Buying shares – guide and adviser for beginners on the stock exchange

Buy shares is in a time, in which the interest for daily money accounts and time deposits for years fell further and further and an upward movement with the savings interest still for a long time not in view, alternativlos. Many savers and investors are therefore looking for other ways of investing money, where the return is right and which can be used both in the short term, medium term and long term. And as large the shyness of the German citizens before securities still is, so one is nevertheless safe: Shares are the investment, with which much is possible. And which can bring in one or the other good net yield with a skilful investment hand and a good nose.

But just laymen are often overwhelmed, how they should approach a share investment at all and how they can buy shares. Here this councellor is to render assistance. In the last section, interested readers will also find some book tips on the subject of buying shares.

Why actually buy shares as an investment?

Shares and securities are not exactly the most popular means of investing money in Germany. Bergen them nevertheless allegedly high risks. At least that’s what many savers think, who give the stock market a wide berth.

There then rather instead of good shares sometimes a fixed interest investment is selected, which is misunderstood due to the advertisement of the respective enterprise also still as time deposit account. And then you invest in a company’s profit participation rights and realize at some point that they are not shares at all, but promissory notes. Thus it goes approximately 2014 investors, who invested their money into profit participation rights of the meanwhile insolvent wind park financier Prokon.

Shares, on the other hand, are not promissory bills to a company, but share certificates in a company. This makes a big difference. Who acquires for example participation rights of an enterprise, lends money to this thereby, for which it receives in the long run, if everything runs well, good interests. When buying shares, however, the investor owns a smaller or larger part of the company – in other words, he invests directly in tangible assets. In addition, if the company is profitable, shareholders can often look forward to dividends, the yields of which alone surpass most fixed deposit offers.

Here there remains however one thing always: the risk. This should not be forgotten especially with the topic of shares also. Even if straight this range of the investment of funds could gain a satte net yield for the investors in the past years – if they set on the correct horse, i.e., on the correct securities. Nevertheless, shares should not be underestimated, especially in retirement planning. Here one sets on securities on a long-term basis, and thereby if possible the portion of the own money is invested, which does not have to be available in the everyday life and for special expenditures, but which is intended really only for the own age precaution.

Where can a beginner buy shares?

But where can I as a beginner now actually buy shares? Do I have to go directly to a company and ask for the share certificates there?? Or do I have to go to my bank when I am interested in buying? Many laymen do not know this, which is why we answer these questions here, which may seem very simple to others.

House bank, foreign bank or broker

The purchase of shares is quite simple in Germany. It is sufficient to open a securities account for the purchase and sale of securities. There are several ways to open such a securities account: either you go to your house bank or you look for another bank or broker. an online broker through which the securities account is managed.

Compare conditions

Important is then above all one: as the conditions for such a depot with the respective offerer are. The costs to be compared for the investor are primarily the custody account management costs and the order fees.

Most online brokers and direct banks offer securities accounts that do not incur any securities account management fees when actively used. The securities account itself is therefore free of charge if investors make a certain number of trades (purchases or sales of securities such as shares or funds). More and more brokers also offer a generally free securities account, i.e. they do not charge any fees at all for managing the securities account.

The larger differences exist with the order costs, thus the costs for the purchase and sales of shares, funds etc., in order to open such a depot. We will discuss these in more detail in a later section.

Who already has a depot, for which a depot change can be an interesting topic. Particularly in this area banks offer again and again special actions, with which investors, who want to make a change of their depot, can profit from good offers and special "Bonbons" like for example high interest for the daily money account belonging to the security depot. It is therefore possibly worthwhile, even as an already active investor to compare from time to time, whether there is a better depot or a correspondingly attractive action for the depot change with another broker.

buying shares at a branch bank

In the past, anyone who wanted to buy shares would go to their branch bank and open a securities account there first. Had such, the purchase and sale of shares either by going to the branch, over the phone or by post.

These times are long gone. Buying and trading shares today always means being fast and reacting to the corresponding market signals. Nevertheless, a securities account at a branch bank may be practical for one or the other if online securities account management is not desired or if people still like to take advantage of the advice of the house bank when buying or selling shares.

