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Investing Successfully

Legal/ tax and helpful subjects

How to generate profits even with a little capital

By André Jasch
5 minute read

Many people believe that you can only invest successfully if you have a lot of money. This is what the "Deutschland-Atlas Anlageverhalten" reports as well. Accordingly, German private investors lose 200 billion euro in potential profits each year, Die Welt reported at the end of September.

Why? In Germany, people park their money in non-interest-bearing current accounts or minimally interest-bearing fixed-term deposit accounts instead of investing it in a variety of ways or trying to make risky investments. If Germans had invested a total of only ten percent of the capital they had placed in time and overnight deposits into equities and other riskier financial products instead, they would now be 200 million euro richer, Die Welt continues.

This is becoming an increasing problem - in times of zero-interest policy, German private investors pay more for the formerly secure investment options: The interest rates can no longer compensate for inflation. Therefore, anyone who wants to invest successfully has to devote a little more time to finances to increase his or her assets. You have come to the right place for that.

 

No, please do not invest your retirement provision only in stocks or equity funds or company shares. Don't invest all your money in gold or real estate. If it doesn't work out, you lose all your money. The trick is very simple: Spread your investments to spread the risk.

Invest your money in a way that you feel comfortable. Sleepless nights are a very bad sign. People are different and individual investments equally unique. Risk-oriented people invest a larger part of their available capital on the stock exchange and in other high-risk financial products. More conservative investors invest only a small portion in equities or corporate bonds. Still: Have at least a little courage!

More conservative investment options include government bonds, call and time deposit accounts, savings plans, building society savings contracts, and life insurances. They are mainly used to put money aside safely. With an inflation of around 1.7 percent, however, the saver does not make a profit at all - he tends to pay more money because most conservative investments cannot even compensate for inflation.

More risky investments are shares, equity funds, ETFs, and shares in unlisted companies. The main disadvantage: The markets are subject to fluctuations and so the monetary value of the shares changes constantly. The value of the shares held by an investor increases or decreases depending on how well the respective company performs. However, this is also an advantage: While conservative investments yield an interest rate of -0.07 percent to a maximum of 2.5 percent, riskier investments offer returns of 5 to 30 percent.

 

Until recently, only professional investment companies have had the opportunity to invest in promising startups outside the stock exchange and to multiply their invested capital if the startups are successful. For more than four years now, however, retail investors have had the opportunity to invest in young companies on Companisto starting with EUR 100 and without transaction costs.

Investing successfully does not require a lot of capital but it does require courage and discipline. You can establish an investment portfolio on Companisto step by step by starting with smaller amounts and expanding your portfolio over time. This allows you to grow into your new role as a startup investor.

As a general rule, do not invest more money than you could do without in an emergency. Investments in companies, whether via stocks or equity crowdfunding, are investments in people and companies in motion - they involve a certain risk. However, this risk can be minimized with a little reading, discipline, and experience. Read more about this in the article "The 5 Best Tips for Investing in Startups." If you want to become a pro when it comes to startup investments, we recommend the articles "Diversification and Modern Portfolio Theory" and "Investments in Startups: How to Make the Best Decision."

 

Foodist started its first financing round on our platform in 2013. The startup from Hamburg delivers boxes with various delicacies in a monthly subscription. 536 investors provided Foodist with EUR 175,000 for a total share of 9.7 percent of the company. Foodist was able to pick up its business thanks to the money invested: In 2014, the startup turned to the crowd again and collected another EUR 295,000 from over 800 investors for 10.45 percent of the shares.

In June 2015, after developing according to plan and growing fast correspondingly, the company raised EUR 1,000,000 for 34.71 percent in a third financing round. In 2016, about four and a half years after its foundation, Foodist was acquired by Ströer. This resulted in a return of 92 percent for investors in the first round, a return of 22 percent for those of the second and a return of 19 percent for those of the last financing round. This prime example shows how early investors accept the highest risk but also receive the highest return.

 

Do you have any questions about this topic? Ask us in the comments section!

Status as of 28.10.2016 08:00


 


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André Jasch

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The acquisition of the offered securities and investments is associated with considerable risks and can lead to the complete loss of the invested assets. The expected yield is not guaranteed and may be lower. Whether it is a security or an asset investment can be seen in the description of the investment opportunity.
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