In a post from Wednesday, I said that now the Best time is to buy stocks. I still think this makes sense. In general, I look for stock investors viz many chances who are opening up because of the current crash. That's why I keep buying more and have more than doubled my savings plan on the Vanguard All World ETF.
Nevertheless, I would like to give you a somewhat differentiated picture today. For this we consider 4 case studies. You can then decide for yourself which one suits you best. Based on these case studies, I give clear advice.
As before, the courses on the stock exchanges have been a roller coaster ride in the last few days. How does that make you feel? Are you curious about the jagged ups and downs that sometimes seem to happen through some news or sometimes out of nowhere? You may be wondering after reading some my last posts whether you should now add a larger amount to your portfolio?
Some are afraid
It is not difficult to read from the stock market prices that many are afraid. Otherwise the market would be much calmer. Are you one of them and would you rather sell securities at the moment? A common motive for this is fear that it could go down even further. These worries are understandable and I would like to take them away from you as they are not necessary. I'll show you better ways of doing this now. I assume that you invest long-term and widely with ETFs. The advice is just as valid for people investing in digital money managers or top dividend stocks. However, these tips are not suitable for short-term traders who want to make quick money in 6 months!
Please note: This is not investment advice and does not represent an invitation to buy or sell! I say what I would do myself if I were in the situation of these 3 people. But you have to decide for yourself!
Four different investor types
Whether and how much you should invest in the stock market depends on your personal situation. For this, consider: Marc, an employee in the automotive industry with a cash buffer that he is considering investing. We also play out a similar situation with Lisa, a civil servant teacher. Stefan has to work hard and receives little wages. We examine the question of whether Stefan should set up an ETF savings plan in the corona crisis with 1,500 euros. Finally, we look at a woman in her mid-fifties, whose depot, which was only recently put on, is now glowing deep red.
Increase ETF savings plan in the corona crisis/buy shares: Marc, employee, 8,000 euros available, automotive industry
First, let's consider an employee with $8,000 of disposable cash on the table cash account. Let's call him Marc. Marc's expenses are around 2,000 euros per month. He works in the automotive industry and is unsettled by the impending short-time work that the industry is facing. He also fears for his job. He could bridge four months with his savings, even if he didn't receive any short-time work benefits at all. Nevertheless, it is risky to use up your cash reserves in such a situation. Since Marc is a reader of Account Loan Comparison, he simply lets his ETF savings plan continue and does not top it up any further.
Increase ETF savings plan in the corona crisis/buy shares: Lisa, civil servant
Lisa is a civil servant teacher. Your employment cannot be terminated until you retire in 2045. If Lisa has not yet invested in ETFs or stocks, she now has a unique opportunity to start her portfolio in a crisis, which is a very good opportunity in the long term. Past economic crises bear witness to this. Lisa should definitely go through with it now! You can find a cheap depot for your ETFs online. A detailed one depot comparison can help her get things started. It's even faster if Lisa sticks to the Konto-Kredit-Vergleich.de deposit recommendations. These include smart broker*, Onvista*, Trade Republic* and DKB*. The three first-mentioned all offer opening using a mobile phone camera (“VideoIdent procedure”). Due to the corona crisis, longer waiting times are currently to be expected at the banks. While there are hardly any restrictions at Trade Republic, it takes up to 4 weeks to open a depot at Smartbroker. At least 14 days can also be expected with the onvista bank.
Increase ETF savings plan in the corona crisis/buy shares: Stefan, cashier in the supermarket, 1500 euros net
Stefan is a cashier at a large supermarket chain. Since he Call for savings for low earners at Konto-Kredit-Vergleich.de, he spent many days thinking about his security in old age. Therefore, he is aware that he should also do something and that ETF savings with savings rates from 25 to 30 euros per month are actually not a problem. Since Stefan still has more than 20 years of his working life ahead of him, the ups and downs in the markets don't bother him much. "The cucumber prices change every week," he adds with a shrug. Stefan does not see his job as threatened. Everywhere they look for help in the supermarkets. Business seems to be booming like never before. in the depot comparison did he learn that it was at smart broker* and DKB* Vanguard ETFs in the savings plan are there. Since Stefan finds the cooperative structure of the Vanguard ETFs a great thing, he quickly opens a depot at DKB and sets up a savings plan of 100 euros a month.
Increase ETF savings plan in the corona crisis/buy shares: Gerlinde, self-employed, 55 years old
Gerlinde is 55 years old and owns a small advertising agency. Since she only entered the stock market at the end of 2019 with a large one-off investment, her portfolio is now blood red. Gerlinde should take a deep breath. Despite the sharp setback, it would be unwise to sell now. So far, the markets have recovered after every setback, no matter how severe. However, that can take a long time. Sometimes several years. If Gerlinde still has some cash in her money market account, she could think about it strike again cheaply now. To be on the safe side, she can buy the positions in small pieces with a savings plan. That spreads the risk a bit.
Course bets and market timing are not investments!
Lisa and Stefan can adjust your monthly savings rate at any time. In addition, excess money can be put into the investment that has now been created at any time by means of a one-off investment. As soon as there are first signs of a calming down pandemic, the stock markets will also calm down again. Since hopes are always traded, the recovery on the markets will probably take place a little earlier
You won't hit the low point to buy again, even people who do nothing else throughout the day than watch the markets fail. Don't waste energy on price betting and market timing. Instead, act promptly and decisively. If it then goes down a little further, it doesn't matter much in the long term: In 15 years, it won't matter to your depot. The more decisive question will then be whether you had the courage to take advantage of the opportunities with your hard-earned money to make the best of this crisis.
one further amendment
With this article I assume that Blog parade by Jürgen from the ETF blog on the topic of "Private wealth creation in Corona times". You can find articles by other authors in under the link on Jürgen's ETF blog.
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Disclaimer: This is well researched but non-binding information.
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