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This investor strategy is also worthwhile in crises

2020-05-20T02:35:22.553Z


Buy shares and leave them in the deposit for decades. Boring? Maybe, but: This "buy and hold" strategy pays off. In the long term, investors can usually achieve rich returns.


Buy shares and leave them in the deposit for decades. Boring? Maybe, but: This "buy and hold" strategy pays off. In the long term, investors can usually achieve rich returns.

Bremen (dpa / tmn) - Admittedly, it sounds strange, the wisdom of the stock market guru André Kostolany, who died in 1999. He advised accordingly: buy stocks, take sleeping pills, and those who sleep long enough will wake up rich at some point.

Of course, investors should not take this literally. Rather, Kostolany wanted to express it: patience pays off in the long term on the stock market.

"For long-term wealth accumulation," Buy and hold "is by far the most successful strategy that has proven itself over decades and can be backed up with figures and statistics," says Thomas Mai from the Bremen Consumer Center. So: do not rush into the stock market, remain level-headed.

Do not act hastily even in crises

"There is currently a risk that imaginative interpretations of an event like the Corona crisis will marginalize the statistical return forecasts," explains Prof. Ingrid Grossl, director of the Institute for Financial Services (iff) in Hamburg.

It would be a mistake to sell stocks that are supposed to be in the depot for a long time because of the corona crisis. "One day this crisis will also be over, and the situation on the stock exchanges will normalize again," says Grossl. A constant ups and downs on the stock markets is ultimately nothing unusual.

Especially for those who are inexperienced in stocks: "Swim better than speculate," advises Mai. Because speculation is extremely risky. It is better if investors buy shares widely. "The fact that the daily price fluctuations are neutralized to a certain extent speaks for a broadly diversified package of shares," explains Großl.

In addition, a widespread custody account prevents investors from losing all of their assets invested in shares if a company files for bankruptcy. The advantage: investors do not have to worry about their shares all the time. They also save costs associated with frequent transactions on the stock exchange.

Pay attention to the right mix

However, in order to compile the share package, extensive knowledge of the respective companies and their expected long-term development is necessary. In addition, investors should not confuse "do not constantly care" with "do not care at all".

Because if the price of a single share rises compared to the other shares in the portfolio, the value of this share in the portfolio also increases. "This is associated with a changed risk-return profile," explains Großl.

Spread the investment broadly

To avoid this, investors should combine the "buy and hold" strategy with the purchase of a passive, index-traded index fund - an ETF. ETFs track an index, for example the German stock index (DAX). There is no active management. "This saves costs," explains Grossl.

If you choose ETFs that only invest in blue chips, i.e. in stocks of established large companies, you can largely ban the risk of corporate insolvency. The dividend is also reinvested with an accumulation fund. "This is how investors achieve an interest-interest effect," says Grossl.

Very important: "Investors should spread widely across regions and industries, so choose ETFs with many stocks," advises Mai. So don't rely on Eurostoxx 50, but for example on Eurostoxx 600. Small-volume funds should avoid investors, as they may face closure at some point, the consumer advocate warns.

"The money invested in stocks and ETFs must remain untouched for at least 10 to 15 years," advises Mai. Investors should therefore have sufficient financial reserves that they can draw on in an emergency. Another principle: "Don't buy stocks or ETFs on a pump," advises Mai.

Stay critical when choosing

What else should investors pay attention to? "Consumers are sometimes offered funds that have so far not performed well or are too expensive," says Mai. The consumer advocate recommends investors to be critical when choosing and putting together the stock package. "It is advisable to purchase ETFs, which are also recommended by well-known relevant tests," explains Größel.

In general, the "buy and hold" strategy is suitable for any long-term investment. "Above all, it is ideal for old-age provision," explains Klaus Morgenstern from the German Institute for Old-Age Provision. He also recommends ETFs.

"Those who have saved for a long time can turn the tables later and have a fund pension paid out without immediately selling everything," says Mai. So even as a pensioner, investors can stay on hold for a long time and do not have to put everything in the savings book.

Source: merkur

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