What were your best stock market investments?

Don't Forget Your Investment Guide!

How professionals invest 20,000 euros & generate future capital

Anyone who can invest 20,000 euros would have earned good interest on savings and overnight accounts before the financial crisis. Today the increase in money on the account is worse due to low interest rates. When investing larger sums, professional investors therefore concentrate on risk investments. High-risk stock market and equity investments make more of the overall budget in the best case, but are only conditionally recommended for private investors due to the lack of collateral. iFunded explains how successful investors invest their 20,000 euros at high interest rates without risking everything.

Know how: 20,000 euros multiply in a secure investment mix

“Don't put all your eggs in one basket” is an old stock market adage. If you want to invest 20,000 euros safely and still make a profit, you shouldn't put everything on the same card. Plan a personal mix of investments by splitting your capital between safe and high-yield investments. This middle ground corresponds to the best type of investment in the short and medium term. 20,000 euros are not the world, but still too much to risk losing your entire capital through risk investments.

For your investment mix, you can choose either a balanced portfolio (50% safety components to 50% risk investments) or an aggressive portfolio (25% safe investments to 75% return modules). In addition to your financial situation, your future plans determine the right mix.

If you invest a surprisingly inherited 20,000 euros with secure basic finances, the offensive portfolio is more suitable for you than with financial uncertainty and costly future plans. In turn, short to medium-term types of investments with collateral will suit you if you are planning high-cost expenses such as building your own home in the near future. On the other hand, the increased tendency towards long-term risk investments with high returns is only appropriate if your financial future is very likely to remain stable even if the entire budget is lost.

In what period do you want to invest your 20,000 euros? This question should not be underestimated in the context of high-risk stock market investments. In order to resell funds and stocks with a return, professional stock market investors deal with time-consuming market analysis. So if you invest part of your 20,000 euros on the stock exchange, you should have enough time for market observations. To find the right mix of investments, it is best to ask yourself in advance who you are, what you want and how much effort you want to put into investments.

What options do I have with which focus?

First of all, you have to decide for yourself what options you have to invest 20,000 euros and what focus you have. With your investment mix you have to decide whether you prefer a balanced portfolio with 50% security components and 50% risk investment or an aggressive portfolio with 25% security and 75% return components.

Fixed-term deposits and overnight deposits

If you like to have a secure investment, but don't want to worry much about investing 20,000 euros, you should invest in fixed-term and overnight deposits. The longer the investor is committed, the higher the interest. If you invest 20,000 euros in a savings bond with a five-year term, you can expect interest of just under 2%. The return is therefore very low and even with fixed-term deposit accounts with a ten-year commitment, interest rates have not yet increased.

property

Real estate is also a safe and long-term investment. The investor benefits from increases in value over the years. The disadvantage of this form of investment is obvious, however: investors have to invest large amounts in a single property and make a long-term commitment.

In addition, the real estate market in the German metropolitan areas is booming, with the result that purchase prices for condominiums and houses are rising rapidly in Munich, Stuttgart and Berlin. Nonetheless, given the volatility in the financial markets, many investors in Germany consider real estate a solid investment.

Open real estate funds

Of course, you cannot invest 20,000 euros and buy a house or apartment with it. You can still purchase shares in a property. Investors can participate in a large number of properties via open real estate funds and benefit from the real estate boom. Nevertheless, it should be noted that open-ended real estate funds also involve risks, as their value can fluctuate.

In addition, by investing in real estate funds, you enter into an obligation and are bound to terms, so that some funds have to be held for at least 24 months. In addition, there is a redemption period, through which the investor must submit a declaration one year in advance to surrender the units. Although real estate is a relatively safe investment, consumer advocates also warn of depreciation due to fluctuating real estate prices and rents.

Focus on returns

Anyone who focuses on generating high returns must invest in stocks. However, you should always be aware of the risk. But despite the financial crisis, investors who bought German shares in 2002 and held them until the end of 2016 achieved a 10.3 percent return every year. This in turn shows that you can generate high returns if you recognize price valleys.

But if you are on the stock market for the first time and want to invest 20,000 euros, you should do so through funds. At best, you invest the 20,000 euros in ETFs (Exchange Trade Funds). ETFs give you further diversification in the area of ​​stocks, as you invest in a fund with different companies.

Considered investment: 20,000 euros require safety modules

How much return investments yield depends on the security of the investment. With higher sums, you will never do without security modules despite relatively low returns. By investing parts of your 20,000 euros in fixed-term deposit accounts, you will not benefit from rapid growth, but from interest security. In addition to the investment time, the interest rate depends on the amount invested and remains stable over the entire term of the investment.

Some providers offer the option of generating monthly interest income from a minimum deposit of 20,000 euros over a long term. In addition to fixed-term investments of this type, a carefully considered mix of investments is based on characteristics such as

  • Broad capital diversification so that short-term fluctuations in your individual investments can be balanced out naturally.
  • Orientation towards large institutions such as churches, pension funds and insurance companies, from which you can expect returns even in times of crisis.
  • Forms of investment whose total profit and risk remain calculable over the entire term.
  • Investments in basic providers and stable material assets.
  • cheap purchases to make a profit even with low resale value.

By building up half of your individual portfolio from these security modules, your overall investment risk remains low. For unforeseen expenses, you keep a small portion of the total capital available as overnight money, which is always accessible in overnight money accounts. However, because of the dependence on the fluctuating interest rate of the European Central Bank, overnight money should not replace the fixed-term deposit. You invest the second half of your 20,000 euros in return components to increase your profit prospects.

With these return modules, you earn 20,000 euros in interest

By dividing the return half of your total budget into three, you have over 6,000 euros available for three different return components. How you should invest these portions of your 20,000 euros depends on your personal preferences as well as your life situation. Do not rush to invest in return building blocks. You invest the risk portion of your 20,000 euros gradually and carefully in the following investment options:

  • Precious metals, oil, gas and other commodity funds
  • Equity index funds (ETFs) on the stock exchange
  • Crowdfunded, profit-sharing business projects
  • Real estate equity crowdfunding

With regard to equity index funds, passive funds are most recommended for private individuals. Such ETFs track the international world market share index (MSCI World) with 1,600 companies and 23 countries in a relatively fluctuation-resistant way. In addition, you ideally acquire European index funds in order to be better equipped against economic crises.

Nevertheless, the highest interest rates are currently waiting outside of the stock market: Real estate projects are currently one of the most popular forms of investment. You can invest 20,000 euros in attractive real estate projects at iFunded. Since the minimum investment is usually between 500 and 1,000 euros, the 20,000 euros can be split over several projects in order to reduce the risk and ensure a broad diversification. There is fixed interest on the projects, which is often paid every six months.

Invest a diversified 20,000 euros with real estate crowd investing

A diversification of capital is always important when investing, so the portfolio should be sufficiently diversified to spread risk and compensate for any defaults. This also applies to real estate crowd investing. Invest in multiple projects to spread the risk.

If you want to invest 20,000 euros, you can invest smaller amounts between 2,000 and 3,000 euros in several projects. However, you can diversify further depending on your individual requirements. A well thought-out diversification of the investment can compensate for losses from other projects.

Sign up for our newsletter and receive our investor guide as an eBook as well as the latest news about real estate.

Sign up for our newsletter and receive our investor guide as an eBook as well as the latest news about real estate.