Especially in times of great upheaval, people look for sensible ways to invest their money. Once you have decided on a good investment path, you can reap the rewards after a few years.
As an example, one only has to look at the purchase of shares: Anyone who invested in shares of Google, Apple, Facebook & Co. at the beginning of the Internet age is bound to be pleased today. The shares of these companies have literally gone through the roof in recent years.
In Austria and Germany, it is assumed that less than 5% of the general population is interested in buying shares - that is far too little!
If you want to trade shares, we recommend that you read this guide carefully. We show you the different investment methods for shares and give you our best tips.
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Content
What are shares?
Shares have been around for several hundred years. The first ideas for shares appeared in the middle of the 17th century. At that time, a company was looking for a way to raise more money.
Even today, shares work according to the same principle: large public limited companies can raise a lot of money with shares. Interested parties and people who believe in the company are given the opportunity to invest their private assets in a company.
When people buy a share, they are buying part of the company's assets. This includes, for example, workshops or machines.
Initially, shares were traded on special trading floors. There, each trade was recorded in a special book.
Nowadays, everything works much faster and less complicated: thanks to the Internet, anyone can open a trading account in a few minutes and start buying their first shares.
[alert style=“info“]Notice: Shares can lead to large losses (if handled incorrectly). We therefore recommend that everyone informs themselves and learns before starting to trade. This reduces the likelihood of a nasty surprise.
Why should I buy shares?
Ever since money has existed, people have been looking for ways to increase it.
One option for this is shares: if you choose the right shares and the prices rise, you can expect the first profits after just a few months. However, it is much more worthwhile to hold the shares for several years and only sell them later.
One of the best known long-term investors is Warren Buffet:
Warren Buffet became a billionaire by investing in the right stocks.
It is therefore worthwhile for anyone who has unused money in their account to invest in shares. If there are companies in which you believe and from which you expect a lot in the future, you can invest. However, it is important that you only invest money that you can lose in the worst case.
Some people buy real estate, others invest their money in gold, and still others buy shares: While there are usually only small price fluctuations in real estate and commodities (such as gold), these can be more severe in the case of company shares.
[alert style=“info“]Example: The following screenshot shows the share price of the electric car manufacturer Tesla in 2018. The fluctuations in the share price are clearly visible: sometimes up, sometimes down. Were good sales figures reported, things went up sharply. If there were problems or negative headlines (e.g. When Elon Musk pulled on a cannabis joint), ging’s bergab.[/alert]
Such short-term jumps should only be of interest to short-term traders who trade in hourly or daily rhythms. If you want to own shares in the longer term (e.g. over several years), you should not care about small breakouts.
In summary, it can be said that buying shares is suitable for anyone who wants to build up a long-term fortune. Shares have long been, and still are, one of the best ways to invest money. In addition, shares allow you to buy shares in real companies, which is particularly good if you are very interested in certain sectors.
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Free account opening possible immediately. Deposit also via PayPal!
EU Risk Notice: 72% of CFD retail investor accounts lose money.
Buying shares: How it works!
If you want to buy shares, there are a few things you need to consider first.
[alert style=“info“]Tip: If you want to start trading straight away, you should take a look at our alternative to the conventional custody account. More on this below.[/alert]
1. select depot
First of all, you need a share portfolio. All purchases and sales are then realized via this account.
It is important to choose a reputable custody account with good conditions. Unfortunately, it is still the case that house banks in particular often charge fees for a share deposit account. However, there are now many free providers.
What is not free is the execution of a transaction (order). The costs are usually less than €10 - but some providers add a large commission on top. An order can then cost a maximum of €70.
It is advisable to compare custody accounts and choose a provider with low fees.
We recommend the following providers:
- Finances.net - Reputable and large broker of the well-known online magazine. Low commissions, regardless of volume!
- Dad.at - Austrian online broker, test winner at ÖGVS.
- Flatex.at - Well-known and large broker with a great online interface.
2. become familiar with stock trading
Once you have decided on a securities account, the exciting part follows: the purchase of the first share.
Although the figures are not known exactly, it can be assumed that many newcomers to the stock market fail. This happens especially when people do not inform themselves sufficiently and invest blindly in shares.
First of all, you should clarify with yourself how much money you want to invest. Initially, we recommend smaller sums before venturing into larger transactions. With small sums, it doesn't hurt if something goes wrong.
Many beginners are over-motivated and are already dreaming of big Ferraris while they are creating their first order. This is wrong - overconfidence is rarely good for you.
The well-known self-made billionaire Warren Buffet did not become so rich because he looked at short-term successes of companies. Rather, he looked at which companies were good and known for doing successful business. He then invested in them.
An example of a company that is good and well-known in the long term is Coca Cola, for example. Companies such as McDonalds or (more modern) Apple also belong to this category. These are no flash in the pan, but renowned big players that know exactly how to dominate their industry.
3. observe & learn
As soon as you've bought your first stock, you're bound to keep checking your portfolio like crazy to see what's happened: Is the price rising? What news is there about the company?
The third part of your stock experience is all about patience.
Successful stock traders usually leave some stocks for years before they think of selling them. During this time, there are many ups and downs.
Anyone who acts hastily and sells at the first minus trend is not cut out for stock trading.
It is also important to remain rational and not be led by short-term emotions.
