Choosing the right investment strategy – 5 simple steps

You want to start investing and finally get a grip on your own finances? A long-term asset accumulation is your goal? If yes, then you are exactly right here. Choosing the right investment strategy is the most important thing when investing. If you don't know what your goals are, you can't achieve them and lose focus over a long period of time.

An investment strategy should be created before investing and is an important milestone for long-term success

I would like to make it easier for you to start investing with this article, in which I show you how important a strategy is and how you can find the best strategy for you.

Know your finances

Before you can even start investing, you need to know your own assets and be aware of your financial situation. Acting too quickly rarely leads to success in the stock market. After all, the aim is not to speculate, but to clearly focus on building up assets in the long term.

So to start investing, you need to know how much money you have left for investing or will have left in the future. Only in this way you can build a solid investment strategy.

Create a budget book

A very useful way to know or get to know your finances in a simple and completely transparent way is a budget book.

I personally have had a budget book since I started earning income. This was one of the main reasons for me to start investing as I wanted to grow my wealth.

  • Overview of your finances
  • Better awareness of expenses
  • Better understanding of income and expenditure ratio
  • Better planning about future expenses
  • Higher motivation for increasing income


The structure of a budget book is very simple. The aim of a budget book is to document your income and expenses and visualize them with graphs for a better presentation.

How you create it doesn't matter at all. The main thing!

There are several ways to keep a household journal: Pen and paper, Excel file, app, etc. I personally keep a budget book via Excel and simply have a separate file per year. I divide the year again into individual spreadsheets, which represent the months. In addition, I have another spreadsheet that shows the summary and overview of the entire year.

For me personally, it has the great advantage of being able to set up and create the tool the way I like it.

A budget book is very useful for a sound investment strategy

A simple and perfect budget book to get you started can be downloaded here.

You can of course also create your own budget book or use an app. It is important that you have one thing.

How does a budget book work?

The way a budget book works is also very simple and can be quickly integrated into everyday life.

As soon as you have any income or expenses, you enter it in your budget book. So if you get your salary, went out to eat in a restaurant, bought new shoes or you invest in an ETF. Every amount received or spent is recorded. Here you simply enter the type of income or expense in the appropriate category. This way you can see in which areas you spend the most money and even find saving opportunities.

The income and expenses are added up accordingly and shown as a sum. This way you can immediately see if you have a positive cash flow or are building up debt. You become much more aware of your finances.

Since I have my Excel list saved on my computer, I make a note in my notes app of income and expenses incurred along the way. If I pay with a checking or credit card, I can transfer income and expenses after the fact via online banking.

Many banks or apps do this work for you and visualize your overview very nicely. However, since I am a customer of several banks and consciously want to transfer the data manually, I personally find the Excel list to be the best option.

What is the best way to use this?

Find the best way for you. If you like to do everything with your smartphone, then use an app. If you do a lot on the computer, use an Excel list. And if you like to work yourself by pen and paper, then use this way.

Start and piece by piece expand your budget book with graphs, categories, macros, etc.

Debt overview

You make the biggest return by paying off your debts. To do this, you need to create an overview of all your debts. Debts are liabilities through which you have to pay back money to someone. This usually involves costs for getting money, interest.

Through debt, one borrows money from the future.

Examples: Car loan, real estate loan, small loan, advance by employer, etc.

You should therefore have an overview of your debts, as this influences the strategy. Debts have to be paid back in the future and therefore reduce the income and therefore the amount you have left for investing.

Plan a buffer for a rainy day

It is very important that you have a buffer for a rainy day. It is essential to consider this for a perfect investment strategy. After all, an investment is a long-term wealth building. Especially on the stock market there can be constant fluctuations. You should not run the risk of having to sell your investments at a loss in bad times on the stock market, just because you absolutely need money.

So before you start investing, first invest in your buffer for bad times (nest egg).

As a rule of thumb, you can remember that you can manage with your nest egg at least three months without income. Many notice periods amount to three months and this is a good period to get out of the "money trouble", z.B. if you need a new job or your car is broken.

Here the focus is clearly on security not on returns. Therefore, the money should be based on safe investments with short-term availability (z.B. Cash, current or call money account).

Assessing your own risk correctly

If you want a return, you have to take a risk.

According to the magic triangle of investment, return is inextricably linked to risk. If you want to have a high return, you have to take a high risk. If you want to take a low risk, you have a low return on investment. But just because there is a high risk, the return does not have to be high at the same time.

Important: Therefore, after reviewing your finances, you must decide for yourself if you are willing to take a risk for a return on investment. In the stock market theoretically exists the risk of losing the entire investment. But there is also the chance to increase the money in the long term and to work against inflation. Therefore you should only invest money that you will not need in the next decades! Historically, you have always generated growth over a period of more than 15 years.

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