It is much easier if you do not go to a branch bank, but look for an online broker specifically for buying and selling securities, where you can maintain a securities account with the desired conditions.

Buying shares with an online broker or. a direct bank

Unlike branch banks, online brokers and direct banks often offer many more options for trading securities. Depending on the provider, not only one securities account is offered, but there are offers for several target groups – from the casual investor to the heavy trader. But the biggest difference is in the order fees. Here the on-line brokers have – owing to renouncement of expensive branch network and concentration on the technical aspects – usually the nose clearly in front. This also continues in the online banking systems through which investors can trade their securities.

Branch banks and also most direct banks integrate their solutions for securities trading into the existing online banking system and thus allow their customers to buy and sell securities, but offer only a few functions beyond that. Online brokers, on the other hand, usually have specially programmed custody solutions that range from intraday trading (buying and selling securities on the same trading day) to providing investors with real-time quotes and extensive additional information about the securities they are looking for.

The most favorable brokers for the purchase of shares in the comparison

BrokerStandardNeukundeBonus Cost p.a.per ordercost p.a. 1 The total costs p.a. are calculated on the basis of the current conditions (source: list of prices and services). Some brokers also charge stock exchange fees.
2 Total costs p.a. (new customer) + premium calculated on the basis of the conditions offered by the respective broker for new customers. Some brokers also charge exchange fees. All information without guarantee
224,00€ 497,50€ 139,60€ 3,95€ 3,95€ 3,95€ 79,00€ 197,50€ 31,60€ [+]
BrokerStandardNew customerBonus Costs p.a.per orderCosts p.a. 1 The total costs p.a. are calculated on the basis of the current conditions (source: list of prices and services). Some brokers also charge exchange fees.
2 Total costs p.a. (new customer) + premium are calculated on the basis of the conditions for new customers offered by the respective broker. Some brokers also charge exchange fees. All information without guarantee
224,00€ 497,50€ 139,60€ 3,95€ 3,95€ 3,95€ 79,00€ 197,50€ 31,60€ 10 free trades. To the broker "
178,00€ 445,00€ 100,00€ 8,90€ 8,90€ 12,50€ 178,00€ 445,00€ 100,00€ Up to 1,00 % p.a. Overnight interest rate for 12 months. To the broker "
224,00€ 495,00€ 139,60€ 9,80€ 8,36€ 15,27€ 196,00€ 417,80€ 122,15€ 100 Euro voucher To the broker "
35,88*€ 35,88*€ 35,88*€ 0,00*€ 0,00*€ 0,00*€ 00,88*€ 00,88*€ 00,88*€ *Trade flat rate for 2.99 euros p. M. in the "Prime-Model To the broker "

Buying shares with an online broker – example based on certain factors

When investors want to open a securities account, they often pay attention to only one thing: the cost of managing the securities account. However, this should not be the only selection criterion, because especially in the order fees can easily be a multiple between the cheapest and the most expensive broker.

In order to find the right securities account, it is advisable not only to carry out a simple securities account comparison, but to use a securities account cost calculator right away. The more specific the information is, the easier it is to find the right broker who offers exactly THE right securities account for your investment needs.

Number of orders

When looking for a cheap depot, the number of orders per year is important. This often shows how cheap or expensive a securities account really is. For example, not every online broker offers special conditions for frequent traders – which can of course make things really expensive if, for example, you carry out 100 trades a year instead of just 10.

Average order volume

In addition to the cost of the securities account management itself and the number of orders placed annually, the average order volume also plays an important role in the search for the right (and at the same time cheap) securities account.

If trading is infrequent, this point, as well as the number of orders to be placed, hardly plays a role in the costs of the securities account. If someone buys often, the average order volume has quite a significance when it comes to the deposit costs.

Average securities account volume

In addition to the number of annual orders and the average order volume, the average custody account volume also plays an important role when it comes to selecting a broker.

Depending on the online broker, there may be differences in the costs here, which is why this point should be taken into account when comparing different offers.

Proportion of orders via the Internet

How do you prefer to buy and sell your shares? Over the phone? Or mainly via the Internet? This also plays a significant role in finding the right broker. Because not every online broker also offers telephone orders.

