What else you should pay attention to as a "beginner

We have already explained in the document "11 principles against misconduct in the investment business" what you should look out for in securities transactions in order to successfully avoid possible "pitfalls".
In this factsheet, you will find additional "tips" and "truths" that can help you to invest as successfully as possible. This often includes the art of asking yourself specific questions... and finding the right answers. At first glance, these can be trivial questions, but when you look closely and interpret them, the answer very quickly contains more complexity than expected.
Experience shows that it is essential to take the necessary time for many questions or answers before entering the investment business. It definitely helps, although consistent implementation of investment strategies always remains a challenge in its own right in the context of "self-discipline".
The following "tips for beginners" - perhaps also for "professionals" - can always accompany this "self-discipline":

In which sector(s) do I invest...
No less an investor legend than Warren Buffett, the "Oracle of Omaha", insists on this principle: "Before making a concrete investment, you have to know or understand what a company produces or offers, how it works and what substance (current and, above all, future) is in it!"
Sound studies are important and very helpful. It is also advisable to take a look at the company's homepage beforehand, where, for example, the annual report, corporate governance, sustainability strategy and much more. etc. provide information. A certain degree of caution is then advisable with regard to analysts' opinions, unless these are fundamentally "underpinned".
In our opinion, well-founded information is indispensable for investors with a longer-term view, whereas a "gut feeling" can be quite sufficient for "traders"!

In which products do I invest...
As is well known, there are various products available to successfully structure an investment portfolio. These include, for example, shares, participation certificates, bonds, funds, structured products, ETFs, options and many more. In parallel to a tailor-made "asset allocation" (investment structure and diversification), it is important that you know and understand the functionality of the individual products. What rights and obligations are associated with a product? What are the opportunities and risks associated with each product? You should know these and similar product features.

Key figures using the example of a share...
We often hear or read terms such as P/E ratio (price/earnings ratio), P/B ratio (price/book ratio), equity ratio, market capitalization, dividend yield, etc. It is not always immediately clear what exactly is meant by these terms. The most important terms are explained in detail in our separate factsheet. You should also take a look at these questions. Some of the explained key figures are helpful for an investment decision, some are even essential.

Who should invest in equities...
The common belief that people with smaller assets and/or smaller incomes should not invest in the "gamble" of equities is long gone.
We'll state right up front that stocks - in combination with serious investment behavior - are definitely not a "gamble"! Because: on average, stock investments rise in the long term (if you don't get caught up in exorbitant cost prices), with stocks you participate in short- and long-term economic events, with stocks you can proactively participate in established, prospering companies and share in the profits in the form of dividends, the tangible asset stock will always exist...
... and thus it is clear: "Everyone and every woman should invest in stocks!" Only the amount and the form of the share commitment must be selected profile-conformal, i.e. from the savings plan over the share fund or ETF up to the direct investment. Stocks provide probably the most attractive platform to make capital work successfully.

Patience brings roses...
As soon as you invest capital in the securities market, you are immediately in the rocking "boat of volatility". Some products and markets are more volatile than others. Especially in the stock market, price fluctuations are the order of the day. Most investors start out with the goal of achieving a good return within a useful period of time... "if it works, why not!"
However, one should always assume that it will take a little more "oxygen" over time. The market and/or the individual stock do not always react as desired. Therefore, it is often enormously important for a successful performance to be patient at the said start.

Sit out crises and market upheavals...
Hardly any investor will be able to avoid extraordinary market moods during the period of his investment activities. Crises in the form of recessions, wars, diseases (Corona), environment (climate, pollution, etc.) or financial market-specific as a result of market distortions in real estate, banks, commodities, currencies, etc., can and will always occur... sometimes foreseen, sometimes with sudden crash turbulence. The media is then also very receptive to such things in each case.
It has ALWAYS been the case that people have had to sit out crises and associated turbulence on the stock markets... and this will ALWAYS be the case in the future! However, this does not mean that one has to frantically hold on to all existing investments in a crisis. There may be individual cases where, in the context of a clear deterioration in quality with no prospect of recovery, a decision to sell is imperative.
In any case, always remain calm, but pay greater attention to the securities portfolio in such times.

