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Build up assets: 16 tips for long-term capital accumulation

Whether on the path to financial freedom or to be secure in old age - if you want to worry less about money, you need to build up assets. But how do you do that? Not everyone can save large sums of money every month. The good news is that you can build up assets even on a small income if you think long-term and choose the right strategy. We show how it can be done and give 16 tips to help you build wealth.


A lottery win or a large inheritance? These possibilities can help you achieve unexpected wealth, but it's better not to bet on them. With the lottery, you have a 1 in 140 million chance of winning the jackpot - fortunately, there are better ways. Probably the best option: invest your money, let it work for you and build up wealth and capital in the long term.

Account and savings books hardly bring any interest, the only thing worse is to collect the money at home in a piggy bank. If you want to build up assets, you should invest in the stock market. Whether individual shares, ETFs, actively managed funds or other asset classes: You can increase your money through long-term investments.

At first, many people are afraid of such an investment. Lack of knowledge and the risk of losses on the stock market discourage them. In the long term, however, the probability of losses (in retrospect) is very low and has been almost zero over the past decades with long investment periods and broadly diversified investments. The chances of price increases and profits, on the other hand, are much higher - much higher than the 0.00000072 per cent with which you hit the jackpot in the lottery.

Building up assets with little money?

"Invest in shares? I can't afford that at all..." Wrong! You can build up assets even with little money. You don't have to invest thousands of euros a month to become rich. Even small amounts can become a considerable sum over an appropriate investment horizon. You can set up savings plans for as little as 10, 25 or 50 euros a month. Even without a salary of 5,000 euros net, you can build up capital through investment and improve your financial situation.


Basic rule if you want to build up assets and invest: You need a regular income. You need to earn money in order to be able to invest and increase it. With a fixed income, you can then get started - these 16 tips will help you build up assets:

1. Start early

One of the most important tips if you want to build wealth is: Start early! The longer your investment horizon, the more you benefit from the compound interest effect and the lower your risk of short-term price fluctuations. Don't keep putting off investments, but get started. As soon as you get started, work actively on wealth accumulation.

2. Analyse your financial situation

Get a clear picture of your financial situation. What is your income? What are your expenses, regular fixed costs and variable costs? Do you already have savings that you can invest or are you still paying back debts and loans? Wealth accumulation only succeeds if you have control over your finances and get a grip on them.

3. Pay off loans

If you still have current loans, you should prioritise their repayment. Take care of the repayment first before you invest your money in different asset classes to build up wealth. It doesn't matter if it's a student loan or if you financed your car through the bank. In the vast majority of cases, the associated interest exceeds your potential return on investment. In other words, it's more worthwhile to pay off the loan. Once all debts are paid off, you can take care of the capital.

4. Build up a nest egg

An important step that you should not skip or forget is: Build a nest egg that will protect you financially over a period of time. The nest egg is a safeguard for unforeseen emergencies. You lose your job or suddenly have to pay a larger sum. If you have no reserves, you will have to take out a loan again or reverse your investments. Experts advise setting aside at least three to six months' salary in a separate account.

5. Clarify your risk tolerance

In the stock market, the higher the risk, the higher the potential gains - but on the other hand, the higher the losses. Think about how much risk you are willing to take. In general, however, the following applies: Low-risk asset classes are particularly recommended for long-term asset accumulation. You want to build up assets over the long term and save a large amount after many years or decades.

6. Have realistic expectations

Investing will not make you rich suddenly and overnight. It is a slow process that requires patience and perseverance. Your expectations should be realistic accordingly. If you think you will be a millionaire after three years, you will quickly lose your desire and motivation.

7. Gather information

The stock market is very complex. You do not have to become an absolute Wall Street expert right away, but you should inform yourself thoroughly in advance. After all, you want to know where you are investing your money and what that means for you. Look closely at different asset classes and understand the differences. When it comes to your investments, you want to make informed decisions. You can only do that if you have the basic knowledge.

8. Develop an investment strategy

Don't invest haphazardly, but develop a clear investment strategy that you follow. Broadly diversified ETFs (Exchange-Traded Funds), dividend stocks or shares in growth-oriented companies? Different strategies have different advantages and disadvantages - but above all, the form of investment must suit you. Do you want regular payouts and passive income? Then dividends are particularly interesting. Do you want to invest passively via a savings plan? Then a 70/30 portfolio with a world ETF and an emerging markets EFT can be a good choice.

9. Review the strategy regularly

Don't forget: Review the chosen strategy regularly. Does it continue to fit you and your goals? Has something fundamental changed in your investments that make you want to sell certain shares and replace them with others?

10. Only invest money you don't need

Even if you want to invest as much as possible to advance your assets, one important basic rule applies: you should only ever invest money that you do not need. If you already know that a major expense is coming up in the near future, it is better to leave the money in your account. Does the flat need to be renovated? The sofa is broken and needs to be replaced soon? You should not invest the required amount. Short-term price fluctuations could otherwise lead to losses if you have to sell your shares again after a few weeks.

11. Do not act emotionally

It is difficult for many, but the following applies to the stock exchange: There is no room for emotions when building up wealth! Your portfolio value falls by 3 per cent, you panic and want to sell everything? You think a company is particularly great and are desperate to buy shares, even though it doesn't fit your strategy and the long-term prospects for this company are poor? As hard as it sounds, you need to keep your emotions in check and focus on facts. Short-term losses can happen - panic selling is one of the main reasons why investors lose money.

12. Pay attention to diversification

Perhaps the most well-known stock market adage is: don't put all your eggs in one basket. By diversifying into different sectors and companies, you reduce your risk. Instead of putting all your money into a single stock, you can invest in a broadly diversified ETF. The volatility of a broadly diversified portfolio is much lower.

Example: You invest 1,000 euros in a single company. This company delivers unexpectedly bad quarterly figures or is involved in a worldwide scandal - the share price collapses by 20 per cent. Suddenly your shares are only worth 800 euros. If, on the other hand, you have invested the 1,000 euros in a diversified ETF, the individual company in it may only account for 1 or 2 per cent. Fluctuations are less noticeable.

13. Stay disciplined

You need discipline to build up wealth. Invest regularly, preferably monthly, and forgo other purchases in return. Of course, you could buy other things with the money you have left over, but this will not increase your wealth. Entrepreneur and major investor Warren Buffett said: "Do not save what is left after spending; instead spend what is left after saving.

14. Compare costs and fees

Costs for custody account management, fees for individual share purchases or sales, total expense ratio for ETFs (TER) - there can be various costs associated with investing that you should be aware of and compare. There are numerous providers (from classic banks to neobrokers) where you can invest at different conditions. If high costs are destroying your return, it makes sense to switch.

15. Increase your savings rate

As you progress in your career, your salary typically increases. You have more work experience, deepen your skills, take further and advanced training, and move up in the company. With higher earnings, you can also increase your savings rate. Don't put everything into higher monthly expenses, but continue to build up assets.

16. Think long-term

If you want to build up assets, you should think as long-term as possible and plan for the future. Compound interest works to your advantage and you benefit from it every year. An example: You invest 100 euros a month in an ETF and expect a return of 5 per cent per year. After 10 years, you have 15,499.21 euros - of which you have paid in 12,000 euros, the rest is interest.

If, on the other hand, you invest 100 euros every month for 30 years at an annual rate of 5 per cent, you will end up with 81,869.78 euros - of which you have only paid in 36,000 euros. Almost 46,000 euros are the result of the compound interest effect.


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