Only free custody accounts?

There are investors who are looking for a first or new securities account, and mainly pay attention to the fact that the depot is free of charge. This can of course also be specified as a factor in a good securities account calculator. However, this point should not necessarily be the deciding factor, as a fee-based securities account with lower order fees can quickly be cheaper than a free securities account with high order fees.

Only securities accounts without limit fees

For some investors, it is important to have a securities account with no limit fees when buying shares. This point can also be taken into account when comparing different offers.

Ignore new customer promotions

The banks and online brokers have long since recognized that more new customers can be generated with appropriate promotions. There are a wide range of offers, from cash bonuses and order credits to iPads and smartphones. But not every investor is really keen on such pure new customer offers, which are often very nice to look at, but must then also pay off on the bottom line.

Who would like to proceed here skillfully, which can test also with a depot calculator both: the indication of the point offerers with new customer actions and the general ignoring of such broker actions for new customers. However, this is not possible with every securities account calculator, which is why a targeted search for a good calculator can be half the way to a good securities account.

Which savings plans should the respective broker offer?

When buying securities, many investors also proceed in such a way that the desired shares or funds are not bought in one fell swoop, but the money is invested through a savings plan. When looking for a good broker, the savings plan offer is therefore also an important selection criterion.

Savings plans can be distinguished between fund savings plans, certificate savings plans and ETF savings plans. Depending on the broker even offers all three options, some only one or two.

For the investor, who would like to buy or sell only individual shares, this point plays naturally no role and can become therefore with the depot search well and gladly outside.

What other requirements should the broker meet?

Anyone who wants to buy shares and is looking for a suitable securities account for this purpose should also consider in advance what other requirements the respective broker, whether online broker or bank, should meet.

What does the broker offer to its customers? Does he also offer foreign stock exchanges for customers who want to buy and sell shares? Is with the respective broker also the off-exchange trade possible, which plays for the one or other investor quite a large role. And just as important for investors is sometimes that the broker offers intraday trading for buying and selling shares.

Should the depot offer further additional functions?

For many investors, a securities account is not only important for buying and selling shares, but they also want the respective securities account to offer corresponding additional functions and thus kill two birds with one stone.

This can be a current account, which belongs to the deposit, a call money account, or also a credit card. Of course not every investor is interested in such additional functions to its depot and selects its broker accordingly.

Nevertheless, for some investors this point is very important, especially because there are, for example, brokers who offer particularly good interest rates for the overnight deposit account for the securities account. In a time of otherwise rather low overnight interest rates, this is of course not to be underestimated.

The important issue of custody account providers and final withholding tax

Who would like to buy shares and above all also sell again, must unfortunately sooner or later with the topic final withholding tax deal. For one or the other investor this plays already with the search for the correct broker an important role. Because: not every broker also automatically deducts the final withholding tax. Especially investors who do not want to deal with this capital gains tax, but want to have it deducted automatically, are therefore only interested in German brokers. There the deduction of the final withholding tax takes place automatically.

With foreign brokers, however, the situation is different, as they do not automatically deduct the final withholding tax and the securities account holder must then deal with it himself to declare the corresponding tax to the tax office when selling shares. Of course, the brokers help by issuing a so-called annual tax certificate.

There are several possibilities and reasons to buy shares

Buying shares as a short-term investment

Investors are different and many investors are of the opinion that shares are only suitable for a medium-term or long-term investment. But this is of course up to each individual investor to decide for themselves. One should answer oneself however two questions: What do I intend to do with my stock purchase and my stock sale, and above all: what investment strategy am I pursuing??

The short-term oriented investor will hardly be concerned with such additional sweets as the dividend, but mainly with making a quick profit from the purchase and sale of shares.

However, buying shares as a short-term investment is not really suitable for every investor. The investor should be aware of the risk, which is of course particularly high with such a form of stock trading. Because not each short term Trade goes on. It will therefore often happen that losses are realized. These must be able to be forgiven, why just for beginners the short-term investment in shares rather unsuitable and/or. rather less recommendable.

