Today a rant about the strange myths of investing.

Just yesterday I had another one of those who claim that dividends are what "compounding" is all about, not growth. Only with dividends does the investment outstrip the demand. They even cited education and Warren Buffet. He can't be wrong with his millions in dividends, can he?

You constantly read about dividend strategies and that you will need them in old age or to pay your rent at some point. Free Money. Financial Freedom. Realty Income, even though their dividends plus growth lags behind a Worl Etf. So flexible, even though you're tied to a dividend day. More growth than without dividends, even if otherwise the companies would be the same if you just reinvested them in said company. Taxes and trading costs, who cares. And compared to partial sales: but you keep your shares. And if they grow, you make more profit than if you had made partial sales. And in a crash, you have cash flow as if nothing had happened.

Now the question: this free money has to come from somewhere, right? Or the misconception. Because in purely technical terms, a dividend is a partial sale (only induced by the company). If dividends were to generate added value, this would also have to be a partial sale plus re-investment. Of course it doesn't. But people believe it does. Why? And what are other myths that are actually nonsense.

Dividend snowballs: I wish it weren't true, but there really are people who believe that a transaction that negatively impacts the value of an investment is somehow magically positive in the same amount of withdrawal if you reinvest that withdrawal. 1000 Euro share value minus 1% is unfortunately 990 Euro share value and a dividend of 10 Euro. Reinvesting these 10 euros leaves you with an investment of 1000 euros. Wait, no, of course not. Taxes and trading costs. You have lost money. And since taxes are incurred by the company and yourself, more than if you had done nothing at all. Dividends reduce the investment (even if you reinvest them). People confuse the effect of growth (which should at best exceed the dividend) with the effect of the dividend. 1000 Euro share value + 1% growth = 1000 Euro share value + 1% growth - 1% dividend + 1x dividend reinvest.

The only interesting thing is that companies pay dividends or not. So there are definitely companies that have more growth + dividend deduction than companies without dividends. But this is not an effect of the dividend. Go figure.

Growth does not change either, as the dividend does not add value. Compounding comes from growth alone.

The number of shares does not change the growth either. 1 share worth 100 euros that grows by 10 % is the same money as holding 0.75 shares in a share worth 100 euros that grows by 10 %.

Flexibility is also nonsense. Partial sales do the same and are more flexible. With dividends, you have the trading costs when you build up the portfolio (you have to reinvest the dividends), and when you sell as and when you need to save. On the other hand, selling without the detour of dividends gives you the flexibility of time that you don't have with dividends. Dividends are paid (and reduce the value of the investment) regardless of what the market is doing. And no, they do not protect you in the event of a crash. 1% of a 50 euro share value is not the same as 1% of a 25 euro share value. Strange that you have to explain this to "educated people".

That's where you end up if you think about it for three seconds: pure dividends are a simplification of de-investment, not saving. Apart from motivation and better companies that pay dividends, a dividend avalanche is complete nonsense.

What else I can think of in terms of misconceptions worthy of Merkel:

Market predictions on "worthless speculation assets" like coins: talking to people who are invested in crypto, they all have a strong opinion on where some coin is going right now. Without any basis. They see a bull run, then a bear market, then a strong sign of a decline (after the fact). Why this should be happening right now: Silence. Or reference to what the coin is doing on a daily basis. You could be looking into a cloudy crystal ball.

After 100k it goes up faster: A confusion of the onset of a noticeable compound interest vs. the investment amount. If you were to save 10k per month or win 100k somewhere, the point where it no longer depends on the savings rate would still be 7-10 years later. Go figure. Nevertheless, hundreds of YouTube videos by mathematical dyslexics on this topic.

Value of a collection: Unfortunately, family affected myself. The collection is worth so much!!!1111!!! Stamps are the little man's shares!!!1111!11 Pick them up. Unfortunately, contact with reality only comes for the heirs when they no longer want to keep umpteen albums. Worthless fuss. If you want to do something good for your heirs: Hard Cash. Meissen porcelain, circulation coins from a vacation, collector's dolls: as long as it is not in its original packaging and has never been scratched, it is worth less than the money that was spent on it. And even if it is: It yields less return than if the money had been invested. So when it comes to succession: invest, don't spend.

What do you think about this?

🤩

It has just happened!

It's so incredible.

We have invested so consistently over the last few years and actually started off quite conservatively, but with the rise of crypto and gold, things went faster than we dreamed.

My strategy:

$VWCE (-0,46%) I save this monthly with 200€. I also make purchases when I have a lot of cash, such as last month (500€)

$BTC (+0,26%) Bitcoin I save weekly with 12,50€ (50€ monthly) plus single purchases if I think the price is reasonable.

The other two shares were from earlier for playing namely$EVT (+1,87%) c $SYNT but I will sell them as soon as I break even.

I would like to increase my savings plans so that I reach €20,000 by the time I am 18.

What have I learned?

"You're weird" and different from others your age, which means you have less contact with people your own age. This makes you lonelier if you don't have anyone with similar interests.

It's not enough to read the book the book or that book (I read a lot for a long time, I wasn't the biggest fan, but for my reading and writing weakness, there's an advantage to being stuck and learning things). or to chase after that and the new investment strategy. The fact is, the biggest driver of your wealth is what you put money into.