Book losses in general...
Price fluctuations are normal in any form of a market. Thus, even without the above-mentioned crises, interim price losses can occur. Again, one should not immediately fall into nervousness - often simply said or written, usually difficult to apply. If the underlying investment does not have to be fundamentally called into question (e.g. due to high operating losses and especially if there is an absolute lack of prospects), one should never fall into panic or false actionism. So also sit out book losses and wait for the better times.
Nobody likes to realize losses anyway. From experience, however, there must also be such decisions. It happens again and again that one drags along so-called "shopkeepers" in the depot and is annoyed regularly about these. If there is a high probability that such positions have no chance of recovery, it is advisable - ideally in an otherwise good performance year - to make a clean sweep, i.e. to say goodbye to the "shelf warmer(s)" and invest the proceeds in supposedly more profitable alternatives.
As André Kostolany so aptly said with regard to share price losses, "Two times two is never four on the stock market, but always five minus one... you just have to keep your nerve and hold out for the one!"

Should I or shouldn't I...
If you have decided to buy shares on the basis of the facts and with a good feeling, you should generally not postpone the decision. The same tends to apply to a decision to sell. "Every day is a lost day".

Blue chip, second-tier stock or "gambler's stock"...
For the "beginner", it is advisable to put a blue chip in the securities portfolio "for the first time", i.e. a proven standard stock, for example from the Swiss Market Index, the DAX, the Dow Jones or the Eurostoxx 50. With this solid approach, he can make his first experiences in the stock market (or other markets) without immediately taking a higher risk. Gradually, further development steps are then possible.

What is also important for the "first time"...
In addition to other explanations in this factsheet, a "beginner" should be clear in advance what type of advice and securities account he has in mind. In this respect, there are primarily three variants:

  • Execution only: The investor always decides on his own responsibility and without external advice on his transactions. In this case, he should definitely install his securities account via an online platform - if only for cost reasons - and process the transactions via it. Often a sample securities account can be subscribed to via such a provider in order to be able to learn how to use the respective platform without errors.
  • Advisory mandate: The investor contacts his bank and gets in touch with an investment advisor who accompanies and advises the investor in all investment matters. Stock market orders can be processed either directly via the investment advisor or via the online platform of the respective bank.
  • Asset management mandate: The investor has neither the time nor the inclination to deal with the investments himself. He turns to his bank and, together with an investment advisor, defines his investment profile, which is then used to conclude a corresponding asset management mandate with a management contract. The bank then makes the corresponding investments within the framework of the agreed strategy. The investor receives regular reports on the status and performance of his portfolio.

In all the forms chosen, it is essential to be fully aware of the fees involved. Execution only is likely to be the most favourable option in any case. In principle, the transaction fees (single transaction or flat fee), the custody account fees or the asset management fees must be clarified for each form. Even when comparing the many different providers, there are sometimes major differences; a comparison can definitely be worthwhile. Every form of advice and custody account always has its advantages and disadvantages.

Don' t completely disregard tax aspects...
In Switzerland, capital gains are tax-free unless you achieve the status of a "securities trader", which is rarely the case for private investors. On the other hand, distributions (e.g. dividends) are generally subject to withholding tax; the exception is distributions from a company's capital reserves. However, as is well known, the withholding tax can be reclaimed in full. The situation is somewhat more difficult in the case of foreign investments. There, high withholding taxes are often deducted as well. As a rule, these can also be reclaimed; however, the administrative processes are usually very laborious, only the partial repayment via the lump-sum tax credit in Switzerland is relatively easy to claim.
In the case of larger capital amounts, investment income from interest and dividends can also lead to higher progressions under certain circumstances. If this is the case, keep an eye on the tax aspects.

