This is what you need to know about stocks& investing know

A share is first and foremost a security, i.e. an intangible piece of property in a company to which a certain monetary value is ascribed. The amount of this value depends on the success and failure of the company offering the shares for sale. In technical jargon, the ups and downs of companies are called bull and bear. With a share you therefore become an investor and acquire a small part of a company of your choice.

More precisely, a share is a share of a company through which you get a fraction of the share capital of a company. The companies that issue shares usually have the legal form of a stock corporation (AG). These companies, if listed, can make it possible for the public to sell shares in their company through an initial public offering (IPO). The process of making shares available to a broad mass is also known as an issue.

The buyer has a vested interest when trading in shares, the yield. The yield is the return on an investment of money, which is achieved and is significantly related to the success of the company. Thus the profit of a company usually lets, also the value of the pertinent shares rise. If one has invested 100€ in shares and after the sale 108€ on the account, the net yield amounts to 8€ – administration costs, taxes and trading costs not yet subtracted. An important factor of the return is also the so-called dividend, which is directly related to the rights of a shareholder.

If you’re looking for more on the stock market, check out our stock market glossary, where you’ll find all the topics at a glance!

Rights and duties of a shareholder

In return for an investment in shares and the associated risk, companies pay out a dividend to their investors. The dividend is a part of the company’s profit, which the stock companies can usually pay out once a year (in the USA every quarter).

At first glance, the dividend appears to be an interest payment, but it has little to do with it. Although investors also expect to participate in corporate profits, there is no obligation to pay the dividend. Some companies decide to reinvest the profits internally in other profitable projects and thus do not pay out a cent.

The amount of the dividend is determined at a shareholders’ meeting after the Executive Board makes a proposal. In principle, any shareholder can participate in the Annual General Meeting if he or she registers in advance. Also of interest to shareholders is the right to information, which gives investors the opportunity to find out about all important transactions of the AG. The subscription right lastly gives the shareholder the opportunity to acquire more shares in the event of a capital increase in order to continue to hold the same share in the company.

A summary of the rights of a shareholder

Participation in the annual general meeting

Right to vote at the AGM if one is a holder of ordinary shares (explanation: "What types of shares are there")

Right to information in order to remain informed about all important processes of the AG

Pre-emptive rights, which allow shareholders to buy additional shares at a preferential price in the event of a capital increase

A summary of the duties of a shareholder

In addition to rights, there are also a few obligations that are important for shareholders. Thus, the purchaser undertakes to also pay for the shares he or she holds by making a contribution to the share’s capital stock. Since shares are nowadays almost only traded electronically via stock exchanges and not as tangible share certificates, this problem almost takes care of itself. The duty of loyalty also requires the shareholder not to act contrary to the interests of the company and to behave loyally. Further duties can be anchored differently from AG to AG in the respective articles of association.

Investors must pay for the shares they hold, otherwise they face penalties

The duty of loyalty requires the shareholder not to act contrary to the interests of the company

Even if a company is doing badly, the investor bears the financial risk only to the extent of the purchase price of his investment. Speak, it can come to no additional payment obligation.

What types of shares are there?

Shares are not equal to shares and can be divided into different types of shares, which also say something about the rights and obligations of a shareholder. Not every distinction is directly relevant for investors, but it is worth knowing which type of share is being referred to at any given time. You can find out which class of shares you own on the respective AG’s website under "Investor Relations" or, in some cases, from your own custodian bank. The AGs determine which forms of shares are traded on the stock exchange. Preferred shares can also be identified by the WKN code number, which always ends with a "3".

Common shares: Owners of common shares are entitled to participate in a company’s shareholders’ meetings and exercise voting rights, for example, to determine the payment of dividends. They are more widespread than preferred shares.

Preferred shares: In contrast to ordinary shares, they do not include voting rights at general meetings and thus no right to a say in the company’s affairs. In return, investors can expect a higher dividend, i.e. they are "preferred" in the payout.

