What are my options for investing money?

Anyone who invests money in individual shares must be aware that their investment is always also a bet on the rising price of precisely this share. This can work out well: Shareholders always make very handsome profits with shares, especially after a price crash like the one caused by the Corona crisis. But it can also go wrong - and the value of the share can plummet within a short time. If things go badly, it doesn't recover either, and the money is gone. Expected returns are therefore highly volatile. Consequently, the basic rule is that you should only invest in individual stocks if you can do without the money invested there.

Funds are actively managed equity funds. Shares in these funds are usually purchased through the customer's bank. Actively managed funds are overseen by a fund manager, i.e., a bank employee, who actively monitors the market and buys and sells shares. Depending on whether the fund manager has a good hand or not so good hand, the fund develops positively or negatively.

If you decide to invest in an actively managed fund, you should definitely pay attention to the level of management costs. These can vary greatly depending on the fund. And the higher the costs, the lower the return for the investor in the end.

Those who invest money in ETFs have two advantages over funds: First, the management costs are significantly lower, leaving more appreciation for the investor. And secondly, they generally perform better. This is because ETFs track an index - the DAX, for example. If the value of the DAX rises, the value of the index also rises. If the DAX falls, the value of the index also falls quite automatically. Managers of active funds try to achieve better performance than ETFs by actively buying and selling. However, they very rarely succeed in doing so. It is also said those fund managers rarely "beat" the market.

For those who want to invest their money in a broadly diversified ETF, experts repeatedly recommend MSCI World. Its return has averaged 7.1% per year since 1970 - despite various crises - making it a profitable investment for many.

Many experts consider real estate to be a comparatively safe way to invest money. After all, people always need a place to live. However, the attractiveness of real estate as an investment opportunity depends to a large extent on the purchase price because its relationship to rental income ultimately determines the return.

However, it is currently difficult to predict how real estate prices will develop: Some experts believe that they will continue to rise because construction interest rates will remain low for several more years or even fall further.

Other experts believe that real estate prices could now also fall. This could be the case in particular if increased numbers of property owners have to sell their properties because they can no longer service their real estate loans due to a job loss or short-time working. But even in such a case, prices will not fall everywhere in equal measure: In metropolitan regions such as Munich or Hamburg, experts expect at most a small drop, if any.

Fixed-term deposits have offered rather low-interest rates in recent years. At present, interest rates at many banks are rising again somewhat. The reason for this is that banks are increasingly relying on savers' deposits, as it is currently more favorable for them to finance themselves via customer bonds than via corporate bonds. However, you still won't get the kind of return that a broadly diversified ETF generates on a time deposit account. But if you're asking yourself: How can I invest my money safely? A fixed-term deposit account is definitely the right choice. One clear advantage over shares, for example, is that at the end of the day you are sure to get back the amount you paid in. Minus the possible loss in value due to inflation, of course.

If you want to invest large sums, you should pay attention to the Deposit Protection Act: Up to $100,000 is protected per bank and customer within the European Union. Many German banks protect much higher sums - but these are then not enforceable. So if you want to invest more than $100,000, it's better to split the sum between several banks.

The same applies to overnight money as an investment option: interest rates were in the cellar for a long time and are currently rising slightly, even if they also do not come close to the yield of broadly diversified ETFs. With overnight money accounts, too, investors get back the amount they have deposited. One advantage over time deposits: You could dispose of money in overnight deposit accounts at any time. The Deposit Protection Act also applies here. Many people who wonder how to invest their money properly park at least their nest egg - often in the form of at least three net salaries - in a call money account.

In times of crisis, there is often a run on gold. For many investors, the precious metal seems to be a safe haven. The ulterior motive: in the worst case, you can still use gold as a medium of exchange for goods. Unlike stocks or time deposits, you finally have a real value in the form of a gold bar or coin in your hand.

However, the gold price fluctuates strongly and is - similar to individual shares - a speculative investment. The strong fluctuations are mainly due to the fact that the price of gold depends on demand, while the value of shares is also due to the development of a company. Such a development does not exist with gold. Experts, therefore, advise investing a maximum of 10% of one's total assets in gold. Since gold often moves in the opposite direction to share prices, it can cushion deposit fluctuations somewhat.

In the long run, however, gold does not yield half as much as an investment in a globally diversified stock index. In addition, the money you invest in gold does not earn interest. And gold does not generate any dividends.

Crowdinvesting means that many people invest money in company projects and thus become shareholders in the respective company. This form of investment is particularly popular in the real estate sector and promises high returns. For their participation, crowd investors usually receive a fixed or variable interest rate. Some also hope that a major investor will later buy the now still young company and that they can sell their shares to him for an attractive price.

The most important rule is: Only invest your money in crowd investing if you understand the respective project. Clarify all the questions you have. If these cannot be seriously clarified, it is better to leave them alone. Also, please take a close look at the forecasts for future sales and profits and consider whether they are plausible. After all, if you want to invest your money via crowdinvesting, you should be aware that the entire amount could be gone in the event of bankruptcy.

Particularly in times of low interest rates, some investors want to invest part of their money in tangible assets, for example, to protect themselves against inflation. In this case, tangible assets are goods that are supposedly not subject to any fluctuation in value. However, this is by no means always the case.

In principle, all goods that have a certain value are considered to be tangible assets, so there is an almost endless number of possibilities. For example, musical instruments, antiques, jewelry, art, but also vintage cars, valuable whiskeys, or wines are considered tangible assets. In short, anything for which you can - presumably - find a buyer who is willing to pay a certain price for it, regardless of inflation. To invest money in tangible assets, investors need good expertise in the respective field. Luck is also part of the equation. After all, whether a whiskey that you assume today will increase in value over the next few years is actually worth more, in the end, can only be said in retrospect. Investments in tangible assets are therefore considered highly speculative.

If you want to invest your money for the long term, it can make perfect sense to invest in an ETF consisting of shares of companies from emerging markets, for example. Compared to ETFs that contain shares of companies from developed countries, emerging market ETFs usually fluctuate more strongly and more frequently. In good phases, they often rise more. In return, they also often fall more in bad phases.

In the past, it was also sometimes the case that emerging market indices performed well during periods when developed market indices performed weaker. However, in the case of the current Corona pandemic, which is affecting the whole world, it is hard to predict. What could happen, however, is that prices on stock exchanges in China, for example, will rise. Since China is one of the emerging markets, this could have a positive impact on some emerging market indices.

If you want to invest money for your children, grandchildren, nieces, or nephews, you should start early. Because even if they only invest a little money on a regular basis, you can also earn a return over time, depending on the type of investment. Basically, experts recommend either ETFs, overnight or time deposit accounts, or a checking account to anyone who wants to invest money for children. Which you choose depends on your savings goal and investment horizon.