How do you invest 10,000 euros
10 ways to invest $ 10,000
What options do I have as an investor to invest € 10,000?
Investing money is not as complicated as finance suggests. Still, you can go wrong. Particularly in the low interest rate phase, investors have to work harder to achieve the desired return. 10,000 euros can nonetheless be invested profitably. Each saver has to decide for himself which of the following 10 ways is suitable for him.
1. Bank deposits - fixed-term deposits or overnight deposits
Bank deposits include balances on current accounts and overnight deposits as well as savings and time deposits. These are assets in savings books, fixed-interest savings accounts, time deposits and time deposits. The creditor of a fixed-term deposit, for example, concludes a contract for two years, after which he receives his money back. The amount is fixed and the account holder receives credit interest in return. Deposits at commercial banks are characterized by a high level of security. In Europe you are legally protected against bank failures and in Germany you are also subject to a voluntary deposit protection scheme. Because of their security, bank deposits have low interest rates. Your liquidity is always available, but if you cancel prematurely, it costs part of the interest. With a normal overnight money account, you can't expect any interest in the current environment. For conservative savers, the fixed deposit account is still the safest way to invest money.
2. Open-ended mutual funds
When investing in mutual funds, fund companies act as capital collection agencies that collectively manage the funds of investors. A distinction is made between equity, bond, real estate, commodity, mixed, maturity, strategy and umbrella funds. Every investor purchases units in the fund. In open real estate funds, for example, managers spread the capital widely over many office, retail or commercial properties. Since the funds are also managed as special assets independently of the business of the fund company, the investment money is highly secure. If real estate prices and rents rise, investors benefit from fund price increases. However, the returns are not fixed, as is the case with the overnight money account, but rather the returns of open funds fluctuate. There may be losses in the form of price losses. The availability is usually every trading day, but the redemption of units can be suspended.
3. Index funds and equity funds
An essential criterion of the fund investment are the expenses that cost the investor return. Compared to actively managed investment funds, index funds traded daily are more cost-effective because they save administrative costs. These funds invest the money in a fixed-income, equity or real estate index. Unlike funds with management, they do not strive for a higher return, but rather develop like their underlying market index. They passively replicate indices 1: 1 in full or via swap transactions. A physical ETF on the Euro Stoxx 50 buys all stocks contained in this index. Investors are spared having to choose stocks, they just have to keep an eye on market developments. By spreading risk, index funds offer a high level of investment security.
4. Equity crowdfunding real estate
When it comes to crowd investing, small investors rely on the intelligence of the community, which helps a property to be successful with very small amounts. The subject of crowd investing is individual residential or commercial buildings. The capital contribution is made as a subordinate loan with interest on capital. The income distributions depend on the economic result of the rented property. The terms are between two and 15 years, prior to this a disposal of the invested money is excluded. The advantages of crowd investing for real estate are that the crowd capital is only a supplementary component of the entire real estate financing and that there are few costs. Despite careful selection of the investment object, the lack of risk diversification can lead to a complete loss of the investment amount.
5. Precious metals
Private investors can purchase precious metals such as gold. Investors realize their profits with physical gold investments through the price. Gold pays no interest and is traded in dollars. As a result, exchange rate losses can occur despite price increases, which in extreme cases can consume the return. In addition, storage costs reduce income. The security and tradability of this raw material plant are very high. Gold is stable in value and is accepted everywhere. It is particularly recommended to investors who expect a loss of confidence in the paper money system or who fear the collapse of the financial system. The latter investors should, if possible, buy coins in small denominations so that they can use them as a means of payment. Anyone who buys physical gold for returns should favor large bars.
Bonds are debt capital for the debtor. They include debentures, bonds and Pfandbriefe from companies, banks, institutions or municipalities. For example, a bank borrows from the investor and issues a bearer bond. It promises that the money will flow back to the buyer of the bond after a certain period of time. The private investor receives interest for the transfer of the investment money. The higher the interest promise, the more uncertain the repayment. Bonds are continuously traded on the stock exchange. If interest rates have risen, the price of the older, lower-yielding bond has fallen. Conversely, if interest rates have fallen since the bond was issued, the higher-interest bond has increased in value. Investors must first and foremost keep an eye on the risk of the issuer's bankruptcy.
Investors can participate in a company in the form of shares. The investor provides equity. He becomes co-owner of the AG and participates in the success or failure of the company. The shareholder has the right to have a say in key business decisions at the company's general meeting. The investor participates in the profits in the form of a dividend, provided this is distributed. Shares are also part of the liquid financial investments, they are listed on the stock exchange. The stock market prices are determined by the future growth and business prospects of the company and can fluctuate widely. If the AG has to file for bankruptcy, the capital can be completely lost. Share prices rise over long periods of time. However, the risk of investing in just one company is unacceptably high.
8. Equity crowdfunding startups
In this case, equity crowdfunding focuses on the financial support of startups. Since these are young companies with innovative business ideas, the commitment is risky. The newly founded companies are not yet making a profit and need a lot of capital. Investors speculate on an above-average return. Participation in the startups takes the form of a silent partnership, participation rights or subordinated loans. In all forms, investors do not have a say in the operational business. The investor participates in the profit or loss of the company, sometimes even subordinate to all other creditors. This reflects the high investment risk that extends to total loss in the event of the company's insolvency. The liquidity of the investment is usually only given after five to seven years.
Certificates are suitable for speculative investors. Investors who are aiming for a disproportionate profit quickly can resort to leverage certificates. This applies provided that they know their way around and can cope with the loss of 10,000 euros. Anyone who chooses a leverage certificate with leverage 4 on a stock index can benefit four times as much from the index's upward movement. If the investor needs his money back soon, the bet on the rising index must pay off within a limited period of time. If the price of the underlying asset falls, the investor also shares in the losses. If the index falls by 25 percent, the total loss of investment capital is already achieved. If the issuer goes bankrupt, the certificate is worthless because it is an unsecured bearer bond.
10. Closed-end investment funds
Investment objects can be real estate, forest, private equity, wind, hydropower or solar systems, for example. These funds differ from open-ended investment funds in that they only invest in a few properties with a long term and can only subscribe for a limited time. The investor usually cannot get hold of his money ahead of time. Since high returns are the fund's goal, the security of the investment is low. The investor is liable with his entire capital contribution for the success of the economic enterprise. However, since the investor has nothing to do with the supervision of the project and only has indirect influence on entrepreneurial decisions via the shareholders' meeting, he has to bear high external costs that reduce his potential for returns.
Conclusion: The secret of investing lies in a good mix, sufficient information and self-determined decisions. If you want to invest 10,000 euros today, you can already get a good diversification today. High minimum investments and acquisition costs are now rather the exception.
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