Long term investing with Trading21217th January 2021
Before it starts! The Trading212 link is an affiliate where you and I get each a share for free.
I started with stocks in November 2020 and since them I am an active user of the trading app Trading212. The main reason is that I do not see a bank account as an ideal form of storage for my money since it loses value there over time.
The exact explanation why I invest in stocks and how my strategy looks like, you will see in the next sections. Only so much is said, it was a great decision and I have already created after a few weeks a higher value than it would be possible in a bank in a year.
Banks nowadays only offer a very low interest rate up to a maximum of 2% per year. This can hardly or not at all keep up with the inflation rate of money. In other words, you lose financial strength. To better understand the word financial strength, I'll give a small example. Lets imagine in year 2020 you could afford 100 buns of 100€, in 2021 it only are 90 buns you can buy with 100€.
So if you leave your money in the bank, you lose financial strength. So other options should be considered when it comes to storing money. An investment in shares with a low risk strategy sounds very tempting at first. At this point, however, it should be said that every investment carries a risk, and this of course also applies to shares. Even banks can go bankrupt at the expense of investors, see Greece.
I also find the idea of supporting certain companies by buying shares very exciting. For companies, the stock market is a good opportunity to get interest-free capital to invest. Alternatively, the company would have to apply for an interest-bearing loan from a bank. To a certain extent, I can invest in companies that I find great. I like companies with the topics:
- Green Energy: Companies that promote the expansion and development of renewable energies such as solar panels or wind turbines.
- Quality Food: I am a strong supporter of high quality food and I like the topics like organic, regional, fair trade.
- US Tech Companies: As a software developer, I naturally know a lot about tech companies and how useful and valuable they are to humanity.
- Non-US Tech Companies: Being from Germany myself, I would specifically like to support tech companies in the EU area.
And I can actively decide against companies with certain topics like fossil fuels or alcohol as a fun drink. These were my personal topics and they can look completely different for you, which is also ok.
In the next section I explain how I invest in stocks with Trading212.
Trading212 is an internet platform for investing in stocks. Trading212 advertises that it does not charge a commission, which makes the platform very attractive. If you use a broker, they usually charge a commission. Trading212 also have an iOS and Android app and of course a web interface.
I myself use the Trading212 ios app as well as the web interface and am very satisfied. It makes it very easy to invest in stocks and track their performance over the long term. Depositing and withdrawing from my bank account to my Trading212 account is also very easy and fast.
Last year (2020) a great feature called Pie was released. With this it is possible to create so called Pies in which you can create up to 50 shares. Each share can then be assigned to a certain percentage value. In the sum all percentage values result then naturally again 100%. If you want to know what else the Pies can do just click here.
I find the Pies great because they help with my low risk strategy and give me a great overview of how my broad portfolio is developing. I also like the AutoInvest feature where I can pay a certain amount into the Pie every month.
Quite recently, the "Share Pie" feature has been added. With this feature you can share the created pies and others can see how my pie looks like, i.e. in which shares and how many percent I have invested. Concrete amounts of money are not revealed. And this here is my Pie with a diverse choice of stocks and companies I want to support.
Even though the range of available stocks to invest in at Trading212 is very large, it happened once or twice that my desired stock was not available. In such a case, however, you can ask in the Trading212 Community Forum to include the respective share in the portfolio of Trading212.
The Trading212 Forum Community is the perfect place if you want to learn more about trading with Trading212 and in general. The community there has been very supportive in my investment strategy for which I am very grateful. Recently Trading212 has also added a Discord Channel.
Also great is that Trading212 offers free webinars on trading on their platform (so apps too) as well as on YouTube. In the next section I explain my investment strategy.
I want to invest long term (more than 10 years) in many different sectors like IT, materials, energy etc. What sectors there are and what they mean you can find here. Investing money in many different sectors instead of one specific sector reduces the risk of loss because these sectors are more independent from each other than one sector would be. If you look at the Corona crisis, for example, you see that the IT sector did not suffer as much as real estate, for example.
Modern internet platforms like Trading212 allow to do without the middle man like the broker, who usually charges a commission, because well designed platforms make it very easy to take care of your portfolio yourself.
Furthermore, I would like to deposit a part of my monthly income automatically with AutoInvest into my Pie. This way I can build up a good reserve over the years without much effort. I start with 100€ which will be transferred automatically every month and increase this amount in the future if necessary.
Since I am still quite new in the subject of shares, I will invest about 20-30% of the portfolio into ETFs. And as my experience increases over time, swap out the ETFs for regular stocks. ETFs are managed by professional traders and this management of course costs something. My long term goal is to do without ETFs completely, because Trading212 with the Pies allows me to manage my own ETFs and I can save the costs.
I am already very satisfied with my current selection of stocks and will probably only make minimal improvements. Then I would swap stocks and ETFs that are not performing so well for more promising ones. Let's see.
My investments are so far mainly concentrated on the American, German and British stock market and I should think about making my portfolio even more diverse and invest in other stock markets and how exactly I split into these.
I am very excited about the "Pies in Pie" feature that would simplify the management of my portfolio even more. Currently I still need an Excel spreadsheet to keep track of how much I have invested in which sectors. With Pies in Pie this would be directly readable.
Also an export feature should come soon, where I can export the investments e.g. into an Excel sheet. With this I can then feed other visualization tools to make interesting analyses. But I don't have any concrete ideas yet.
Trading212 makes investing in stocks fun. It gives me all the tools I need to manage my stock portfolio myself. It's a great alternative to holding money in accounts and you learn a lot of useful things about the stock market. I think it is important and right to develop your financial intelligence. Trading212 can be your start to do just that!
Thanks to the DeepL translater (free version) for helping with translating to english and saving me tons of time :).
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