Many savers ask the same question before they venture into the stock market: Can you make money with shares??
Or is the stock market not rather something for gamblers, gamblers and speculators??
Short answer: Yes, you can earn money with shares. Better yet, anyone can do it, no matter what your income is or if you don’t have the time or inclination to watch stock prices every day.
And the whole thing certainly has nothing to do with gambling.
The German hates the risk
Man and especially we Germans have a disturbed relationship to risk. Seemingly every form of it is pure evil and must be avoided or insured at all costs.
And so it is no wonder that the German’s favorite money child is still the bank deposit. They are safe, you know what you have.
Stocks, on the other hand, are the devil’s work. This is also reflected in the proportion of shareholders in the total population compared to other countries:
Ok, that’s clear:
We Germans are not keen on shares!
But why not? In the long run it was finally the asset class with the highest return. So why should you give it up? Because financial market crises will happen along the way? So what? What is interesting is what your portfolio will be worth in a few decades, not how much it has lost.
You need some time
How to make money with shares?
The longer you have time, the less you care about any crises in between. And there will always be. That is a fact you have to come to terms with. Shrug your shoulders, move on and have fun.
There is more to life than the stock market and stocks (unless you run a financial blog& ).
I always try to look at it that way:
I) The prices are high right now: Great, my portfolio is worth a lot.
II) The prices are just in the cellar: Super, you get more securities for the same money.
Because as long as the world doesn’t stop turning, people will continue to tinker with new things, trade with each other and create wealth. And these things are insanely closely intertwined with the stock markets.
Of course, no one can say how the world as a whole will work out next year. Or in the next two years. As I said, there are always crises in between. But in the long run it goes uphill.
Now maybe call me glass half full but I am optimistic that in 20 years the world and the economy will look better than today. I am convinced of this and think the same way about the stock market.
That means if you want to earn money with shares, you have to think long term. In the short and medium term it can always go bumpy in the development of man but in the long term the trend points clearly upwards. Always. So we should also invest for the long term.
Take 20 – 30 years for your involvement in the stock market. But if you have less time, you should also invest only accordingly significantly less in stocks.
You need a plan
But time alone is not enough. For your bet on a better world economy in a few decades you need to invest in the same. Of course, this is not possible with the holding of a few piddly individual securities, but I am talking about 1000s of different securities.
With ETFs it is possible today to achieve such a high diversification efficiently and cheaply even with a small savings rate.
I would like to put forward a provocative thesis, which can be discussed very well:
You should have around 2000 different stocks in your portfolio.
Beside your suitable depot you must still find an individually suitable savings rate for you. With this you are constantly and regularly investing in your ETF, no matter if the market is high or low. You just do it without trying to time the market somehow. Also not to "avoid" crises.
In the course of time you will buy sometimes when the prices are in the sky and sometimes when the prices are at the bottom. All in all, the average price will be somewhere in between. This one will not be the best possible but not the worst either.
The magic of a constant savings rate is that you automatically buy less when the stock market is high and automatically buy more when everyone is panicking again. This means that in the long run you get a mean value, where it is not necessary that the stock market shoots up during your holding period. You will always get a decent cost price.
You need perseverance and you must not wet your pants right away
Shall I tell you something?
As complicated as the whole web of capital markets may seem, as someone who has studied it, I can tell you: it is not.
The greatest possible diversification in all areas, sufficient time and regularly investing constant amounts.
This is the bottom line. There is no more knowledge from the point of view of science. At least nothing that would be of interest to you as an investor.
I am also sure that you have heard it all before somewhere like this. Believe me, it is really that simple.
Why then are there still so many burned children in the matter of the stock market?? Certainly not because they do not understand the scientific fundamentals.
Rather they fail themselves.
At some point fear prevails, this time it might not be just a temporary market crash, this time it really is the end of the world. Just get out quickly.
A few years later the markets have recovered and you are left with your losses. The premonition has been confirmed: The stock market is a dangerous place and only the big players can make money with shares.
But that’s not true, you have only lost money, because in the meantime the panic has seized you. You have strayed from your path, you may have been infected by the scaremongering of the media, which regularly focus their attention on the stock market when something happens again.
If you have a TV, get rid of it. That only drives you crazy. Block all sites on the Internet that do nothing but tick stock prices up and down. That doesn’t get you anywhere and only distracts you.
You have your savings rate.
You have your time.
Now you have no other choice but to do your thing for a few decades and not to look left and right.
Conclusion: Can you make money with shares??
Yes, you can make a lot of money with stocks. At the end of the day, you only need three things:
1. Some time: Not to watch the stock market news, but to wait and see. 20-30 years, it should already be.
2. A solid plan: first the call money reserve and then a deposit account. Nowadays it is no longer a problem to build a scientifically first-class and diversified portfolio. ETF are the keyword. Regularly invest constant amounts and the whole thing is done.
3. A little risk aversion: For everything that is worth having, you have to accept some risk. This applies to attracting women just as much as it does to investing money. Risk is unavoidable, it is more important to take sensible risks.
What doesn’t show up in this summary is how much wealth you already have or how much you earn. Interestingly enough, it really doesn’t matter. More important is constancy and perseverance.
Earning money on the stock market is a marathon, not a sprint. But with a little perseverance and a plan, anyone can make the leap from simple saver to investor.
Have you already taken the plunge or is there something that has prevented you from doing so?? Tell me about it in a comment!
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Great post, find your formatting just fine.
Good summary. I know the numbers, but still think it’s terrible. That we do not have a share culture in Germany. In view of our "secure" old-age provision, we should finally do something about it!
Otherwise in 10-20 years collecting bottles will be taxed as well, because the majority of pensioners will pick them up. I hope that something will change here. Germans need to wake up and start investing effectively for once. Instead of forcing haphazard and profitless saving.
thank you, glad you like it&
I’m currently digging deeper into numbers that suggest how dramatically Germans have lost the desire to deal with their money.
Partly really frightening what opens up there. There will be a separate post on what I found on this as well.
Thanks for your comment&
can be such a constant stock trading, which goes over 20-30 years, an alternative to the classic pension plan? After all, your article sounds quite simple, so why not, I just say to myself.
the one with the risk aignorance I find the most difficult.
It is difficult not to look constantly, what happens just in the depot, if times again Hiobsbotschaften stream through the ether.
Greetings Finance Skills
Yes, that with the ignore is not always easy.
It helps me, if I remind myself in a weak moment that constant "Depotgechecke" does not bring more money but costs time and nerves.
So you can only lose.
I do not like games where you can only lose, so I just leave it then.
Better go for a run with the saved time.
Or taking a nap&
I need some urgent advice. I am 18 years old and to be honest have almost no experience with trading stocks in practice. I don’t have a constant income yet (I’m a student) and now I have a little capital, which I would like to use for investing in stocks. Now I wanted to ask if you could possibly give me a tip/advice where I could acquire enough knowledge to enter this industry and how I can best get started in it. Thanks in advance.
With kind regards,
depending on what your plans are after school (study, training), the very first thing I would do is to build up a buffer on the daily allowance.
This allows you to invest in yourself/your skills later, which in the long run gives a much better return than shares.
Or unforeseen expenses (z.B. own household when moving out at home) cushion. Once you finish your education, start working and then have something left at the end of the month I would start investing in ETF.
Until then, I would mainly study blogs like this one&
a great contribution. The most important point is perseverance. Especially at this point in time it can be really hard to stick to your goal and not give up. But there an investor must now once through.
In addition, one can also say that a phase with negative rates also has something good. You simply get to know yourself better, so think positive and keep at it.
Hay Alex what can I earn here ?? I would be interested