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by C. Platt, J. Billina, S. Bauer and K. Schachinger, Euro am Sonntag
E.An inheritance, fixed deposit due, a capital life insurance that is paid out – there can be situations in which tens of thousands of euros are suddenly available. This windfall may be gratifying, but the way to a new investment is often a headache.
€ uro am Sonntag wants to provide assistance to avoid brooding. In the following, the editorial team explains, using an amount of 30,000 euros, how the money can be invested sensibly and profitably.
The answer to the question of how newly available capital is to be invested naturally always depends on your personal situation. In our cover story, we make some assumptions to frame our recommendations.
The first: The money should be invested over a longer period of time and not just for one to two years or even just for a few months. The investments listed below have all proven their long-term benefits and can be used as building blocks in almost any portfolio.
Our second assumption: the money can be freely distributed. In other words: The remaining assets are already invested according to the personal situation and are widely diversified. On the other hand, those who invest very one-sidedly should give previously unused asset classes a chance.
Adoption number three follows on from this. In providing advice, we assume that there is a nest egg. Unexpectedly necessary purchases or repairs should be manageable without affecting the permanently invested assets. The same applies to risk protection: You should only start investing when you have essential insurance and the like.
This is particularly relevant for younger people – which brings us to the categorization of our investor types. As an example, we present below how a 25-year-old saver should invest 30,000 euros, like a 45-year-old and a 65-year-old.
Room for returns
Of course, age per se does not automatically determine the investment strategy. But it can serve as an indication of the time horizon. In principle, the more time you have, the more you should invest in stocks. Because this asset class offers the highest return in the long term. Long-term oriented investors can accept the disadvantage – high price fluctuations – and sit out intermittent losses. For the young, risk-ready investor, we therefore only recommend equity investments.
In the investment horizon is still wide in mid-life. It therefore makes sense to continue to rely heavily on stocks. But for many investors it no longer has to be the full risk. We have therefore put together a mix for this phase of life that allows opportunities, but no longer fluctuates quite as strongly as a pure sharedepot.
If 30,000 euros become available at the beginning of retirement, high-risk investments should only be used cautiously. Because there is not any amount of time left to sit out phases of loss on the stock market. It is therefore important to use investments that do not fluctuate much and that secure their value. At the same time, shares should not be missing in a 65-year-old’s portfolio in order to continue to generate considerable income.
Our portfolio suggestions for risk-taking, moderate and cautious investors can be found below. Five offensive, balanced and defensive products are presented.
The question of how to invest 30,000 euros well is a tradition at € uro am Sonntag. There were also recommendations from the editors in previous years. The three model portfolios from 2020 performed well – albeit very differently. The depot for the risk-ready investor brought an increase of 30 percent over the year, that for the moderate investor a plus of 15 percent. The model depot for the cautious grew by six percent.
The past twelve months have shown that risk aversion did not pay off. Because the stock markets boomed, portfolios rose the more stocks were included. It turned out to be a brake block goldthat we have added to our depots via an ETC that follows the precious metal price. This is the only one of the 15 investments that has lost value within twelve months.
That shows how important it is to position yourself broadly. B.On our balance sheet in the previous year, it was the other way around: from 2019 to 2020, gold was one of the key stabilizers for the portfolios of moderate and cautious investors, and at that time it increased their value.
Because a varied diversification is recommended, the editorial team remains true to its line and mixes different product types, asset classes and regions. In addition to individual stocks, ETFs and actively managed funds are used, as are certificates.
We are again proceeding cautiously with the substitutions compared to the previous year. Only four of the 15 investments from 2020 have to give way, the rest are retained because the editors are still convinced of them or they serve a specific purpose.
The main thing is that there are opportunities
Diversity with stocks: If you want high increases in value, you can’t avoid stocks. In order not to be dependent on the weal and woe of individual companies, we recommend Funds. But one or the other individual value can also find its way into the depot.
Diversity with stocks » Anyone who wants high growth in value cannot avoid shares. In order not to be dependent on the weal and woe of individual companies, funds are recommended. But one or the other individual value can also find its way into the depot
M.ith offensive investments, investors want to achieve the highest possible returns. In return, they accept risks in the form of sometimes significant price fluctuations. This category is all about stocks. A single value, two ETFs, an actively managed fund and a certificate are presented.
The editors recommend Microsoft’s share as an individual value. With boss Satya Nadella, who has led the US company since 2014, the group is currently on a growth path in almost all areas: cloud, computer games, automation, data analysis and artificial intelligence (AI). Microsoft has long been the world’s second largest cloud provider after Amazon and has significantly narrowed the gap to the leaders. For the fiscal year ended June, analysts expect a good 16 percent more sales, a total of more than 166 billion dollars. At least until 2024, the giant from Redmond in the US state of Washington is expected to achieve double-digit annual growth in sales and profits.
