A little thought experiment:
Everyone who starts investing asks themselves what they should buy, what will go up the most!
Many opt for individual shares
But does that make sense? Especially for small amounts / beginner portfolios
Let's take a look at this:
Assumption: 1000€ deposit
(development after 1 year)
Share 1: 200€ (50% +) = 300€
Share 2: 200€ (5% +)= 210€
Share 3: 200€ (5% +)= 210€
Share 4: 200€ (0% +/-)= 200€
Share 5: 200€ (-25%)= 150€
Total after 1 year: 1070€
1 ETF solution:
1000€ ( assumption 7% p.a.) = 1070€
Of course, I have adjusted the values so that the result for both is €1070, but what I am trying to say is:
"If you don't deal with shares full time or examine each company closely, you can lose so much return with just one bad purchase that it's not even worth the risk of a single share."
(Finanzkeks - 12.08.2024🫶🏻)
And in this example I am only talking about one bad investment + one 0% case and even one very good investment (+50%).
What if there had been more bad investments or no very good investment at all?
Beginners in particular should therefore perhaps opt for the ETF variant (even if the 7% p.a. is of course not guaranteed)
Example: $VWRL (+0,46%) or $ISAC (+0,51%)
This saves work/time and possible loss of returns. I myself have nothing against individual stocks, but if you hold them instead of an ETF, you should try to outperform it, which can go wrong with just one or two bad purchases.
Especially as individual stocks simply offer less diversification + higher volatility than a defensive ETF.
So to all beginners, take your time, get to know the stock market, start slowly, build a base and gain experience.
I myself have also bought individual shares -
and made bad purchases...🤡 Greetings $MPW (+8,53%)