Bearer shares: The name of the shareholder, is not known to the AG. The identity of the current owner is known only to the relevant custodian bank or the clearing house, a settlement agent for payment claims arising from securities transactions. Transferring shares to other persons or selling them on a stock exchange is not a major problem with standard bearer shares.

Registered shares: The shareholder is known to the AG, is entered in the shareholders’ register and the AG learns when shares of this owner are to be sold. In the case of some stock corporations, the bank must first approve the transfer of shares to a new shareholder. This case is rare.

Young shares and old shares: Young shares, or new shares, are additional shares that are newly issued when a company increases its share capital. Old shares on the other hand are share certificates which were already on the market before such an increase. The criterion for differentiation here is the time of issue.

No-par-value shares: No-par-value shares are widespread today. Like par value shares, these also express a proportion of the share capital of a stock corporation. This, however, not by a fixed value, but relative and in percentages. With a share capital of 5.000€ and 5.000 available shares, the value per share is 0.02% (calculation 5.000€/5.000 shares = 1€, per share 0.02%).

Par value shares: Par value shares can be compared to banknotes and refer to a nominally fixed share of a company’s capital stock. A share is then worth €5, for example, and is as invariable as a banknote. If a company gives 1.000 shares with a nominal value of 5€, the share capital of the AG is 5.000€. Since the introduction of the euro, however, this type of share hardly exists any more.

You can also find out which class of shares you own by looking at the daily published price sheets, which show the daily prices of all securities traded on the respective stock exchange. The price list is, in other words, an official press organ of the stock exchange, which shows all prices and data of all shares listed on the respective stock exchange.

Excerpt from a price sheet of the Hamburg stock exchange. | Image: boersenag.de

How share prices are created?

Every company listed on the stock exchange has a share price, a curve with ups and downs that shows a company’s profits and losses. The overall picture is called a chart, a graphical representation of the price trends of various financial products. But what exactly are share prices and how are they formed?

It is supply and demand that determine the price of a share on the stock exchange. If a company had only one seller of a share at 5€ and one buyer would buy at this price, the share price would be 5€.

In real life, of course, there are always more shares from different sellers at different prices on the market, which can change every second. Here then purchase and sales offers are compared with one another. The price is then formed from the trading situation with which the highest possible turnover is achieved. The price at which the most shares change hands is therefore sought.

Today, this process is carried out via a digital order book of electronic trading systems such as Xetra (Exchange Electronic Trading).

However, financial products can not only be traded classically on the stock exchange, but can also be bought and sold over the counter. OTC trading" stands for "over the counter", as trading does not take place on the stock exchange but usually directly between buyer and seller. This type of trading is not subject to stock exchange supervision and is characterized by longer trading hours. While Xetra trading, for example, only takes place from Monday to Friday between 9:00 a.m. and 5:30 p.m., over-the-counter trading is usually still possible until 11:00 p.m.

However, it is not advisable to trade outside these opening hours of reference exchanges such as Xetra. OTC trading venues such as Gettex, L&S Exchange or Tradegate, for example, must follow the prices of Xetra or American reference exchanges during their opening hours. This obligation does not apply when these exchanges are closed and trading can become significantly more expensive. Whether the prices then offered for a trade are still in line with the market can then no longer be checked, as a reference price is missing. Trading should take place therefore always better within the addressed times. An order can then be created there, which is forwarded to a market participant.

That is why share prices fluctuate (so much)

Buyer and seller determine the price. However, this is not a fixed value, but fluctuates constantly up and down. Some gain money from these fluctuations, others lose some. Some shares fluctuate more, others hardly at all. The fact is, everything is in motion on the stock exchange. The rise and fall of share prices is also described by the term volatility, Latin for volatile. But why are prices volatile, why does the curve go sometimes in one direction and sometimes in another? There are many reasons for this, and they are not always rationally comprehensible.

For example, a company like Tesla may introduce a new product that many people expect to see and that could make the company a lot of money. This expectation increases demand for Tesla shares, and sellers can demand higher prices per share. Consequently, the share price rises, the curve goes upwards.

