The time factor plays into the hands of the depot
The good news first: The time factor plays into parents’ hands. For children have a lot of time. At least 18 years to the majority. So it makes sense to invest money in the capital markets. “Even in the current difficult environment, investing in capital markets is worthwhile,” explains expert Schmidt always increased despite all fluctuations and crises. ”
His conclusion: “Today, investors can no longer avoid stocks, mutual funds or other capital market-related investment products if they want to support themselves or their children.” but they are also associated with high value fluctuations. “
Invest 100 Euros a month and earn more than 35,000 Euros: 5 percent return is possible in the long run
A simple example: Parents can regularly invest in a savings and pay in e.g. 100 euros a month for their children. We assume a return of five percent. In the long run, it is a very conservative and therefore very realistic value – despite currently high inflation.
If parents keep the savings scheme for their child for 18 years until they reach adulthood, if they pay into the savings scheme, where parents continuously pay 100 euros a month for 18 years until a child reaches adulthood, it gives a total of 5 percent before tax with an average return of 5 percent 35,066 euros, with parents paying 21,600 euros. 13,466 euros are added as interest.
And 5 percent – that’s a realistic value for a long-term investment: “In the middle-risk class, we believe that with our sustainable investment concept, an average return of 5-6 percent is easily achievable in the long run.”
On the one hand, parents can invest in ETFs, listed index funds, Tobias Schmidt explains. They are cheap and spread the risk widely. Active funds are also suitable for long-term investments: Fund managers determine the composition of actively managed funds. They intervene when the fund no longer lives up to their expectations of return and risk. Anyone who wants to invest in funds for the kids should first consider: How does the fund invest? What return does the fund management expect, at what risks? What does the product cost in terms of start-up fee and ongoing fees?
Time deposit accounts provide more security, but almost no return. “They are suitable – if at all – if you have a short investment horizon,” says Tobias Schmidt. Card means less than ten years. However, interest rates here are relatively low and hardly exceed one percent per year. Experts and consumer advocates advise against education insurance and housing savings contracts. The former combines several services that may be unnecessary but cost money. The latter provides a low credit rate.
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Invest sustainably – more and more investors are doing this
Looking to the future, sustainable investments are also worthwhile. In the first quarter at the end of March 2022, asset managers in Germany managed € 563 billion in sustainable public funds and a further € 120 billion in green specialty funds for institutional investors. This was announced by the German fund association BVI. This means: Within a year, the wealth of sustainable investment funds has increased by 80 percent.
Tobias Schmidt: “We have understood that sustainability must also create attractive returns. We invest in my-si right from the start and only responsibly and sustainably. With ESG-tested funds, we want to contribute to a more sustainable way of doing business and at the same time achieve attractive returns with a reasonable risk. ” To that end, my-si donates a third of its own income to ten selected social projects.
my-si (my sustainable impact) is a brand from f-fex AG and stands for a digital investment platform for sustainable investments with social responsibility. my-si is based on the f-fex advisory platform that the company developed for different user groups and investment topics. The range of f-fex solutions ranges from fund policies and fund deposits to complex investment strategies for insurance companies, banks and financial distributors, asset managers, private and institutional investors. The fund experts at f-fex have more than 25 years of experience in fund analysis, development of rating systems and portfolio optimization. My-si investors are now benefiting from this knowledge.
As always, the assessments are subject to the following reservations:
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