How should a young person invest money

Bremen (dpa / tmn) - Child, think about your retirement: Grandma, uncle and parents are happy to give this advice. You then often reap eye rolls. Young people often do not want to think about retirement provision yet.

That doesn't mean they are just hitting their money on their heads. In a survey on behalf of the banking association, almost 90 percent of 14 to 24 year olds said they were saving money. At least some of them now and then, many regularly. About a third of them saved up for larger purchases, and many also wanted to be prepared for emergencies. And the old-age provision? In fact, only one in ten saved for this.

But how do you go about saving? Is it even worth it if only 20 euros a month remain from student loans or the starting salary after training?

Annabel Oelmann has a clear opinion on this. "Every euro counts. The main thing is that you start at all," says the financial expert at the Bremen consumer center. Saving requires discipline. Your tip to start: Set up a daily money account and transfer a certain amount to it every month by standing order. If there is still some money left in the current account at the end of the month, it is also in good hands on the overnight money account. "If I leave it in the current account, I tend to spend more," says Oelmann.

The overnight money account is a safe bet. But the interest rates are marginal and well below the inflation rate. At best, there is 0.3 to 0.35 percent there, as Oelmann says. In the long term, however, the money saved should increase, i.e. bring a return. "It is only with certainty that you cannot make provisions for old age," she says. "You only have one certain loss." Of course, this does not only apply to old-age provision. What has been saved should never lose value.

However, returns are related to risk. And beginners should approach it first. According to Oelmann, index funds, so-called ETFs, are a good start. These are passively managed and track a stock index, for example the Dax.

One advantage of ETFs: They are more widely diversified and therefore less risky than shares in individual companies. Global funds have the comparatively lowest risk, explains Thomas Krüger from the magazine "Finanztest", which also continuously reviews and evaluates equity funds. Funds that track the MSCI World Index were among the good ones. "You are invested in around 1,600 stocks worldwide and have the risk relatively well under control," explains Krüger.

In the end, it is the mix of risk and security that makes up for it. A simple variant is the combination of a call money account and a share ETF. Krüger calls it the "slipper portfolio". "Because it's as easy as putting on slippers." For example, if you can put back 100 euros a month, you transfer 50 euros a month to the overnight money account and 50 euros to your deposit, where a share ETF is located.

A custody account can be set up with an online direct bank, for example. It's straightforward, says Oelmann. Each index fund has its own number. You look for it in the depot and use it to select the appropriate ETF.

Many young people have no clue of what is happening on the stock exchange, if you believe the survey by the banking association. Two thirds said they had little or no idea about the subject. But young savers should read something into the subject before investing in index funds for the first time, advises consumer advocate Oelmann.

According to Krüger, those who want to invest in an ethically correct manner will also find ETFs with certain sustainability criteria, according to Krüger. Defense companies or tobacco companies could then be excluded from the index fund.

How much risk and how much security is appropriate? Of course, that depends on the individual type. A balanced mixture of 50:50 is the best option for most young people, says Krüger. If you are concerned about security, you only leave a quarter of your savings in the depot. Those who are willing to take risks, on the other hand, only have a nest egg on their overnight money account and invest the rest.

The slipper portfolio is quite easy to maintain. The rule is: check once a year to see whether the desired ratio between the two types of investment is still right. Even if the stock market is going up or down a lot, you should take a look, says Krüger. If there is an imbalance of more than ten percentage points, savers should temporarily adjust their monthly payments.

If, for example, 65 percent of the reserves are in the share custody account instead of the targeted 50 percent, you divert the monthly payment for the share ETF and invest it in the overnight money account until the assets are balanced again. Conversely, it would be steered in the other direction. Krüger speaks of an "anti-cyclical investment effect". He explains, "You take something out when the stock markets are very good and save some of it." Or you step in when the markets are down. "That turned out to be quite beneficial in our analyzes."

Before starting to save, other financial construction sites should be closed, advises consumer advocate Oelmann. From their point of view, the following points should be observed: Is there a nest egg for unexpected, sudden expenses that you could not easily pay with your monthly income - such as a car repair? Have all major insurance policies been taken out? And: have outstanding loans been repaid? "It makes no sense to save something on a call money account with mini interest while you have to service a loan with higher interest," explains Oelmann.

Otherwise, what is left over at the end of the month can be put aside. Not only grandma and grandpa think that's sensible. Even if in the end you may not save it for your retirement provision.