Buying shares appears to many stock market newcomers like an inscrutably complicated science. But this does not have to be the case! New investors will get in this article the most important basics and tips, to master the entry into the stock business professionally.
In this article, we will guide you step by step through the most important planning points and make the purchase of shares for you a easily understandable instrument of asset management.
Definition shareA share is a security, by the acquisition of which you become a partner of an AG or KGaA.
Technical requirements: To buy shares you need a securities account, either through your house bank or through an online broker.
WKNMeans security identification number and is a 6-digit number consisting of numbers and letters that makes each security uniquely identifiable.
ISINOn international stock exchanges, shares and other securities can be distinguished by their ISIN (International Security Identification Number).
What is a share?
A share is a Stock – A type of certificate that evidences ownership in a stock corporation (AG) or partnership limited by shares (KGaA). Shares are Financial Instruments, with which an AG or KGaA Raise equity capital can. This is done by shareholders buying shares on the stock market. By buying a share, a shareholder becomes at the same time a partner of the AG or KGaA.
The number of shares into which the share capital of an AG or KGaA is divided is already determined at the time of formation. Shares are divided into par value shares and no-par value shares:
- Par value share / Nominal value share: Issued with a fixed, imprinted par value. Example: 1.000 shares at 100 euros each.
- No-par-value share / No-par-value share: Does not have a fixed par value, but corresponds to a share in the capital stock (z.B. 0.2 % of the share capital). Theoretically, these shares also have an arithmetical par value.
The value of a share on the balance sheet date is calculated as follows:
Book value: equity : number of shares
Why is it worth buying shares?
The question of why to buy shares and why it is worthwhile is answered simply: Investing in shares and other securities is the best way to build his wealth. Particularly due to low interest rates, shares are by their yield an alternativlos means, in order to increase its money on a long-term basis.
The investment in shares offers beyond that a good possibility of improving its age precaution.
Where does the share trading take place?
Basically, there are 8 stock exchanges in Germany, one foreign exchange, one securities futures exchange and one commodities futures exchange.
A large part of share trading in Germany is done via the Frankfurt Stock Exchange (B), which is the most important German stock exchange, and XETRA settled. Xetra is an electronic trading platform through which a very large part of stock exchange turnover is now processed.
The stock exchange is also called the stock or securities exchange. It is a stock exchange, on which securities, shares and derivatives are traded in the sense of the respective national securities trading law.
Three ways to buy shares
You have three options to buy stocks: Either through your house bank, a direct bank or through an online broker. For House bank you can speak directly with a bank advisor and open the securities account and if necessary. let manage. To place an order, you then have several options: by phone, via the Internet, by fax or in person on site.
The same applies to Direct banksHere you can open a securities account with the help of an online application. Direct banks have in most cases no branches, resulting in lower account maintenance fees and additional online services Germany beliebet direct banks are u. a.:
The third way to open a securities account are online broker. These particular financial service providers are considered to be particularly favorable. Online brokers offer apps for easy buying and selling of stocks, which they can control from your smartphone.
What are the best online brokers for buying stocks?
In the meantime, numerous online brokers have established themselves. When choosing an online broker, you should u. a. pay attention to the cost per execution. Some brokers offer a flat rate, with others you have to pay per order. In addition, you should look, which shares or ETFs are offered. If you are interested in a savings plan, you should look in advance to see which savings plans are offered by the different online brokers.
On the German market successfully established and popular online brokers are u. a.:
buy shares: What information should you know?
Regardless of which way you place your order, you will need the following information with each order:
- the indication whether it is a buy or a sell
- the exact designation of the security/contract with the security identification number (WKN with 6 digits) or the International Securities Identification Number (ISIN with 12 digits)
- the exact order volume (number of units)
- the validity of the order
- the stock exchange where you want to place your order
- any order additions (such as a buy or sell limit)
Stock market knowledge: How do share prices come about?
A price is determined by supply (seller of shares) and demand (buyer of shares). The "classic" variant of price determination works as follows: For each share, all incoming buy and sell orders are collected in the order book.
If the price expectations of the buyer (buy limit) and seller (sell limit) match, trading takes place – at the price at which the maximum turnover (= number of shares traded) occurs.
The stock exchange is a continuous auction. Offered shares are sold to the highest bidding market participants. If the Offer of a share higher than the Demand for it, providers have to settle for a lower price if they want to get rid of their shares. If, on the other hand, the demand for a share is higher than the supply, then those willing to buy will have to offer more money if they want to own the shares because of the higher competition.
This means that if you buy shares that have fallen in price, you are buying shares that fewer and fewer market participants want and that are therefore very likely to fall even further. Since you only earn money by buying a share when its price rises, it is much more lucrative to bet on shares whose price has risen recently. Because this is precisely what documents sustained demand.
Definition: cash market vs. Futures market
On the spot market (also called spot market), stock trading takes place, as well as the Trade in commodities or bonds – also called underlyings. As Spot transaction This is the conclusion of a contract for the purchase or sale of shares, for example.
