Investment
Invest safely, win more
Invest safely and profitably
- Explanation: Investments are all measures aimed at increasing capital.
- Investment opportunities: There are numerous ways to invest money.
- Sicherheit: Jede Form der Geldanlage bringt ein gewisses Maß an Risiko mit sich.
- Return: The basic rule is: the higher the risk, the greater the potential return.
What is an investment?
What should you consider before investing money?
Savers are of course free to decide where they want to invest their money. The savings goal, the desire for availability and the willingness to take risks are crucial for the selection. It can also be beneficial to get an overview of the current financial situation. This can, for example, determine how much capital will be needed in the future to cover ongoing costs and for possible emergencies such as repairs or new purchases. To make an even easier decision, the following questions can be helpful before deciding on an investment:
Are there any loans or other liabilities outstanding?
The interest rates for loans and the like are often higher than the interest and returns that can be achieved with investments over a short period of time. It can therefore be worthwhile to first pay off all outstanding liabilities before making the decision to invest.
What savings goal is set?
The savings goal will vary depending on whether you are saving for a major purchase such as a car or a house, a long-distance trip or generally to build up assets.
How long can you go without the invested money?
With some investments, the assets are not available for a long time or cannot be converted into money within a short period of time or can only be converted with difficulty within a short period of time. This applies, for example, to fixed-term deposits, real estate, gold or other tangible assets. The investment period is therefore an important factor when deciding on one or more investment options. The advantage of a longer investment horizon is that, for example, fluctuations in investments traded on the stock exchange can be better balanced out, or investments such as fixed-term deposits are not subject to fluctuations over this period.
Are possible losses financially bearable?
Every investment is associated with a risk and losses can occur. However, the risk differs depending on the investment. Call money and fixed-term deposits are among the safer investments, whereas stocks, for example, have a comparatively higher risk.
How high is the willingness to take risks?
High returns are often associated with a high risk. However, by distributing assets across several investments (diversification), savers can spread their risk widely.
What types of investments are there?
The most common investments include savings accounts, call money, fixed-term deposits, stocks, bonds and investment funds such as equity funds, real estate funds and bond funds. ETFs and, more recently, cryptocurrencies are also included. In addition, savers invest in real estate, vintage cars, precious metals and other valuables. This variety of investment forms enables a broad diversification of risk across various independent investments.
According to a study from 2020, more than half of Germans still keep their money in a savings account. However, given the low interest rates for years, this form of investment is no longer really lucrative; the average interest rate in 2020 was just 0.07 percent per year. A noticeable increase in interest on savings deposits has not yet been observed. It could therefore be advantageous for savers to consider alternative investments such as call money, fixed-term deposits or ETFs.
Since 2022, Heveller Finanz GmbH has been offering an expanded range of products for savers, including attractive savings offers and globally diversified, low-cost investment opportunities, including ETFs, to build wealth and achieve savings goals. Find out now about the options for daily money, fixed-term deposits and ETFs at Heveller Finanz GmbH. Your retirement provision can also be secured with our ETFs.
Daily allowance
Call money is one of the investments that offer high flexibility, availability and security. It is an excellent way to build up a financial reserve, as it is important to have some money ready for unforeseen expenses, such as a new washing machine, a refrigerator or major repairs to the car. Since call money is available at any time, savers can access it quickly when they need extra money. In addition, deposits of up to 100,000 euros per customer and bank are protected by the statutory deposit insurance. Some banks also offer voluntary deposit insurance that protects even higher amounts.
The advantages of availability and security also apply to current accounts, but there is currently no interest on them. With a call money account at Heveller Finanz GmbH, savers can earn up to 3.80% interest.
Fixed deposit
Similar to overnight money, fixed-term deposits are bank deposits and are protected by both statutory deposit protection and any voluntary securities provided by banks. In contrast to overnight money, however, fixed-term deposits are less flexible because the capital is invested for a fixed period of time.
When investing money, a fixed interest rate is agreed at the beginning. This has the advantage that fixed-term deposits are not affected by price fluctuations during the entire term and there is no need to fear changes in interest rates. This means that this type of investment is easy to plan. However, the invested money is only available again at the end of the agreed term, as early termination is generally not possible. In return, fixed-term deposits generally offer a higher interest rate than overnight money.
Shares
Bonds
Bonds are fixed-interest loans that are typically given to companies or governments. The term is set by the borrower, i.e. the person who receives the money. As with all loans, bonds also carry the risk of default or delay in payment. If a company gets into financial difficulties or goes bankrupt, there is a possibility that investors will not get their money back at all or that they will get it back late. The credit rating of a company serves as an indicator of risk; higher credit ratings usually mean lower risk. However, safer bonds usually have lower returns compared to riskier options.
Fonds
An investment fund, or fund for short, is a financial product traded on the stock exchange that consists of a variety of assets, including stocks, bonds or real estate. Other securities and tangible assets can also be part of the fund. The name of the fund often provides information about which investments are included; for example, equity funds mainly contain stocks, while real estate funds focus on real estate.
Investors often invest in funds managed by active fund management. This allows risk to be spread because the capital is distributed across various assets, meaning that the return does not depend on the performance of a single investment. In general, higher risks often come with greater potential returns. However, it should be noted that active fund management strategies usually come with higher fees. These include management fees, which average around 1.5 percent, and issue premiums (commissions) of 2 to 5 percent.
ETF's
Cryptocurrency
Tangible assets
Investments such as real estate, vintage cars, works of art, gold, silver and other precious metals have their own material value. This value depends on supply and demand, which can lead to significant fluctuations. The question of whether and how much return can be achieved with such investments is often uncertain. In addition, it usually takes a little longer to convert these material assets into cash.
What is the best way to invest my money?
Investing money can be useful in various ways. By combining safe investments such as overnight money or fixed-term deposits with higher-yielding options, investors can spread the risk widely. However, there is no universal investment strategy, as individual savings goals and risk tolerance vary.
A helpful concept when choosing the right investment is the magic triangle. Every type of investment meets at least one of the three criteria—security, return and availability—but never all three at the same time. If security is the priority, the return often decreases. If availability is also important, the return is further reduced. Conversely, if you are aiming for high returns, you may have to forego security and availability. It can therefore be helpful to set your personal priorities in order to find the right investment strategy.
Spread the risk with diversification and partial amounts
Diversification is crucial to achieving your savings goal and reducing the risk of loss. Investors can combine different investments to benefit from both high returns and security. If the money is not invested in a single investment but in several, the risk can be minimized and the savings goal secured in the long term. With Heveller Finanz GmbH, you have the opportunity to save in three different types of investments and invest in your retirement provision at the same time.