Conversely, bad news about Tesla can also make the rounds. The new product line has a system error. This doesn’t even have to be 100% true, but rumors can also create negative sentiment among shareholders. As a result, shares are sold to save as much of the company’s assets as possible. But demand is understandably not high in such times. The price falls, the curve points downward.

Panic selling is a frequently used term for such situations and shows that psychology plays a central role in price development. It doesn’t just have to be news about a company that shakes up the stock chart, changes in the industry can also have an impact.

In the Corona crisis of 2020, for example, the entire tourism industry suffered enormous losses. This not only affects a company’s share price, but also shakes up entire industries. Downturns and upturns can vary in severity and duration. In short periods of time, however, these changes don’t have to be related to corporate news at all. Coincidence can also play a role. Perhaps at the same time, many investors have decided to sell their shares at a certain price. Even then, the price can change.

How to determine the value of a share?

Behind the actual share price are many values that can give investors information about how successful a company is and the value of a share. Because the current share price does not always necessarily reflect the performance of the company. Generally, it is assumed that a company has a true value or fair price. If, for example, from the subjective point of view of stock market experts, this value does not match the current price of the shares on the stock market, the security may be undervalued or overvalued in their view. So-called stock splits also play an important role. Experts take a closer look at the following key figures:

Key figureMeaning
Profitability ratios
Sales growth The turnover is the sum of all the sales that the company has made. The sales growth shows how it has developed over the last years.
EBITDA margin EBITDA is earnings less fixed costs costs (personnel, rents, etc.).) and direct production and sales costs. Depreciation, interest and taxes are not yet deducted here. EBITDA margin can therefore show you how successfully a company is doing business, as it puts earnings in relation to revenue.
Return on equity Indicates how much return shareholders have theoretically achieved and is expressed as a percentage (calculation: annual profit/equity). What remains at the end, not only theoretically, is the so-called cash flow.
Balance sheet ratios
Equity ratio Proportion of own financial resources as opposed to borrowed capital. The value should not be less than 25%. The higher, the less indebted the company (calculation: equity capital/total assets).
Gearing The lower the gearing, the lower the company’s debt ratio (calculation: [debt – cash]/equity). Depending on the industry, a gearing between 10% and 40% is acceptable.
Valuation ratios
Market capitalization Expresses how much a company’s equity is worth on the stock market (calculation: number of shares x share price value).
Enterprise value To calculate, debt is added to market capitalization and cash is subtracted to determine the company’s true value. The logic behind this: If you buy the whole company, you also have to take on the debt and could get the cash paid out directly.
Enterprise value/sales Makes company comparisons possible. If the value is lower compared to other companies in the same industry, the security is considered undervalued and vice versa.
Enterprise value/EBITDA Makes company comparisons after deducting costs, but before accounting adjustments, and makes an assessment of cost efficiency possible. The lower the figure, the more favorable the company is compared to its peers.
Price-earnings ratio (P/E ratio) Indicates how often investors are willing to pay for the company’s profit. Or to put it another way, it indicates the number of years a company needs to generate the share value as profit (calculation: market capitalization/annual profit or earnings per share/share price).
Price/book ratio (P/B ratio) Indicates the premium that investors are willing to pay on the equity reported in the balance sheet. If this ratio is less than 1, you could buy 1€ of equity for less than 1€ (calculation: market capitalization/equity).
Cash flow Cash flow refers to the value that remains when all financial flows into a company are subtracted from the flows out of a company. So the cash that is left at the end. Profits can be controlled by the balance sheet, cash flow not. Therefore, as often as they can, investors base their analysis on cash flow rather than earnings.
Price/cash flow ratio (KCV) The KVC indicates how often investors are willing to pay this cash flow. A low value compared to competitors also means undervaluation and vice versa (calculation: market capitalization/operating cash flow).

One ratio alone has no meaning for share valuation. Only in combination, over a longer period of time and in comparison with competitors in the industry can one make a statement about the security. And even then, with the knowledge of all key figures and a thorough research, one is not protected from losses. Instead of relying on one’s own analysis, broad diversification is better to avoid unpleasant surprises.

