6 things you should know as equities beginners! - In this article I want to basics-pick six points that everyone should know "Shares-beginner" before he tries on the stock exchange and invest in shares. This post will help both first basic knowledge of stocks to build, and to create a realistic expectation and assessment of the potential returns of equities.
1.What are stocks?
First, I would of course like all beginners to pick up with the question: "What are shares".
A stock represents a small fraction of a company. If a company has for example 100 shares and we keep 10 of them, so we include 10% of this company. This company is also a joint-stock company, in short referred to AG. The advantage of a corporation lies primarily in the fact that the shares are easily transferable. Especially for companies that are traded on a stock exchange, is the buying and selling, even for private individuals, within a few seconds via the Internet. However Normally publicly traded companies have far more than 100 shares. Thus it is possible that large companies (blue chips) are traded every second. Because of the constant buying and selling the stock price arises. Depending on whether the future expectations for a company are positive or negative, the share price varied up or down.
2.How can you earn money with shares?
Basically, you can earn in two ways with shares money: On the one hand, the investor can bet on rising prices, so the share buy low to try it at a higher price to sell them later. So he speculated on price gains. The second option is to pay a dividend. Each investor holds a stock is owner of a fraction of the company, which is why he is entitled to a share of the profits. In more or less regular intervals, the corporation therefore pours a portion of their profits from (because if profits were earned) to investors. This distribution is called a dividend.
What is separable even in theory, in practice more and more blurred. One assumes that an average of 60% of profits on capital gains and about 40% are due on distributions of dividends. In the long term capital gains and dividends are therefore inextricably linked.
3.What risk have stocks?
Of course, stocks have not only a high profit potential or risk. For each share there is a risk that the company goes bankrupt and has to file for bankruptcy. In this case the stock price falls to zero and the money may lose. However, the value of a stock can not be negative, so that the investment made is lost in the worst case "only". Shares Beginners should therefore, at least in the initial phase, especially at large companies geared to everyday products. The thirty largest German companies are all grouped together in the DAX index. As stocks beginners it is still important to know that even here can threaten a total loss. It is therefore important to consider the basics of investing and by no means "all your eggs in one basket", so invest its assets only in one share.
4.Can you get rich with stocks?
How do you do on the stock exchange a small fortune? - By starting with a large fortune ... Definitely is investing in stocks for beginners, as well as for professionals no sure way to get rich. Realistically are pre-tax returns of 6% -10% per year. Through a regular savings and the compounding effect, however, stocks can support sustainable asset accumulation. Just when the asset is eventually become bigger, it makes sense to improve the diversification of investments to invest partly in equities.
Nevertheless, it is possible with shares (and good luck) to be really rich. So many shareholders the first hour of companies like Apple or Microsoft have probably never work in their lives. However, such achievements are more under the heading: "Happiness" and check off for beginners shares no meaningful "investment strategy".
5.How can I invest in stocks?
The trading of shares is for private investors now easier than ever. Where earlier nor a stock portfolio at the bank had to be set up in which each trade hit with high fees to book, today reaches the rapid opening an online depot. For this, I can tell you the DAB bank * recommend with a good conscience. This is hardly heavier than the opening of a deposit account and already completed after a short time. However, in order to reach a meaningful size and position not to pay high fees to the investment amount should be at least 5,000-10,000 euros. However, this is only a rule of thumb, the course should be determined individually by each. Sit down apart with the fees of your online broker and is also your other plants with an in contemplation. As always here, not only for shares beginner, do not put everything on one card.
6.What values should buy shares beginner?
This is probably the most important question, and at the same time also the most difficult. I will unfortunately can not give advice on specific companies here. However, I would like to give you a little tip, which I generally eighth. Shares Beginners should, in my opinion, must be kept away from fashion or trend shares. Often great companies are recommended in any financial windy leaves that have just a few handfuls of employees and a market capitalization of only a few million. Sure you can make money, but it's just for beginners shares, much easier thus losing money. So what to consider?
I just keep my eyes open in everyday life, which companies stand out, what products I use regularly? Drinks, instant soups, cleaning supplies, diapers (I use myself not as common 😉), Sport Albums / Medicine, Fast Food / junk food, you know the difference for small solar Bude from next to? True, the products just mentioned to me it is not about any "new-fangled trends", it is simply to everyday products. There is usually the underlying companies for many decades. They grow slowly, but continuously. Here it is worthwhile to look for stocks beginners most for lucrative investments in my opinion.
In the last step you should take a look at the company even more precisely, browse the Annual Report again and fly over the balance at least once. I can only warn you against the many financial sites, here are very often hides the error a not attract attention immediately. Guckt rather short even in the balance sheet and make yourselves a picture. A super introduction to the subject offers to book a business valuation metrics & analysis of Nicolas Schmidlin *. Since this book is still quite new, there are many interesting and topical practical examples. As a small tip, or small suggestion You can also pick one look at my dividend strategy, but I ask you not (never) just anything to act blindly, but think for yourself, understand yourself and then also to take responsibility for your own actions.