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Created on 13.08.2018

What you should watch out for when purchasing shares

Share prices can fluctuate significantly, which is something investors must take into account before getting started. If you understand the key principles, however, you should consider investing in shares. It can particularly pay off if you have a long-term investment horizon. Find out everything you need to know here.

Think long-term

Based on past performance and over a long-term investment horizon, i.e. more than ten years, a broadly diversified selection of shares almost always generates profit. This means that sudden price plunges or even stock market crashes have little effect. You should be able to achieve a return (profit) on the stock exchange over the long term as higher risk is compensated for. This means that the timing of the investment is less important.

Finding out about and understanding companies is definitely worthwhile

Purchase shares only in companies whose business model you understand. Obviously nobody can predict the future, but shares in solid companies of good standing which adopt a long-term approach are generally a better option than ones promoted in the media whose business models are unclear.

Don’t put all your eggs in one basket

It’s extremely important to spread your risk. Many beginners invest only in individual securities, which exposes the investor to the risk that one particular company’s share price will plunge. Choose shares in different companies – ideally, they should operate in different sectors and, once you become more experienced at investing, from a number of countries. The principle of investing only in companies and countries whose situation you are familiar with and understand also applies here. If you don’t wish to select the companies yourself, equity funds are an alternative. This gives you the assurance that your assets are well diversified.

How and where can I purchase shares?

To buy and sell shares, you have to open a securities custody account. This can usually be done online. You may be charged fees for your custody account which vary greatly depending on the provider and portfolio. In addition to custody account fees, brokerage fees are charged every time you buy or sell shares. It is therefore worth comparing products and conditions beforehand. Keep your strategy in the back of your mind, and in particular, how often you wish to trade shares each year. You should also be aware that in Switzerland switching your custody account to another bank incurs charges for the transfer of your shares.

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