The SPDR MSCI ACWI is ideal for positioning yourself extremely broadly in the equity segment. The ETF tracks the All Country World Index from MSCI. This contains around 2,700 papers from industrialized and emerging countries around the world. As is usual with global stock indices, stocks from the USA, by far the most important stock market in the world, predominate. They make up almost 60 percent of the index. Japan, China and Great Britain in the following places have shares of six to 3.7 percent. Although emerging countries are represented in the MSCI ACWI, they play a manageable role with a total weight of twelve percent.
Investors focus on the European stock market with the Xtrackers Stoxx Europe 600 ETF, which shows the performance of the 600 most important companies on the continent. In terms of weighting in the index, the Swiss corporations Nestlé and Roche as well as the Dutch semiconductor manufacturer ASML are at the forefront. In terms of countries, stocks from Great Britain have the largest share at 23 percent, followed by French, Swiss and German stocks, each with roughly 15 percent weight. Like the SPDR ETF for global stocks, the Xtrackers product shines with low fees.
Domestic export strength
In order to pay special attention to German stocks, investors can invest in the Globax (German Global Export). The index developed by the editorial team is based on 30 German companies that generate a particularly high proportion of sales outside of Europe and therefore benefit greatly from the growth of emerging countries and the USA. The Globax has existed as an investable Wikifolio since May 2020, after the previous certificate was terminated by the issuer Deutsche Bank. The composition is reviewed in May, and the members are weighted approximately equally on the date. Smaller companies such as Symrise or Brenntag therefore have a greater influence on the index than on many traditional indices, which weight stocks according to market capitalization.
An actively managed fund should not be missing in the group of offensive investments. While major European corporations are mapped via the Xtrackers ETF, Squad Growth enables exposure to European small caps. Fund advisor Stephan Hornung from Discover Capital has been doing an outstanding job for years. The portfolio is one of the best small cap products not only in the long term, but also in the short term. The team is on the lookout for little-known companies that are global market leaders in their niche. These must show good growth prospects with a favorable valuation at the same time. The only catch of the fund: In order not to dilute the strategy, the inflow of funds is slowed down by always charging the full front-end load of five percent when purchasing units.
Dynamic, but with a buffer
Stocks with defensive qualities » Going full throttle on the stock market can be nerve-wracking. But with selected investments, investors get involved in the stock market without suffering the full force of the price fluctuations
OWithout shares, you can hardly get out of the way when investing money. That is why the balanced investments mainly rely on this type of company participation. However, all five have characteristics that help mitigate the risk somewhat. Two actively managed mixed funds, a special equity ETF, a certificate and a dividend star belong in this category.
Of course, an individual value fluctuates more than products that represent a whole basket of securities. But even among the stocks there are stocks with a comparatively high level of solidity. One of them is the alliance. Europe’s largest insurance group is well on the way to catching up with its targets before Corona. The middle of the corridor of eleven to 13 billion euros in operating profit for 2021 is at the level of 2019. With assets worth 2.4 trillion euros most recently, of which 1.8 trillion euros for third parties, the insurer is one of the largest asset managers worldwide. The company can particularly shine with its reliable dividend policy and a sustained high dividend yield of currently just under five percent.
If you want to invest widely in stocks but don’t want to take full risk, the iShares Edge MSCI World Minimum Volatility ETF is a suitable product. The passive exchange-traded fund follows an offshoot of the well-known MSCI World equity index. The price barometer that the ETF tracks contains just under a fifth of the stocks in the MSCI World – those that have fluctuated less strongly than the average in the past. These are mainly companies that are hardly sensitive to the economic cycle. The price of stability: in a bull market, these stocks often lag behind the broader market. It was the same in the past twelve months, in which the ETF only gained 13.5 percent.
Investors who prefer active management can turn to mixed funds if they own stocks and at the same time do not want to invest quite as aggressively. The Seilern Global Trust has cut a very good figure for years. It belongs to the group of equity-heavy mixed funds. At the moment, however, the portfolio managers cannot gain anything from the traditional division of assets into stocks and bonds. Bonds have not been attractive to them for a long time, which is why they do without them altogether. Instead, the level of risk is managed using liquidity. 83 percent of the fund’s assets are currently in shares – which has had a very positive effect on the performance.
The Acatis Gané Value Event has not yet completely sworn off bonds. But at eight percent, their share in the assets of the balanced mixed fund is quite manageable. The vast majority of the money is currently in stocks (69 percent), but liquidity also carries a significant weight (23 percent). The fund managers see themselves as value investors, so they focus their attention on stocks that they consider to be significantly undervalued on the stock market. In addition, they keep an eye out for “events”, positive company-specific events such as changes in the capital or shareholder structure. The constant focus on companies with high business quality should limit the risks.
