• March 3, 2023

Should you invest in shares now

Should one invest now in shares?

Interest rates are low and will remain so in the long run. Until at least September 2023, the ECB plans to flood the markets with money. Every month(!), government bonds worth 60 billion euros are therefore to be bought up by 2023. What benefits shareholders, entrepreneurs and banks hurts small savers. They no longer get a return on their traditional savings options, such as savings accounts, call money and even life insurance policies. The retirement provision of many Germans should therefore now get dangerous Schlagseite.

The share

An investment instrument is against it for some time extremely lucrative: The share, of all things the investment option, which Germans avoid so far, like the devil the holy water. The last large share euphoria was lastingly disturbed by the loss of value of the T-share and the bankruptcies at the new market. Of it the investment market did not recover until today, private investors make a large circle around shares.
But this restraint has cost them mighty money. While the stock markets are chasing from one record value to the next, the return on savings deposits declined steadily and now threatens to slide completely into the negative.

This is why German private investors are now also beginning to cast an eye on shares again, albeit hesitantly. However, the stock markets have already risen considerably in recent years and experts do not rule out either a further rise or a sharp correction in the near future. The pros and cons of a stock investment should therefore be compared and then make a decision.

Pros and cons of buying shares

That speaks for a share investment:

  • Share price increase
    If you invest in a stock at the right time, you can earn a hefty return on the price increase alone.
    Whether the time is just right now, one always knows only afterwards.
  • Dividend
    On top of the share price increase, successful companies give their shareholders a share in the form of the annual dividend.
  • Real opportunity for returns
    Unlike other investment options, which are suffering from historically low interest rates, stocks offer a real chance of return for a certain risk. It is often the only chance for investors at the moment

That speaks against a stock investment:

  • Wrong share
    Who sets on single shares, often has the larger profits. But this also means greater risk. Those who put all their money into the T-share at the time felt the pain of this. To minimize the risk, an investment in equity funds is a good option.
  • Lack of knowledge
    Stupidity does not protect from losses. Those who are not sufficiently concerned with the stock they want to invest in and have not understood the business model need not worry about a higher risk and, possibly. Losses not to be surprised. In addition it comes that private investors often do not come at all or only much later to price-crucial information. In this case, professional investors have already cashed out long before the small investor can react. Here, too, equity funds are a good way of reducing risk.
  • Fees and costs
    Everyone wants to earn from the stock business. The bank, the stock exchange, the fund manager. Every purchase and sale costs money in the form of fees, and that pushes down the return on investment.

Anyone who conscientiously weighs up these arguments and considers the current situation on the markets will certainly come to the conclusion that there is no way around an investment in shares at the moment. Although equities have been doing well for several years, the lack of alternatives and the ECB’s loose monetary policy mean that stock markets can be expected to continue rising.

The risk can be reduced for private investors if they invest in funds instead of individual shares. They should not disregard the fees and only invest money that they can do without for a longer period of time in case of doubt. So nothing should stand in the way of a successful investment in shares.