Fundamental analysis vs. Chart technique

Two approaches are widely used in stock analysis and can also be used together.

As already mentioned, fundamental analysis is based on the assumption of a fair value to which the share curve will adjust sooner or later. If this occurs, the company is valued as fair by experts. If an expert’s analysis shows a fair value of €10 for a company, but the stock is only quoted at €8 on the stock exchange, the share is considered undervalued. However, these are always subjective valuations, which you can of course also make yourself according to your own fundamental analysis. Of course, reality can always differ from one’s own analysis.

Such an analysis should not only include data of one company, but also of competitors and of the whole sector. Usually involves a global analysis, an industry analysis and a company analysis. Among other things, this involves checking the growth potential of a market and how a company compares with others.

So it’s not worth looking at Tesla’s P/E ratio alone, but you have to see it in relation to other car manufacturers. In addition, values such as the P/E ratio or the company profit must always be viewed historically: What development did these ratios take over the years?

With the Chartanalyse it concerns however not directly around enterprise characteristic numbers. Using various techniques, the stock chart of a company is analyzed to make statements about the future price trend. The aim is to uncover trends. If, for example, a security is currently on the upswing, it is important to check whether the "trend channel" will continue to develop. Whether this strategy of a chart analysis really works and is meaningful is doubtful.

Works share valuation?

In the stock market, you should never buy by instinct, so a stock evaluation and detailed study of the company of your choice is always a must if you want to do stock picking. This way you can better estimate the value of a company and the value of the stock, especially in comparison with competitors from the same industry. Even this valuation scheme cannot protect you against all unforeseen risks.

We therefore advise private investors rather to make a passive investment in the asset class equities. This dramatically reduces your risk when investing without sacrificing expected returns.

What are the investment strategies?

If you want to be successful on the stock market in the long term, you have to follow a clear line, ideally over decades. For this you must find the strategy suitable for you.

Buy and Hold

A strategy that is not only suitable for beginners, but has also been successfully practiced by star investors such as Warren Buffet for decades. Individual shares of companies or ETFs are bought and held for the long term. Note the plural. Buying shares not only from one company, but holding shares from many from different industries with a long investment horizon.

This means that price fluctuations even out more quickly if one company is doing badly and the other is just rising to new heights. Long-term in this case means 20 years or even longer. During this time, a steady increase in value is assumed, which will only be thrown off course for a short time by price fluctuations. And at least a look in the rear view mirror agrees with this theory.

The S&P 500 price index, which tracks the 500 largest listed companies in America, has risen continuously since the 1930s. So if you invested broadly back then, you would be a rich man or woman today – despite fluctuations.

In short, the buy and hold strategy frees you from the misconception that you can make permanent profits with the right timing on the stock market.

Index strategy

Here, the focus is not on individual stocks, but on a complete stock index such as the DAX, which tracks the performance of the 30 largest German companies. It is even better to use an indexing strategy not only for one country, but for one or more indices that track the whole world, such as the FTSE All World. With an ETF, you can then bring this index into your portfolio and replicate it. If the index wins, the ETF also wins (see section: Investing in ETFs is broad investing in stocks).

Dividend strategy

This strategy focuses on regular dividend payments and the performance of the share price. The companies that reliably pay out a profit share from a historical perspective are preferred. Problem: Nothing is really reliable on the stock market. Even companies that pay their dividends over a long period of time can cut the payment or leave it for economic reasons.

Dividends are not interest and are not contractually required anywhere. The investor has no control over the payout. Besides, this method is less a strategy and more a preference. Some prefer to bet on share price increases, while others focus on companies with less growth potential but which pay a regular dividend.

Countercyclical investment strategy

Betting on the loser, that means anti-cyclical investing. Shares are bought when they fall in value and do not promise success from an expert’s point of view. If the share price rises again, the shareholders sell at a high profit because they got in cheaply. On the other hand, the prices can go even further into the basement or stay there forever. It is difficult to predict the long-term development of a company.

