Investing money – the best time is always now!

In 2020, more Germans have invested in shares than they have in a long time. Young people in particular have discovered the stock market for themselves. According to the Deutsches Aktieninstitut, one in six people in Germany has shares, equity funds or ETFs in their custody accounts – despite Corona and the associated turbulence on the capital markets. However, this trend does not change the fact that there are still a lot of Germans who prefer to save in the traditional way and do not dare to take the step towards shares.

One reason is the fear of making losses over weeks and months and ending up with less money than before. Many people also wonder about the right time to enter the market. The good news is that if you follow a few basic rules, you can take it easy.

What are the requirements for investing money?

Investing money in the capital market is not just for the rich and financial professionals. In the meantime there are various possibilities to educate yourself on the subject of finances or simply to get advice. Various forms of investment allow money to be invested even with regular small amounts.

Before you start investing money, you should think about three things:

How much money do you need as a nest egg that you can quickly access in case of emergency?

One of the most important investment tips is: never invest all your money. Life may present you with unpleasant surprises, such as a period of unemployment or the total loss of your car. To avoid getting into a financial bottleneck, it is advisable to set aside an emergency reserve of two to four months' net income, depending on your personal situation. If you do not have such a "nest egg", the worst that can happen is that you have to sell securities at a loss at an inopportune time in order to obtain liquidity.

An important criterion for deciding on your investment is your personal risk appetite. Consider in advance which investments you feel comfortable with. Your advisor will help you find a suitable portfolio that balances higher-risk appreciation options with lower-risk value protection options. Last but not least, your investment horizon plays a very important role in terms of your financial investment. Depending on how long you want to invest your money, there are different types of investments you can consider.

When should you invest money?

Unfortunately, not even the best-known stock market professionals in the world know a sure answer to this question. The reason: There are simply no. Although forecasts and market observations help to identify better and worse times, since no one has a crystal ball with which to look into the future, it is also impossible to predict how long an upswing on the financial markets will last and when the next downswing or crash is just around the corner.

"Time is your friend"

Warren Buffett

Nevertheless, there are some basic rules you should follow in terms of timing. The most important one is: "Time is your friend" , that means "time is your friend." It comes from living investment legend Warren Buffett. The background to this statement is that almost all security prices rise over time. Experience shows that phases of rising prices on the financial markets last much longer than phases of falling prices. The long-term price charts of the most important stock indices speak a clear language. For people with a long-term investment horizon, the answer to the question of the best time to invest is clearly "now"!".

The longer you stay in the market, the fewer losses you will have

Example: If you stay invested in international markets for 5 years, you will only suffer a potential loss just under 21% of the time invested. Depending on the mood of the economy, it can be higher or lower. Nevertheless, it is much more likely to make a profit. If you invest for at least 15 years, you have virtually no risk of loss.


Only very few people, however, have large sums of money that they can invest immediately on the stock market. A majority, however, are able to invest a fixed amount month after month. If you belong to this group of people, investments with regular contributions, such as savings plans or unit-linked annuities, are the right way to invest your money profitably.

You invest a constant amount every month in one or more securities of your choice, for example in a fund. With this type of investment, you can benefit from the so-called "cost-average effect. This means that you buy many securities with your constant investment amount when prices are low, but only a few when prices are high. In the long term, the average cost of the shares can be lower than with a one-time investment.

Investing money regularly also has the advantage that you practically no longer have to worry about the right timing of your investments. Too many people waste their precious time trying to figure out the "perfect" time to enter the stock market. In practice, many investors in search of the perfect time to invest make the mistake of buying securities too late (when prices are too high) and selling them too early (when prices are too low).

Perfect timing is enormously difficult and yields little

The following chart shows a theoretical investment in the 500 largest companies in the U.S. In the process, the total 2.000 US dollars per year invested differently: with perfect timing, with bad timing and regularly via a savings plan. If you look at the result, you will see that a savings plan with an investment period of 20 years is only 10% below the result of perfect timing.

Studies show that when investing money in the stock market, it is crucial to "ride" the best market phases. If you miss the days with the biggest upward price jumps, you significantly reduce the return on your investment. However, since no one knows when the best days on the stock market are to be expected, it makes sense to invest money over as long a period as possible.

If you invest for a longer period of time, you will inevitably experience that prices will also go down (more or less) in the meantime. But in the long run you profit from phases with rising prices.

Conclusion: The best time is now

This rule applies to many things in life, but especially to investing money. Because: time is money. Therefore, start investing money early and don't try to be smarter than the market. You cannot know the perfect time for a capital investment. Rather, two virtues in the stock market are the basis of your success: patience and perseverance. "Buy stocks, take sleeping pills and don't look at the papers anymore. After many years you will see: You are rich."There is no better way to sum it up than the legendary stock market expert Andre Kostolany.

You want to get started right away, but you still have questions? Then a personal consultation with an insurance broker is a good next step. In our article "Well prepared for the consultation", you can find out what to expect in the consultation and how to prepare for it.

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