4. diversify and mix the portfolio well
Would you like to minimize your risk and have a chance of making a profit at the same time?
Then it is advisable to diversify the portfolio. Diversification means not concentrating on just one company or one sector. Rather, one buys shares from different markets.
It is often the case that some markets explode and are bullish, while others are trending downwards. Profits from the former then smooth out the losses from the downtrending markets.
[alert style=“info“]Tip: Safe markets include sectors that have been established for a long time and in which there are no major upward or downward movements. Uncertain and risky markets are so-called "growth markets". Nowadays, these include electric car manufacturers, for example.
Good tips for buying and selling can also be found in stock magazines, such as e.g. at Finanzen.net!
5. sell strategically
Again, the anecdotes of older stock professionals help us with the last point: let profits run, limit losses aggressively!
Nobody wants to lose a lot of money on shares, after all, the reason they bought them in the first place was to make money.
Successful share traders therefore set themselves fixed limits at which they sell their shares. Limits in the region of 20% are often used. If one of their orders slips below this limit, they sell rigorously. This prevents major failures and minimizes the risk.
In some programs you can even enter this limit in the program.
Then the share is automatically sold when the price slips below the limit.
Alternative to stock trading: CFD Trading
There are many different variants in the spectrum of share traders. In addition to the classic longer-term buy-and-sell, day trading is also becoming increasingly popular.
This is a special form of investing where you only enter and exit a course for a very short time.
In contrast to traditional trading, however, you do not actually buy the share.
Rather, one speculates with a provider on the future development of the price. Here, money can also be earned with negative prices, if one bets on a falling price.
How do CFDs work?
CFDs are not tied to a securities account. After opening a free account with a CFD broker, you can start trading.
It is possible to speculate on rising and falling prices.
[alert style=“info“]Example: If you assume that share XYZ will fall, click on "Short". You can then choose how much money you want to "short" the share with. In other words, you speculate that the price will fall. If this is indeed the case, you will receive money.
CFDs are leveraged products.
In short, this means that you end up working with much larger sums than you actually invested.
As a result, a lot of money can be earned with CFDs in a relatively short time.
At the same time, however, CFDs are highly risky and if you are unlucky, you can lose all your invested capital in a matter of minutes.
As with shares, the same applies to CFDs: learn and then trade properly.
Many CFD providers offer demo accounts for this purpose.
Broker recommendation: eToro
eToro is a renowned CFD service that is one of the largest in the world.
Registering with eToro is quick and you can use the demo account to learn step-by-step what it means to trade CFDs. You also get a virtual starting balance.
When you feel that you have learned enough, you can switch to the real money account with one click and trade real values.
Do you want to dive into the fascinating world of stocks, CFDs or commodities like silver and gold? Then eToro, one of the most popular trading providers, is the right place for you!
Why should you choose eToro? Here are some advantages that will convince you:
- Huge selection of trading opportunities: At eToro, you can choose from a wide range of options, including precious metals, commodities, stocks, ETFs, cryptocurrencies and much more. Explore the world of markets and find the asset classes that suit your goals.
- Trust and experience: With over 20 million users worldwide, eToro has been active on the market since 2007. The company has earned an excellent reputation and offers a solid platform for online trading.
- Free trade: At eToro you pay no custody and order fees. You can manage your investments freely without having to worry about additional costs. Make full use of your capital and maximize your chances of making a profit.
- Quick and easy online securities account opening: Want to start trading right away? No problem! At eToro you can open an online account in less than 3 minutes. It has never been so easy to become part of the financial markets.
- (Almost) all cryptocurrencies tradable: eToro offers trading in over 60 digital currencies and coins. Whether you want to trade the standard cryptos like Bitcoin, Ethereum, Ripple and Cardano or are looking for up-and-coming meme coins like Dogecoin and Shiba Inu Coin, eToro has it all in one place.
- Bet on falling prices: At eToro you not only have the opportunity to bet on rising prices, but you can also profit from falling prices. Use different trading strategies and make profits in any market environment.
What are you waiting for? Start your trading adventure with eToro today and benefit from the wide range of trading options, user-friendliness and attractive conditions. Click on the link to the popular trading provider now and open your online account with eToro!
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Free account opening possible immediately. Deposit also via PayPal!
EU Risk Notice: 72% of CFD retail investor accounts lose money.
Tips for Trading platforms we present here.
Conclusion: Buy shares
As has been well demonstrated in this article, stocks are recommended as a long-term investment method.
Stocks have already made some people rich and they could also help you to build up a small fortune. The important thing is to diversify your portfolio and not just bet on one card.
In addition, people are particularly successful with shares if they regularly inform themselves about the state of the companies whose shares they have bought.
The more you are interested in and learn about share trading, the more likely you are to make long-term profits.
If you now feel like it, we also recommend the many interviews with Warren Buffet on YouTube. What the gentleman spills out is information that you can't get for free everywhere.
CFDs are a faster and significantly riskier method.
CFD trading is not about long-term trading, but rather short-term trading and "riding" "play money" from price waves. Day trading is much more stressful and you have to sit at your PC all the time. On the other hand, the trading account is opened immediately and you can get started straight away. Most providers even have a demo account where you can try trading completely free of charge (with virtual "play money").
