Many investors make the same mistakes over and over again - sometimes without knowing it. Those who know the typical traps can easily avoid them.
Ludwigshafen (dpa / tmn) - "Buy low, sell high": Buy stocks cheaply and sell them when the price is high. This is probably a stock exchange wisdom that everyone can agree on.
There are many such sayings. Investors should not necessarily base their investment on this. Wisdom or beliefs are not a good guide and can cost a lot of money if in doubt.
Following trends is a typical mistake. "If you invest in something that has gone well so far, then it makes more sense than typing last Saturday's numbers," explains Prof. Hartmut Walz, behavioral economist at the Ludwigshafen University of Applied Sciences. Transferred to stocks and investment funds, he warns: "Yesterday's successes are very likely tomorrow's losers."
Inexperienced investors in particular should not be unsettled. "In good phases of the stock market people are ready to buy shares, in bad ones they are not. But it should be the other way around, because after a crash it is a good time to get into shares," explains Thomas Mai of the Bremen Consumer Center.
Correctly assess risks
Investors often misjudge risks: While the stock market is considered dangerous, some put a lot of money into opaque investments. "The so-called gray capital market attracts with a lot of returns. But if you fall for black sheep, you make serious losses," explains Mai.
Over decades, stocks often achieve a higher return than other investments. "You can't just get cold feet and sell in times of crisis, but persevere," says Mai. The price loss of a share only becomes a financial loss if you sell the paper.
Walz mentions another mistake: Investors put their money into managed funds. In theory, an active fund should outperform an index fund, after all, a highly paid fund manager monitors it. His goal is to get more returns. Only: Hardly anyone actually makes it long-term.
This is also shown by statistics from the Morningstar analysis company. Accordingly, active funds rarely outperform the benchmark, especially in the long run. Only 18 percent have exceeded the index in 15 years. But even this number is distorted: only 41 percent of all funds launched have survived this period.
Unsuccessful funds are often closed silently by the companies. "Investors mostly orientate themselves on the numbers of those who actually did well. But they only look at a small sample," warns Walz.
Better to use spreading instead of the right horse
If even professionals cannot predict how individual stocks or investments will develop, it is almost impossible for small investors to bet on the right horse at the right time.
All the more important is the diversification of the investment. This is possible, for example, with an index fund on the MSCI World, since it invests in various industries and countries worldwide.
What Walz describes as a "love of possession" is also fatal - the phenomenon that one does not part with loved shares, even though it makes no sense to hold onto them. Investors should ask themselves if they would buy the stock again at this price. And if not, part with it - even at a loss.
Walz mentions another problem: intellectual potty management. Instead of managing the money in an account, investors would have a different account for each savings target. Keep looking at the depot, this mental subdivision persists.
"When investors invest in ten stocks, many look at the performance of each investment. If a stock is in the red, they are frustrated, even if the portfolio as a whole is up." His tip therefore: always have the whole in view.
Literature:
Hartmut Walz: "Simply brilliant decisions in the event of a financial crisis", Haufe, 1st edition 2020, 210 pages, ISBN-13: 978-3-648-13758-1, 19.95 euros, available from May 8, 2020