Procyclical investment strategy

Never change a winning team. A pro-cyclical strategy focuses on companies that are currently performing well and will continue to do so in the foreseeable future. The assumption is that a positive trend will continue. But success is not set in stone. With bad luck you get in expensive, if the price goes downhill afterwards.

Value Investing Strategy

Value stocks (substance stocks) are securities that show low growth compared to the market as a whole; large leaps in sales are not to be expected in the future. However, profits are quite constant and hardly subject to fluctuations. In most cases, the business model is very solid and not much capital will be needed in the near future to maintain operations. Profits in the form of dividends are therefore distributed to shareholders rather than reinvested in the company. Substantial stocks are usually assigned to very classic sectors such as automotive, finance or steel.

On the other hand growth shares with a growth, which lies above the market average, stand. Often found in the technology sector, these stocks are very popular with investors and feature prominently in the trade press. Growth companies invest a lot in their business, which means that profits tend to be low and dividend yields are very low or even non-existent. Investors hope that the usually rapid rise in the share price will continue into the future.

Factor investing

Factors, or factor premiums, are statistical drivers of risk and return in equities. By overvaluing one or more of these factors in one’s portfolio, investors expect to earn an additional return compared with a broadly diversified investment in the global equity market – and usually after deducting higher management costs. It is thus quite consciously the risk of the own portfolio by such an overvaluation of a group of shares upward screwed, in order to be able to count on more expected net yields.

Example of emerging markets: In the past, they have achieved higher returns than industrialized countries and currently account for around 10% of global market capitalization. Anyone who invests above this level is not simply investing in value stocks, but is engaging in factor investing. By the way, one of the best-known factors is the small cap factor. Thereby you invest disproportionately in small companies with small market capitalization, because they statistically achieve higher returns compared to big players.

You can even invest in several factors at the same time and thus end up in multi-factor investing. However, there is no guarantee to achieve higher returns just by investing in factors, as it is not a risk-free investment. In addition, the return can, for example, also be quickly swallowed up by the comparatively high management costs of factor ETFs.

Trading / Short-term investments

You are a yield hunter. Investors who follow the trading strategy do not care at first which companies they invest in. Main thing coal comes in – and as quickly as possible, usually within a day, hence the term day trading. Goals with the net yield move in the two-digit percentage range per year. It is paid attention to trading signals, then quickly bought and even faster sold again. Not a good idea for beginners but also for advanced traders, as some maneuvers come very close to gambling. You have to be stress resistant anyway. And even then hardly anyone has success with this strategy. For example, the American financial economist Brad Barber and his colleagues studied the trading activities of hundreds of thousands of day traders in Taiwan. The result: From 450.000 day traders could only 4.000 profits. 99% made losses.

Investing: How to make money with stocks

Now you have a first overview of what shares are, what investment strategies there are and how the stock market works, and perhaps you want to get started yourself right away. But what do you actually need to trade in stocks?? Here is a small checklist:

Share deposit with a bank or. Online broker

There is no way around a securities account when trading securities. The deposit is the headquarters of your financial transactions, a kind of warehouse for your securities. This includes a clearing account, which can be used to buy and sell shares and other financial products. All transactions are thus reflected in the clearing account.

You can open your securities account at a traditional branch bank as well as at direct banks and neo-brokers on the Internet. A comparison of the order fees is also worthwhile here. These costs come among other things on you, if you buy shares or sell again and vary from offerer to offerer.

If you want to find out more about the different providers, you can also find our securities account comparison here.

Once your securities account is opened, you can start investing. Each AG on the stock exchange has its own WKN and ISIN number. Both are securities identification numbers, the first only for the German area, the latter is the internationally valid combination. In your online depot you can find the share of the corresponding company in the search field with one of these numbers.

Order types

Buying shares is not just buying shares. When an investor deposits a buy or sell order with his provider, there are always several ways in which this order, i.e. the purchase, can be executed.

