If you would like to increase your wealth in the long term, you have to align your strategy accordingly. Asset accumulation is an individual process. However, asset accumulation is not just about finding the right product. “You have to deal with your investments in general and find your strategy,” says Trefz. These six basic rules will help.
RULE 1: FIRST RISK PROTECTION AND NEST EGG THEN ASSET ACCUMULATION
If you want to increase your money, you first have to ensure that the substance is preserved. And that is usually the income. In the opinion of consumer advocates, absolute essential insurance protection, therefore includes an occupational disability and a liability policy. Everyone should also hold back a liquidity reserve for unforeseen incidents. The amount of which, of course, always depends on the needs and living conditions in the specific individual case.
RULE NUMBER 2: START SAVING AS EARLY AS POSSIBLE
Small cattle also make crap – the adage is true. Even those who can only save small amounts at the beginning of their working life benefit from it. Especially in the long term, this can turn into a handsome amount. This can be supported by intelligent account models in which money that is leftover at the end of the month automatically flows into a form of investment.
RULE NUMBER 3: KEEP AN EYE ON THE INVESTMENT HORIZON AND SAVINGS GOAL
Everyone must first determine what they are saving for. Does he need the money in the short, medium or long term? It also depends on whether he has to be able to access the money flexibly or whether he can tie it up in a system for a few years. “The further the investment goal is, the more worthwhile it is to take a certain risk for a better long-term return”, emphasizes Trefz. Background: The ups and downs on the stock exchanges are balanced over a longer-term investment horizon.
RULE NUMBER 4: BET ON DIFFERENT PRODUCTS
Don’t put all off your eggs in one basket – that is one of the most important wisdom of the stock market. There is a simple consideration behind this: if one type of investment goes downhill, some of the money is still parked in other investments and can compensate for it. Good diversification of the investment forms is significant. Something can go into high-yield but riskier equity investments, another part is reserved for tangible assets such as real estate and the next part is covered, for example, through traditional pension insurance or bonds. The sum of the building blocks must result in a structure that suits the investor.
RULE NUMBER 5: THE FORM OF INVESTMENT MUST MATCH YOUR RISK MENTALITY
Despite all the variation, it is also essential: You also have to be able to sleep well. If certain asset classes are too risky for you, because you don’t trust them or you don’t understand the construct, you should stay away from it.
RULE NUMBER 6: TRUST PROFESSIONALS Those who would like to take advantage of the stock market opportunities, but are more of a layman themselves, can use the experience of professionals and, for example, rely on asset management funds.