Investment

Investment (Kapitalanlage) is the umbrella term for any form of putting money to work with the aim of generating a return or preserving wealth.

The magic triangle of investing:

Three goals that can NEVER be maximised at the same time:

• Return: how much does the investment earn?
• Security: how high is the risk of loss?
• Liquidity: how quickly can you get at your money?

Investment types compared:

• Instant-access savings: 2–3% return, very safe, available immediately – ideal for an emergency fund
• Fixed-term deposit: 2.5–3.5%, very safe, tied up – for 1–3 years
• Bonds: 2–4%, safe (government bonds), exchange-traded
• Shares/ETFs: 7–9% historically, risk (fluctuations), exchange-traded – no loss from 15+ years
• Property: 3–6%, medium risk, very illiquid – stable in the long term
• Gold: 2–5% historically, crisis protection, medium liquidity – tax-free in Germany after 1 year!

The basic principle:

• Higher return = higher risk (ALWAYS)
• Anyone who promises the opposite isn't offering a serious product
• Diversification is the only "free lunch": spreading across different asset classes lowers risk at a similar return

Recommendation for beginners:

70% MSCI World ETF + 30% instant-access savings/money market fund – simple, cheap, broadly diversified.