Speculating or investing or both...
This is where opinions quickly diverge. What is speculation and what is investment? There is no exact demarcation in the investment markets. Every stock purchase is first of all a speculation. If the purchase is based on a long-term intention, one could probably speak of "investment", but if the market participant is more of a trader and thus a short-term oriented person, the term "speculation" definitely fits better. Each investor must therefore classify himself according to his profile. It will tend to always be a "both and". There is thus also no "right or wrong".

The stock market doesn't take any consideration anyway...
Precisely because this is the case, fundamental facts about the individual company are very important. We can't "dupe" stock market psychology anyway, supply and demand also vary daily. In our opinion, well-founded investment decisions are therefore important. Even the speculative trader should not lose sight of this. In any case, from our point of view, it is not enough to simply rate a company as "good" or "bad". Rather, the focus should still be on the valuation of a stock, naturally taking into account its future prospects. Not everything that is expensive has to be good... not everything that is cheap has to be bad. In this sense, the stock market takes no notice.

Placing orders, order types, trading venues...
In this respect, an acquired basic knowledge is sufficient. We have summarised the most important elements for you in a separate factsheet.

Trust is good, control is better...
Would also be one of the benchmarks in the investment business, but too often there is not enough time for a thorough check or clarification of the fundamental facts. Precisely for this reason, those investors leave portfolio management to an asset manager; if the latter is demonstrably reputable (membership of a self-regulatory organisation is mandatory), no major problems should arise.
In all other cases, a healthy degree of scepticism should always be applied to stock tips. Many share tips are absolutely good to very good, which does not exclude a questioning nevertheless completely.
It becomes dangerous with "sure-fire" tips from any "clairvoyants" or self-appointed "stock market preachers". In these cases, the fundamental facts of a recommendation are often not transparent enough and not comprehensible. As an investor, you should be extremely cautious about promises of excessive returns without plausible background information. The "gambler" is of course free to bet on any "horse".

Cadence of portfolio review...
As mentioned above, one should never panic with a good investment strategy and always proceed with as steady a hand as possible. However, it is important to keep an eye on what is happening in the financial markets. Should major economic, political or other upheavals occur, a portfolio will need closer monitoring.
But even in calm times, it is advisable to review the portfolio with a certain degree of consistency. There is no "golden rule" here. In our view, a monthly review is sufficient at most, and at least a semi-annual check with any rebalancing measures or other measures that become apparent. But you can also keep it here with Warren Buffett or André Kostolany...

  • WB: Buy stock/s and imagine that the stock markets would be closed for the next five to ten years!
  • AK: Buy stock/s and go into a deep sleep for 20 years!

We would not go to such an extreme, but these statements are only to be understood symbolically.

Don't forget to plan for retirement...
The importance of planning for retirement as early and as a whole as possible has risen steadily over the last few decades. Demographic developments, pension conversion rates, low interest rates, etc. no longer automatically ensure "euphoric" income prospects upon reaching retirement age. It is therefore essential to pursue a balanced, tailor-made pension concept, particularly in the context of a selected investment strategy or in dealing with your own assets, as well as in connection with shares and other investments.
For this purpose, contact a qualified pension advisor at an age of 35 to 40 years at the latest! Don't be afraid of the usually one-off costs involved. The investment business forms an essential part of your future path. You should not leave the strategy and quality of your future to chance!

Timing - the great unknown...
We have deliberately placed "timing" at the end of this factsheet. Timing is art, timing is luck, timing is chance, timing is judgment... and much more.
With good timing and therefore good cost prices, a performance can be optimized purely by calculation. However, as we know, it will never be possible to buy at the lowest price and sell at the highest price. The time axis alone speaks against this. For this reason, the term "timing" should be forgotten immediately in the context of this optic. The timing of a share purchase is nevertheless very important, but only on the basis of the investment principles set out in this factsheet and other documents. In this respect, "the great unknown" can only ever be quantified with a concrete date in retrospect, no more and no less.
We will be pleased if the principles outlined here also help you to achieve the investment success you desire. You will hardly find a common denominator for everything in your personal investment business and investment behaviour, but it will help in dealing with your own consistency and discipline.

With this in mind, I wish you every success in your daily decisions.

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