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Finding your personal investment style

Finding your personal investment style

As they are different ways to build a house there are different ways to invest. While the risk profile I talked about in my previous articles is definitely important, more profound questions need to be answered first. In order to make this easier on the eyes and on the mind I tried to channel my inner artist and created a quick flowchart. Keep in mind that this chart should give you a idea where to go from here rather than something you would follow blindly.

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The risk of investing

The risk of investing

“Past returns are not an indicator for future performance.”

Everybody who has ever read something about financial instruments like ETFs, stocks or other derivatives has probably seen this statement. It basically means that if a stock, for example apple, grew the last 20 years, it does not mean it has to do so continuously. To be precise the past development of a stock has zero correlation to the future development of the stock in question.

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Use your timevalue (Theta)

Use your timevalue (Theta)

To improve their account balance someone has basically three options additional to working:

– Capital markets
– Real estate
– Working more (overtime, 2nd job etc.)

As most people don’t have enough money to buy real estate or don’t have the time/energy to work more it basically boils down to capital markets.

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Why investing IS important

Why investing IS important

If you would ask somebody the question how to make lots of money they would probably tell you this : get a well-paying job. While this is definitely true, it is only half the truth. Normally whenever somebody starts to earn money their life-style and their expenditures increase as well (this is especially true for students who often didn’t earn money before). Therefore they start earning a lot more while their bank balance stays the same due to an increase in spending.

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