Order type Description
Market order The order will be processed as soon as possible. The shares are either bought cheapest or sold best. In this case, "cheapest" means that the purchase of a share is made on the stock exchange with the seller who is the cheapest at the current time. "Best", on the other hand, means that the share is sold at the best price on the stock exchange at that moment. However, the best price is not necessarily achieved when selling or buying. The securities can be bought on the trading day quite still at a cheaper price or be sold at a higher price. The market order executes the transaction only at the next possible time at the then prevailing market price.
Stop Order The transaction (buy or sell) is executed when the price goes above or below a level. When selling, for example, there is the advantage of setting a limit downwards, at which shares are sold in any case and so widening losses can be averted without having to be present.
Stop Buy The stock is bought when a fixed price is reached. The trade is then executed again as a market order cheapest.
Stop Loss Relevant when selling shares. If a predefined price is reached or undercut, the sale takes place in the best possible way. After that, it does not matter if the price is the same as the set price.
Limit order A trading instruction that is executed when a certain price level is reached that is more advantageous than the current price of a stock. With a limit order, a maximum price can be set with an entry order, at which one would like to buy or sell. an exit order for a minimum price at which one wants to sell. A Tesla share costs 100€. If the paper should fall to 95€, I would like to strike with an entry order. If the share rises to 105€ after that, an exit order has already been placed, so as to safely take profits. Disadvantage: My limits never have to be reached and my order goes nowhere.
Stop Limit Order Combination of limit and stop orders. When the stop is reached, the trade is not cheapest or best, but turns into a limit order. Prices above the limit are not executed when buying, just as sales below the limit do not take place.

Tip: Not every type of order is possible with every broker and with some only executable at high sums. It is also worthwhile to find out about this when choosing a custody account provider.

By the way, these order types only apply when you invest or sell once. However, you can also invest money by savings plan: then the purchase is carried out automatically on the execution day determined by you and at the current daily rate.

The unfounded (?) German fear of shares

The Germans are not a friend of shares and never have been. The stock market is not infrequently still compared with casinos. Here as there, you can lose your entire fortune in one evening .Even if the interest rates for classic savings offers such as savings accounts, daily or fixed-term deposits are in the cellar, people in this country are reluctant to accept the stock market as a serious alternative for asset accumulation.

This is also shown by the numbers. According to the Deutsches Aktieninstitut (DAI), approximately 9.7 million people owned shares or equity funds in 2019, 660.000 people less than in the previous year. Only each seventh Federal citizen over 14 years is active at the stock exchange, which corresponds to a shareholder ratio of 15,2%. A meager number in international comparison. In the USA and Japan, the value is between 20% and 50%.

So where does the skepticism come from in a country whose savings rate could rise to a record 16% in 2020, according to DZ Bank? First of all: There are reasons to treat shares with caution, and there are reasons why Germans in particular do it. With shares one can speculate, enter into risky transactions and especially crashing losses are a topic in the news. Unlike savings accounts, the money deposited in shares can suffer large losses in a jerky manner. And when some tried it anyway, it went wrong. The promising stock market dream of the Telekom share in the 1990s burst after continuous growth at the beginning of the new millennium, like the entire dotcom bubble. Many (first-time) investors lost money.

At that time, according to the DAI, the shareholder ratio was still at an early peak with 6.2 million shareholders. In 1996 there were only 3.7 million. In times of low interest rates it is again worthwhile to think intensively about stock exchange transactions. Because never before have there been so many possibilities as a beginner to invest broadly diversified in shares and other financial products.

Reduce risk in stock investments

You cannot eliminate all risks in stock trading. This is a good thing, because the return on the stock market is the reward for your willingness to take risks.

Regardless of your investment strategy, you can make your stock market excursion a little more comfortable by taking a few precautions. There are two main risk factors: market risk and company-specific risk. Company-specific risk describes the fact that any company can crash from one day to the next. Just think of the Dieselgate affair of Volkswagen or the current Wirecard scandal and the subsequent insolvency of the company.

As a shareholder who only owns single shares of this once emerging company, you have a big problem and will have to accept big losses. However, the company-specific risk can be reduced relatively well to close to zero if you don’t just back one horse on the stock market.