Buy shares as a medium-term and long-term investment

Buying shares as a short-term investment is not necessarily everyone’s cup of tea, and in addition to a good nose and a good dose of luck, you often also need a high degree of willingness to take risks. This is why short-term stock investment is not particularly well suited for beginners and novices.

It is more advisable to buy shares as a medium-term or even long-term investment and then leave them in one’s own securities account for a certain period of time before either selling them again (preferably at a profit).

Of course, every investor should already think about it when planning his investment, what investment horizon he has and what his risk tolerance is.

The desire to buy shares and then hold them for the medium term and then sell them again, or to buy certain securities once and then just leave them in the securities account for a long time, can be of very different nature. Often the long-term investment has the sense that shares are not bought from the point of view of the possible price gain, but the focus is on the dividend payments.

Buying shares because of the dividend?

There are investors who buy shares because of the possible price gain. For others, this is not so important. The reason for this is also simple: they do not want to sell the once bought securities at all again, not even with profit. But hold the respective shares, because their dividends are important to them.

Especially for investors who want to live from their portfolio and its earnings, the annually distributed dividends (not every stock corporation really distributes dividends year after year) play an important role!) often play a major role.

This has also a simple reason: the planability of the yields. While price gains from share purchases can hardly be planned as income, this is the case with dividends at least when the share-issuing company announces how high the dividend is that is paid out per security.

This means: an AG announces the distribution of a dividend of 1,- Euro per share. The investor has of the issued share altogether 100 pieces in its depot, thus it has a yield of 100, – euro, which it can plan accordingly. In addition, historical data can quickly show how reliably a company has paid dividends in the past and how they have grown over time.

Buying shares as a retirement plan

Of course, the topic of shares and dividends also plays an important role when it comes to buying shares as a retirement provision and thus putting them in your own portfolio for the long term.

Of course, one can now say: but shares have price fluctuations, so how can they be suitable as an investment for old-age provision?? However, the answer to this is quite simple. Shares are tangible assets and therefore represent an investment in a company. In addition, short-term price fluctuations become relative the longer the share is held. Investors can consult key figures when selecting shares for their retirement provision, which give them the maximum fluctuation per year, the maximum loss period, the return per year and other important data for making a purchase decision.

But of course, this type of stock investment also wants to be well planned. To bet only on a certain share is certainly not the right way to go. And: Investors should also remember when buying shares for their private retirement provision that they don’t have to stick with papers for years and years that at some point no longer pay off. Flexibility is thus also important here with this long-term investment, in order to have at the end good material values in the own depot and not securities, which left their best days long behind themselves.

Buying shares as an alternative to low-interest savings deposits

In recent years and especially months, the falling interest rates on savings deposits have been a major issue. For overnight money accounts as well as for time deposits, there are no longer the high interest rates that were available for these types of investments a few years ago, and many savers are now despairing because of the low interest rate level.

With shares, however, the situation is different. There has been a lot of reason for investors to be happy here in recent years, even with the DAX, Germany’s leading index, it can be seen in the performance that an investment in securities of companies listed in the DAX has really paid off.

In 2009, the DAX was still trading at under 5.000 points. 2014 was the first time it was above 10.000 points, which represents a performance of more than 100 percent (. ) within this period means. This means that if you bet on the right shares in the DAX five years ago, you could double your stake within a few years.

In 2011 the DAX was quoted at 7.110.20 points, which still means a performance of almost 40 percent until 2014. And in 2013 alone, the German benchmark index rose by a good 20 percent.

However, the situation is different with fixed-term deposits and overnight money. With both types of investment, as with savings accounts in general, there has been a drop in interest rates in recent years since the prime rate was gradually lowered from October 2008 onwards.

Therefore, it is all too obvious: those who have a savings account, a call money account or a time deposit account may benefit from the legal deposit insurance that applies to these types of investment. However, he pays for this security a high price, in that he hardly receives any interest for his money.

On the other hand, if you are willing to take at least a small risk, you can achieve a significantly higher return by buying the right shares. And has in addition the chance on course profits and regular dividend payments.