You need a business or a job that you can scale or at least get money out of (I have built a window cleaning business with 32 clients).

Hold on to your dreams and always finish what you start. I'm currently in a phase where I don't have anyone outside of me and my family. That means I have endless time for myself. I don't really have any excuses for not following through with my habits and the like. 2.3 of my habits are always taking a shower, taking a cold shower, doing at least 30 pull-ups, 30 dips, 60 push-ups every day and reading every day.

Habits forget a day, if not several days. What have I learned? In two years of trying to "pull through" I have realized one thing in particular, even if sometimes you haven't done your H Habits for a week or even a month, you have to keep at it and pick it up again sooner or later.

Goals: In the short term, €20,000 by the time I'm 18.

Long term: financial independence and live happily

It's been a long time since I bought my first shares. To be precise, it all started on January 23, 2017.

When I look back and think about the shares I bought and sold in the first few months and years and the mistakes I made, it's a bit embarrassing in hindsight😂

But how did it even come about that I decided to take my first steps on the stock market to become the next "Warren Buffett"?

Well, one thing at a time.

Like most of us, I had my first experience with money when I went to the savings bank with my parents and my little sister and opened a savings account with a starting balance of 5 marks.

I can still remember it well when there was a fire at a neighbor's house next door, we had to get dressed quickly and run outside, of course we also grabbed the most valuable thing we had, my sister and I stood there on the street with our piggy banks in our hands, luckily the whole thing turned out well.

We continued to save diligently and our "assets" grew bigger and bigger and we got more and more interest. After years of saving, however, I got weak in 2001 and spent it all on a PlayStation 2, at that time just under 800 marks. Due to vacations and mini-jobs, the savings account got a little fatter again and it wasn't the last "plundering", it was followed by 1500€ for a driver's license in 2004 and 4000€ for a VW Polo in 2005 and I was broke again.

After that I was only interested in the interest and looked for better offers than the savings book and so the first extra account was opened at Ing with just under 2%. For transactions at Ing, I actually had to use a landline phone for the first few years.

When the financial crisis hit in 2008/09, interest rates rose to over 5% and I was able to invest €20,000 for 1 year for an unbelievable 5% fixed-term deposit and was later happy to receive €1000 gross. In hindsight, it was the best time to invest in shares, instead I chased the highest interest rate, followed by an account with DKB and Bank of Scotland. For me, shares were only for gamblers who were constantly buying cheaply and selling expensively and you could lose your entire fortune; the fact that companies could also distribute profits was a foreign concept to me at the time.

I was happy, my savings grew and the interest came regularly. The interest rate continued to fall year after year until I reached 0.01% at DKB and the first reports of negative interest rates appeared.

The constant crises in the media about losing your assets also made me nervous, but in hindsight that was one of the reasons I ended up with shares.

In 2016, I first became interested in precious metals and so I decided to buy 7 ounces of gold and 100 ounces of silver. At the time, I had just under 150k cash and was considering investing further in precious metals. Almost panic-stricken, I looked for alternatives to protect my assets, the real estate was already too expensive for me, although in retrospect they were good deals.

The famous bicycle chain.

So I started looking into shares, mostly through YouTube financial influencers. I read a book about finance years later.

Then I started buying shares in a frenzy. I wanted a high dividend, a healthy payout and a favorable P/E ratio so that I could achieve long-term returns on the stock market. I was fascinated by dividends, interest rates at 0% and Daimler paying a dividend of over 5%? Shut up and take my money, followed by positions in Nestlé and Roche from 🇨🇭und, Engie and Unibail from 🇫🇷. The disappointment was great when the 3% from Nestle only came to 1.5% net, only then did I find out that each country has its own withholding tax.🙈 Fortunately, I was able to sell the aforementioned positions at a profit.

I then continued to invest according to the dividend/cheap P/E ratio principle, and when I bought the position I read the brief fundamental analysis on Finanzen.net 🙈

Dividende✔️Ausschüttung✔️ cheap P/E ratio ✔️

I only came up with the idea of reading the earnings a few years later, which meant that I lost a lot of returns and, for example, an Alphabet, Amazon, Nvidia was simply too expensive according to my strategy. Nevertheless, I managed to buy Apple and Microsoft. With Microsoft, however, the famous P/E ratio came into play again. According to a Youtube financial influencer, the P/E ratio was clearly too high and he sold the position to get in later at a lower price, I decided to do the same🙈

I was also hesitant to put my assets into shares, 50k in the first 3 years, the majority was still in overnight money at 0.01%

The media constantly reported that everything would crash soon, nothing has changed in that respect, it's supposed to come practically any day now. Now when the Corona Crash 2020 came and the world felt doomed and I actually wanted to buy cheaply, I didn't have the cojones to buy strongly. Later I change the strategy to invest the money in the market every month no matter what.

Well, just like in real life, you're always learning on the stock market.

The 8-year share balance sheet is of course all gross

My conclusion after 8 years

• Get to know the company and read the earnings before buying a position
• Don't buy shares just because they pay a high dividend
• A share with a favorable P/E ratio usually remains cheap in the long term
• Back winners instead of turnaround candidates
• Invest regularly, don't wait for a crash
• Never sell a Microsoft.
• Or to summarize briefly, buy a World or S&P500 ETF 😂

Thank you very much ✌️😊