Investing – Money Management
Financial experts agree that money management is one of the leading aspects that determines the success of a long-term investment. Even so, money management is a very individual matter because everyone has different financial goals.
We would like to show a few approaches that can serve as something to consider or inspiration. As a basis for our thoughts, we assume that all investments have a long-term horizon and are diversified under the usual risk parameters and are made in high quality investment objects.
Money Management
We often hear the question: should you invest once or invest regularly?
Both approaches are target-oriented if it is a long-term investment.
The combination of both methods is the most effective. You can get a good example in our article "A good way to build wealth".
.. More .. A good way to build wealthFor most investors who have a normal job and earn a monthly income, regular investing is a particularly good way to build wealth over the long term. The regular investment benefits from the cost average effect.
.. More .. Cost average effect
If you have an amount of cash that you do not want to invest once for risk reasons, this amount can be invested in 2 - 4 tranches over a predefined period of time. Those who do not invest their capital over a long period of time are exposed to the risk of inflation and may miss out on positive price developments.
Money Management
Money management also includes psychological aspects. There are many factors that can play a role. Let's take a closer look at three aspects.
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1. What is a realistic profit? And how can I build up assets with it?
a. This point is important for confidence in the long-term investment.
Please have a look at the average return article. There we show that the global stock indices achieve an average performance of about 6-8%.
.. More .. History & Average Profits -
2. What is my rate of return? How long does it take to double my capital?
a. You can get examples in our article «A good way to build wealth».
.. More .. A good way to build wealthb. Please look at the amount of the 72 rule.
.. More .. 72-Rule -
3. Are price declines a buying opportunity or will prices continue to fall?
a. Regular analysis makes it easier to answer this question. Check out our weekly market analysis.
.. More .. Market Indicators - What is it?b. Investing is always long-term! Buy quality at a low price.
c. Good investors are happy about price declines.
d. Long-term investments in high quality always benefit from price fluctuations (volatility).
f. Don't get carried away by the emotionalism of the press. Form your own opinion.
