Part 2 of the BAWAG P. S. K. series, today about stocks & funds.
In the first part of the series we have learned that it is good not to just park your money in your account or savings book. Interest rates are very low, inflation is rising, and that's how we lose money. In 2017 that was around 4.7 billion euros for Austrian households. So that this doesn't happen to us, we want to invest our money sensibly. In the form of bonds, stocks or funds, for example. This gives us the chance to increase our savings and take our financial future into our own hands. Regardless of whether we want to buy a car or a home, provide for our children's education or be secure in old age - there is a suitable investment opportunity for every need. We can find out more about this in a conversation with the financial experts at BAWAG P. S. K.
Back to the facts: Put simply, a bond is a loan that we give to a company or a state. The term of this loan and the amount of interest are agreed in advance. A stock, on the other hand, is a small part of a company. If we buy shares, we are co-owners and therefore partakers in the economic success of this company.
The reverse applies: If the company is doing badly, the value of our shares falls and we lose money. So buying stocks in a single company is quite risky. Scatter is the magic word here! It is best to invest in a mix of as many different companies, industries, countries, regions and currencies as possible. This mix can be found in funds, for example. This enables us to participate in the global growth of the economy very easily and with little risk. It is important to note that investing requires a little patience. It will be worth it, but not in a few weeks.
In the next part of the series when we talk about security and risk - we realize: Even with small amounts it makes sense to invest!