Diversification

Investments are spread across as many companies and industries as possible. So you profit from the return of the whole stock market and not from a single company. You also protect your assets against major losses and benefit from economic growth in the long term, even if not every sector picks up at the same rate or sags at times. These two components are particularly well mixed in one financial product: the ETF.

Market risk, on the other hand, cannot be reduced by diversification. Even if the capital has been spread over many different companies, a global economic crisis can drive the prices of many different sectors into the basement. Not infrequently, shares are then sold for fear of even greater losses. You have to live with this unavoidable volatility – and you should, because the expected return on your investment in the stock market is your reward for the willingness to bear these risks and ride out fluctuations.

Invests money with a long investment horizon

If you sell your shares during a financial, stock market or economic crisis, you miss out on the opportunity to return to positive price territory afterwards. Those who invest broadly and over many years in the stock market as a whole benefit from a steadily growing global economy. Historically, the world economy has recovered after every crisis so far. The only loss is made by the one who exited too early. These two components, diversification and a long investment horizon, can be realized particularly well in one financial product: the ETF.

You should be able to do without the money you make when trading shares – regardless of your investment horizon. And above all: Do not trade with money that you have borrowed or that you have budgeted for other expenses in the short term.

Investing in ETFs is broadly diversified investing in stocks

The ETF (Exchange Traded Fund) is a passively managed fund. Funds in themselves are investments in which money is collected from investors and invested in many different securities. The big advantage here is the risk diversification, since not only in a share or bond is invested. Investors profit in such a way from potential increases in value of many papers, and/or. of an entire asset class.

The passively managed fund, or ETF, aims to replicate the price structure of an index as faithfully as possible. So the point gains of the index are also the gains of the ETF investor, minus the management costs. However, these are much lower with ETFs than with actively managed funds, as many processes are automatic. In order to invest broadly and cost-effectively, there is no way around ETFs.

While it is possible today to invest in ETFs that track only certain industries or segments such as tech, a world portfolio such as the global stock index MSCI World, which combines the prices of over 1.600 companies from all over the world, should remain the first choice.

By the way, you don’t have to spend a lot of money on investments either. Many online brokers offer savings plans on ETFs or also shares. Already with 25€ in the month the Investing can start then and so ETFs or shares not only to a courageous experiment to let become, but to a column in the fortune structure, which savings accounts and daily money accounts are no longer.

Frequently asked questions

What are shares?

Shares are securities and shares in companies or. their stock companies, which can be bought and sold on the stock exchange.

How to buy shares?

First of all, a securities account must be opened at a house bank or an online broker. An order can then be placed on this account for shares and other financial products.

How to sell shares?

Similarly to buying, when you sell, you place an order on your securities account that you want to sell your shares. The goal is always to sell shares more expensive than they were purchased.

What happens to shares in the event of a takeover?

With a takeover your shares are of course not lost. The acquirer will make you an offer to buy your securities or make you an exchange offer. Your shares will then be exchanged for shares of the new owner and you remain a shareholder.

What happens to shares in a merger?

This can vary from merger to merger. In general, however, it is possible to take new shares in the company into one’s own custody account at a fixed exchange ratio.

What happens to shares in the event of insolvency?

Shareholders are not creditors, but shareholders. As a result, there’s rarely anything for investors to fall back on in a bankruptcy, as they’re behind on their compensation.

How shares are taxed?

Capital gains such as dividend payments or price gains after a share sale must be taxed. The tax rate is 25% plus a solidarity surcharge of 5.5% and, if applicable, church tax at 8% or 9% of the capital gains tax.

What is the point of owning shares?

Shares can be an important building block in asset accumulation and promise higher returns than traditional financial products such as savings accounts or call money accounts.

Why stocks rise or fall?

Share prices rise or fall due to supply and demand. If there are many interested buyers but only a few sellers for a security, the price will rise or vice versa. The reasons for a higher or lower buying interest depend on many factors.

Why do shares fluctuate so strongly?

Fluctuations in securities can have a wide variety of reasons, and only a few can be explained rationally. Bad resp. Good company news, a changing industry or economic crises can cause prices to swing. It is a fact that the stock market cannot do without volatility.

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