Buying shares for the first time: Tips and hints for beginners

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Buying shares for the first time: Tips and hints for beginners

Anyone who wants to increase their assets and achieve a reasonable return these days will (naturally) be disappointed by traditional forms of investment such as overnight money, fixed deposits or home loan and savings accounts.

On average, overnight money does not even yield 0.80 % p.a. anymore. The situation is not better with fixed deposits – yields for an annual commitment have fallen below 1.00 percent and are mostly not even on the level of overnight money anymore.

In order to still make a profit as high as possible above the current money value loss (approx. 1.5 – 2 %), security trading is an interesting option.

As a result, more and more newcomers enter the stock market. The number of small investors in Germany, for example, has risen massively over the past year. Our tips and hints should help small investors who are getting ready to enter the stock market and start investing.

The model depot: Avoiding dangers and learning about them

If you decide on buying shares, you normally do not want to hesitate, but start working immediately.

However, the world of stocks is completely different from the types of investment that a newcomer on the stock exchange already knows. If you have never bought a security before, you should therefore definitely set up a model depot.

With such a model depot, it is possible to get to know the world of stock markets without losing a single cent. There are lots of providers who offer free sample depot software online, e.g.: CapTrader: Open a model depot.

Some brokers are not too happy about these opportunities as they naturally miss out on some business. But it is essential to become familiar with the language of the financial world, which is full of technical and foreign terms, before fully diving into the market.

Afterwards, it is important to find an inexpensive online broker, so that the fees do not consume the entire performance. Here, we describe how to find the right broker and with our broker comparison calculator, you will find the best offer for your needs.

Risk or security?

Börsenbär

Source: Gerd Altmann/Hans Braxmeier / pixelio.de

When you buy stocks, you will very quickly realize that there are riskier strategies of investment and those that are more secure.

If you take a risk, you may be rewarded with a high yield, but you may also lose a large sum of your money. With more secure investment strategies, the risk of loss is limited, but so is the chance of gaining high profits.

In this case, risk means that you purchase only one type of share – for example 100 securities of company X. If the papers increase their value, you win. If they fall, you will suffer losses. In the safe option, you spread. One possibility to do so is to copy an index such as the DAX. For beginners, the second variety makes more sense because it reduces risks.

The stock market calls for expert knowledge

When you open an overnight money account, there are no sudden fluctuations that require your immediate actions. The situation is different when you are on the stock market. A message that at first glance has nothing to do with your papers can cause severe damage. For example: Last year, a pharmaceutical company went bankrupt.

It produced a medication that was used in animal feed. The securities of some animal feed producers lost massively in value over a short period of time. So you have to inform yourself to be able to trade successfully on the stock exchange.

In order to inform yourself, specialized business newspapers can be useful. You can also search the Internet for specialist trading websites written in a language you understand well. On those, you can regularly read the latest analyses by experts. If you do not understand certain parts, do not hesitate to give regarding feedback. Generally, this communication channel is available and is also used by the site operators so they can change their offers accordingly.

General knowledge of shares

Before you start buying shares with real money, you should familiarize yourself with shares as an investment opportunity and the stock market in general. On our page, you can find furhter articles on shares and the stock market in general and in more detail!

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