In order to provide investors with a portfolio of high-quality dividend stocks, € uro developed the idea for quality stocks in Europe four years ago on Sunday. The concept: Using seven criteria, ten sustainable dividend payers with price potential are filtered out each year from the 675 largest companies in Europe. The corporations must all have increased their distributions in the past ten years and beaten their benchmark indices. In addition, there are high hurdles to balance sheet quality, such as a low level of debt. In addition to Scandinavian stocks, the portfolio currently includes several Swiss stocks such as Roche and Novartis.
Get the capital
Calm gradients » Bond funds and open-ended real estate funds are less profitable than equity funds. But they fluctuate less and cushion losses when the stock markets correct. Gold also offers security, especially when inflation rises
The offensive decides games, the defensive wins tournaments: The sentence was quoted several times during the European Championship and confirmed with the victory of the “Squadra Azzurra”. With defensive strategies, success can also be achieved in the markets. € uro am Sonntag has identified four funds that are suitable for investors who primarily want to preserve their capital with the lowest possible fluctuations. In view of rising inflation rates, we also recommend exposure to gold as a defensive investment.
The mixed fund Kepler Vorsorge Mixfonds, with an equity component of currently 35 percent, is still the most risk-averse among the selected defensive investments. The focus, however, is on fixed-income papers. The management invests at least 60 percent of the funds in bonds or money market instruments from international issuers. The papers are denominated in euros. The pension share is currently 64 percent. The portfolio includes government bonds and corporate bonds from industrialized countries. Emerging market papers are currently weighted at 22 percent. The rating agencies rate the issuers predominantly with investment grade. In the past ten years, the fund achieved an average of seven percent per year.
The globally investing Jupiter Dynamic Bond, on the other hand, relies exclusively on bonds. The portfolio of the nine billion euro fund includes government bonds from the USA, Australia and – with a low weighting – emerging market bonds. Corporate bonds make up 55 percent. On average, the total of 617 papers have an investment grade rating of “BBB-“. With a volatility of 2.4 percent, the fund shows little fluctuation over a year.
Focused on Europe
RenditDeka, which was rated with FondsNote 1, also primarily invests in government bonds, but is exclusively focused on the investment region of Europe. Federal bonds currently account for 17 percent of assets, while Italian and French government bonds are weighted at eleven and ten percent, respectively. If the management finds attractive bonds from other currency areas, it hedges the exchange rate risk. Since the beginning of the year, the fund has shown a small minus, but in the past five years it has increased by more than twelve percent.
Gold should not be missing in a defensively oriented depot. The precious metal does not generate any interest. On the one hand, however, investors are looking for gold as a safe haven in times of crisis, on the other hand, it offers protection against inflation. Those who have not yet invested may be convinced by a recently published study by Goldman Sachs. Should inflation rates turn out to be higher than previously expected and the global economic recovery also lose momentum, the US investment bank believes a 38 percent increase in the price of gold is possible.
With the ETC (Exchange Traded Commodity) Xetra-Gold, investors participate one to one in the development of the gold price. Xetra-Gold is a security that can be traded like a share. Each share corresponds to one gram of gold. The shareholders are entitled to physical delivery of the precious metal for a fee.
Open-ended real estate funds are also a proven component of defensive investment strategies. However, the Corona-induced trend towards home office and online shopping can have a negative impact on office and retail properties. In contrast, the focus on living in Germany is not affected by the consequences of the pandemic. He focuses on residential real estate in Germany. Their share is around 70 percent. The remaining funds are distributed among kindergartens, senior citizens’ and student residences, medical centers and nursing homes. Within five years, the focus on living in Germany increased by around 25 percent.
If you have a lot of time and tolerate strong price fluctuations, you can invest all your money in stocks. A wide spread protects against extreme developments in individual values. The risk-ready investor divides the 30,000 euros into five offensive and two balanced investments. Two low-cost and broadly diversified ETFs for global and European stocks form the basis of the portfolio proposal and collect half of the capital. The remaining assets are distributed evenly across the remaining five investment ideas.
To preserve potential returns, moderate investors should invest largely in stocks. However, it can make sense to focus on investments that limit price fluctuations somewhat. A third of the 30,000 euros goes into an ETF on stocks with low fluctuations, 5,000 euros are in a mixed fund that prefers stocks but pays attention to stability. The deposit proposal also attaches great importance to dividend payments with Allianz shares and the € uro-am-Sonntag certificate for European quality companies. Gold serves as insurance against extreme risks.
As a result of low interest rates and high prices, bonds are less reliable as a source of income than they used to be. Nevertheless, a cautious investor cannot do without the papers if fluctuations are to be limited. 4,000 euros each flow into two tried and tested pension funds. At the same time, a certain proportion of shares gives the portfolio momentum. You can access the portfolio via the two mixed funds and a special ETF. An open real estate fund brings steady income with low volatility and is therefore highly weighted. Gold completes the proposal.
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