Learn to trade on the stock exchange: Earn money with stocks, ETFs & Co. on the stock exchange – and build up your wealth

2. The magic word diversification

“The stock market is dangerous!” Say skeptics of stocks, ETFs & Co. This statement cannot stand still and needs to be differentiated: It is true that a stock market investment is riskier than a call money account, but only the stock market really offers the chance to make money to let work for you. And: The stock market is only dangerous if investors invest wrongly, too riskily or too one-dimensionally.

One of the most important rules for trading on the stock exchange is therefore: Never bet everything on one horse, spread your capital as widely as possible across countries, sectors and products away. There is little point in buying just one stock or just stocks in the same industry. If such an investment yields long-term profits, then you have probably been very lucky – under no circumstances should this “investment strategy” be the yardstick for future stock market investments.

Combine different investments. Depending on the type of investor (opportunity-oriented or security-conscious) and investment strategy (short-term, medium-term or long-term), it makes sense, in addition to stocks, ETFs, certificates, investment funds, bonds and commodities such as gold, to also rely on a call money account or a fixed-term deposit account as a security component.

A security module should ideally compensate for fluctuations in the stock markets, but at least it should cushion them. The capital for the security module therefore does not flow into stocks, real estate funds or raw materials, but into overnight money or fixed-term deposits. A security module of 25 percent is sufficient for offensive investors, in this case a quarter of the invested capital flows into safe investments. Balanced investors are right with a 50/50 mix, defensive investors should invest around 75 percent of your total capital safely.

Investors who are planning their investments for a term of ten years or more can also choose pension funds if they invest in euro bonds or are hedged in euros. In “Finanztest” issue 11/2018, Stiftung Warentest recommends these bond funds Euroland government bonds: SPDR Barclays Capital Euro Government Bond ETF (ISIN IE00B3S5XW04 / WKN A1JJTP), Lyxor EuroMTS All-Maturity Investment Grade (DR) UCITS ETF (ISIN LU1650490474 / WKN LYX0XK) and iShares Core Euro Government Bond UCITS ETF (ISIN IE00B4WXJJ64 / WKN A0RL83). According to the financial testers, all of the pension funds mentioned are “1. Choice”. Finanztest also rated the following Euroland bond funds as “1. Option “: SPDR Barclays Capital Euro Aggregate Bond ETF (ISIN IE00B41RYL63 / WKN A1JJTM) and iShares Euro Aggregate Bond UCITS ETF (ISIN IE00B3DKXQ41 / WKN A0RGEN). You can find out more about pension funds in the Buying Funds Guide. By the way: mixed funds, which, due to their construction, already consist of a return component and a security component, must be allocated proportionally to the safe and the risky component.

Note: Of course, not all products are necessary to diversify an investment well. A security module with interest investments and a return module are sufficient. The latter can, for example, consist of an ETF on the MSCI World Index as a basic investment and a high-yield admixture.

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