Building solid wealth through stocks doesn’t have to be a risky endeavor. Here are five valuable tips for private investors and small investors to act successfully in the stock market in the long run.
Invest Long-Term and with Patience
Patience and a long-term perspective are crucial. An investment horizon of 12 to 15 years or more allows for market fluctuations to balance out and maximizes the compound interest effect. This approach minimizes risk and maximizes the chances for returns.
Diversification is Key
A broad distribution of capital across various asset classes, industries, and regions is essential. This includes not only stocks but also bonds and commodities. A diversified strategy significantly reduces risk and protects against unexpected losses.
Focus on Quality Stocks or Established Funds/ETFs
Beginners should focus on stock funds or ETFs in the long term, as these are professionally managed and spread risk. Quality stocks may offer high returns but come with stronger price fluctuations.
Use the Momentum Strategy as a Supplement
The momentum strategy is suitable for additionally benefiting from short-term market movements. By investing in winning stocks from the first half of the year, one leverages their tendency to continue positive developments.
Stay Flexible and Regularly Inform Yourself
Successful investors keep an eye on economic and geopolitical developments and adjust their strategies accordingly. Considering tax advantages can also be important.
Additionally, for investments of €50,000 or more, investors should consider lower-risk investments to stabilize their portfolio as well as dividend stocks for regular income.