As an investment, stocks promise long-term returns. Even better if the investment goes into sustainably oriented projects and companies. Every year, 140,000 schoolchildren and students gain their first experience of how the capital markets work in the stock market simulation game. Sustainable investment strategies are also the focus in a separate evaluation category. Young people today no longer just want to invest their money. They question whether their investments are convincing from an ecological and social perspective.
With the help of an expert interview with the Bremen consumer advice center, Planspiel Börse has compiled information on what young investors should pay attention to.
Personal inventory
Your living circumstances and personal plans for the future are decisive for your choice of investment. The first priority should be to cover the major risks with liability and occupational disability insurance. It is then advisable to take the first important steps towards building up assets and planning for retirement. For students, trainees or young professionals, there are of course no big financial leaps in the beginning. But the earlier you start saving, whether for a property or for retirement, the better. The same applies to stocks: Even if you can only invest in them later with the appropriate capital, it is worth considering this investment early on. With the stock market simulation game you can gain your first important experience with stocks without any risk.
What type of investor am I?
In order to find out which investment is right for you, you need to know what type of investor you are. Security, availability and returns – these three goals describe the “magic triangle” of investing. It is not possible to find a form of investment that meets all criteria equally well. The aim of an ideal investment strategy is to find the right balance between the three points. For example, the higher the yield, the lower the security. With stocks you generally take a higher risk than with other investments, but you can achieve very good returns in the long term. A study by the German Stock Institute shows that anyone who bought DAX shares at the end of 1995 and held them until the end of 2010 achieved an average annual return of 7.8 percent during this period. However, for investments that are classified as low-risk, such as savings bonds, federal securities and other government bonds, the return rarely exceeds the two percent mark.
Development of sustainable stocks
Investing in sustainable stocks is trending. However, the share of sustainable investments in the overall market is still in the low single-digit range. By investing more in these investments, you can have a positive influence on this change. This is also worthwhile from an economic point of view, as a meta-study by the University of Kassel shows. When comparing sustainable and conventional investments, she came to the conclusion: Those who invest their assets sustainably have even greater chances of making money with them than with investments in conventional investments.
Double dividend
When you buy shares in sustainably oriented companies, you get two things: profits and a clear conscience. Sustainable investments take into account not only economic but also ecological and social factors. One then speaks of the double dividend. It means that investors not only receive a certain return for their money, but at the same time work for sustainable development. How you ultimately invest your money is your personal decision. For some, ecological aspects are important, while others attach great importance to compliance with certain ethical or social standards.
Sustainable criteria
Most DAX companies, but also smaller listed companies, now document how responsibly or sustainably they treat the environment, employees and business partners. As an investor, you can decide based on “positive criteria” or “negative criteria”. Those who select according to positive criteria reward particularly responsible actions. Companies that have a strong social or cultural commitment can benefit from this, as can companies that adhere to and promote strict environmental protection regulations. Anyone who makes decisions based on negative criteria excludes those who, in their opinion, do not act responsibly. Third option: select the company from each industry that acts most sustainably. This process is called the “best-in-class approach”.
Take a close look at the company
When you invest in stocks, you are always investing in a specific company. You can tell whether it is acting sustainably by the orientation of the core business: what products and services are there and how are they produced? However, in a globalized world with multinational corporations, assessing the core business of large corporations in particular is becoming increasingly difficult. You should therefore not only look at the end product, but also always keep an eye on the labor and social standards as well as the conditions in the supply chain. This way you avoid investing in companies that, for example, B. be associated with human rights violations or child labor. More information can be found in company reports as well as in independent reports from business newspapers and analysts.
Observe stock exchange rules
And finally, a few general tips that apply to all stocks:
Only invest your freely available money and plan for the long term. For stocks, long-term means several years to decades.
Limit your orders. This will protect you from unpleasant surprises. Set a maximum price or a minimum price at which you want to buy or sell the stock.
Be careful with stocks whose price falls sharply, otherwise you could suffer large losses.
Don't just bet on one stock, but on different stocks. Your portfolio should contain several stocks from different industries and possibly countries in order to spread the risk.
You can find out more here
To the stock market simulation game
The next round of games runs from October 7th to December 16th, 2015.
The Bremen consumer advice center has its own section on the topic of “sustainable investments”: www.vz-hb.de/ethisch-oekologe-geldanlage
The current brochure “Ethical-ecological investments – protecting the climate and the environment” from the Bremen Consumer Center also offers a comprehensive overview.
With the “Investment compact” guide, the money and budget advisory service of the Sparkasse Finance Group offers information on the topic of sustainable investments.