The cash market is a sub-market of a stock exchange, which must take place immediately after a transaction has been concluded when it is settled. In Germany this Period on two days set. That means: two (stock exchange days) later your account is debited with the purchase price at the time of purchase and the share or the bond is booked into your securities account.
The futures market is the complement to the cash market. While the transaction in the cash market must be fulfilled after two trading days at the latest, in the futures market it must be at least three trading days after the deal be fulfilled on both sides. Securities, foreign exchange, metals and other derivatives are traded on futures markets.
Ten tips for newcomers to the stock market
Tip 1) Understand stock trading first
The first tip may seem a bit redundant, but in reality it is the key to a successful start on the stock market for many investors: if you want to buy shares, you should take the entire mechanism of securities trading Know and understand.
Already the legendary stock exchange guru Warren Buffett preached once that one should always invest only in products, which one also understands. Of course, this advice applies especially to the basis of the investment itself, i.e. the shares.
Tip 2) Invest only free money in shares
Shares are especially in the long term a profitable investment. The stock markets have in the past 20 years worldwide on average about 8% yield per year brought – despite all crises. Adjusted for inflation, this value is somewhat lower. Nevertheless, stock investments are more attractive than ever in today’s low-interest phase.
Make sure that your start-up capital is not needed elsewhere – neither today nor in a few years’ time.
Tip 3) Define goals before buying shares
A stock purchase must be made on the basis of sound planning.
Therefore, the following questions are crucial to your success as an investor:
- What are you willing to invest?
- How high is your financial cushion?
- What are the minimum and maximum amounts you want to invest?
- Would you be able to cope with losing money?
This leads us directly to the next point: How high should your profit be?? In general, the rule of thumb is "high return equals high risk". If you want to earn a high return? In this case, you should not be too attached to your money in case of emergency.
Tip 4) Buy multiple stocks and diversify risk
For beginners the idea of diversification is worthwhile. Your money should be invested as broadly as possible. Buy for this not only a single share, but several, because a spread distributes the risks and brings more security.
The mix depends on the personal risk-return profile and the available investment capital. However, a stock portfolio also needs to be maintained. Managing too many files quickly takes you to your limits. Therefore, especially Beginners should not buy more than 10 to 15 shares and hold in your portfolio.
Tip 5) Inform, buy, manage
After this basic planning it goes to the concrete selection of different shares. For this one must look in advance thoroughly inform yourself about the individual companies, Which are eligible for a stock purchase. Important here are:
- Key figures
- Market opportunities
- Market environment
- Valuations resp. Recommendations from analysts
If you want to buy shares from a particular company, you need to know it in detail. You can expect help from current stock and company reports, which are offered free of charge on financial portals.
You should also inform yourself beforehand about the Fees when buying and trading shares inform. Direct banks are cheaper and save costs. All fees and transaction costs incurred when buying shares and, of course, selling them later, reduce the profit you are aiming for.
Expert tipDo not automatically open a securities account with the bank you have been using for years. Inform yourself about the conditions beforehand and compare the offers.
Let’s move on to the test phase: test yourself and your company shares in a safe environment. For this purpose, there are now several online simulators with which you can "replay" stock trading. Get an allocation, invest, and see what happens without actually suffering losses.
Tip 6) Set maximum/minimum rate for buying and selling
Important: For stock trading, you should always set yourself firm limits, i.e. a Highest or. Minimum rate for buying and selling set. This keeps you within the predictable range and avoids losses in the event of price swings. Fixed limits protect you from your own greed. It is better to take profits within the limits and reinvest them safely than to be left empty-handed afterwards.
Tip 7) Caution with bank recommendations
How important it is to inform oneself well is also shown by the bank advisor. The key here is to pay attention, think for yourself, and not be rushed into decisions. Advisors who receive commissions or have to implement the bank’s specifications do not always recommend what the investor needs. The principle of diversification also applies to advice: A broadly diversified range of different information sources helps to avoid risks.
Tip Stay invested in the stock market
The majority of experts believe that the risks in the stock market are overestimated and the risks for the bond market are underestimated. In recent years, large sums of money have been invested in the supposedly safe government bonds; first because the yields were still attractive, then because the fear of further crises triggered a flight out of stocks and into bonds.
In the meantime, interest rates on the bond market are barely enough to even cover the low inflation rates seen to date. On the other hand, this problem in the bond market favors the upswing in the stock market, which investors should again increasingly consider as an alternative.
In the coming years, capital flows will continue to carry you into the stock market upswing. So stay invested despite short-term setbacks.
Tip 9) Avoid too offensive shares
Many investors were underinvested in equities for a long time and then tried to make up for lost ground by investing very aggressively in equities. But it must not be forgotten that even a long-lasting upswing will come to an end one day. The risk exists that the stock market in the mature stage of an upswing rises more selectively than before.
In such times, avoid high-risk stocks with questionable business models and go for stocks of quality companies.
Tip 10) Ignore the political events of the day
Focus on what really moves the markets. And ultimately, this is above all the course of the economy, which may continue to be in an upswing phase due to political events. So don’t give political issues and geopolitical events more importance than appropriate.
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