Design your own trading concept instead of being guided by emotions!

A typical beginner’s mistake often occurs when trading stocks: investors let themselves be guided by their emotions instead of designing their own trading concept. Over it knows also a song to sing in its guide to share trading for beginners and lists thereby some frequently occurring errors within the range of the share plant.

Just because beginners in the range of the share investment often can be enticed to buy shares, which do not fit perhaps at all to them, to set only on a certain security, instead of spreading (keyword: the Telekom share admits as so-called people share became!) or to sell in panic when prices are falling, it is so important to create a good trading concept in advance. This is also done by professional investors, because panic buying as well as panic selling can rarely be a good guide to investment success with stocks.

When designing such a trading concept, tailored to individual wishes and financial possibilities, books can also be helpful. In the following, we will therefore list some books that could help you to find your own way in the investment jungle and not to get lost right at the beginning among all the beginner’s mistakes and then immediately give up buying and selling stocks again.

Book tips on the subject of buying shares

Not every investor knows from the outset how to proceed when buying and selling shares. Therefore we would like to give some book tips at this point, which could be a supplement to the guidebook buying shares available here:

Beate Sander "The stock and stock exchange driver’s license" – The licence to invest money

"The driver’s license" for investing in stocks does not exist, of course. But the book of Beate Sander, with the subtitle "The license to put on money" designated as "the share and stock exchange driver’s license" offers some at information, which can be very helpful straight laymen.

You are not born to be a stock investor, you can make yourself a stock investor. And thereby profit from the numerous information in this book.

The "Stock and Stock Market Guide" covers all the areas that are important for investing in stocks, from the various asset classes to the important topic of stock market psychology.

In our opinion, a good basic work for understanding how to get started with the stock market and buying shares, as well as learning about all types of securities and derivatives.

For special topics such as investment and trading strategies, we recommend one or more of the books presented below.

Max Otte "Investing instead of saving" – How to build up a fortune with shares

Max Otte is one of the best known financial experts in Germany and has written an important book with his book "Investing instead of Saving.

Among other things, this book is about choosing the right investment strategy, identifying sound investments and making independent purchasing decisions.

Thus, the book also picks up on the topic discussed earlier by us, to build up your own investment strategy, which can then be implemented in a second step.

It concerns Otte also to point out to the readers, how one can obtain better results by such a way "than so some fund manager", so the publishing house in addition.

In our opinion, a well-founded basic work, which is primarily aimed at investors who are oriented towards the medium and long term.

Otte sees shares as investments, thus as an important form of the financial investment also and particularly for goals such as the addition of the private age precaution.

Board N. Steenbarger "Your daily trading coach" – 101 psychological lessons for successful trading

If you want to buy shares and invest your money in securities, the topic of trading psychology also plays a major role.

Or at least there should be. In Board N. Steenbarger’s book "Your daily trading coach", interested readers can find "101 psychological lessons for successful trading".

It is all about one thing: becoming your own trading coach. And in the process also develop appropriate trading skills.

In addition to the 101 lessons, "Your Daily Trading Coach" by Brett N includes. Steenbarger also provides insights into the actions and thinking of 18 professional traders, which show that Steenbarger’s methods not only work in theory, but can also be implemented in real investors’ lives and actions.

The book is especially suitable for active investors. Long-term investors rely less on trading strategies and more on an investment style that suits them or. focus their attention on building a balanced portfolio. This is also the focus of our latest book recommendation:

William O’Neil – How to make money with shares

Making money with shares. For one person this is unthinkable, while another makes his entire income by buying the right shares at the right time and selling them again at the right time.

In order to be able to build "winning portfolios", William O’Neil, the editor of the stock exchange letter "Investor’s Business Daily" has developed the CAN SLIM® method.

This method is recognized worldwide, and contains seven success factors that investors can use to find rising quotes.

On 600 sides the stock exchange book publishing house published the updated new edition of William O’Neil – How one earns money with shares.

Perhaps not a book that is equally suitable for every investor, precisely because of its abundance.

But for interested investors who like to read and get comprehensive information on this topic, "How to make money with stocks" by William O’Neil is a suitable read.

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