamental for shareholders that we would like to go into it again at this point. Anyone investing in shares should be aware of the Market risk be aware. This means that you can never specifically predict how the market will develop. This applies across the board to all industries.
Also the Business risk plays a role. A company can get into financial trouble for a variety of reasons, be it management mistakes, negative press or environmental factors such as pandemics. To keep your investment risk low, you should own shares of different companies from different industries as well as from different countries.
Admittedly, it sounds rather complicated to put together such a portfolio yourself. But this is not necessary: Most investors use investment funds. This collects money from investors and distributes it among shares of various companies.
Investing wisely and following the most important stock tips, with a little bit of luck you can definitely succeed in making money with stocks. financial freedom to obtain. The most important thing is to find out about the investment risk before you buy and to diversify your portfolio as much as possible. Here, for example, it may be worthwhile to use a custody account. It is also important to regularly review and, if necessary, adjust your portfolio.
