Michael Stadler from Osteopathy Central is now convinced that he would like to start investing in stocks. It is important for him to start with small amounts, because that way he can cope with the potential losses. The reason he chooses to start investing is because he knows that he can save bank fees if he manages his retirement savings himself.
An example how to minimize losses: Hermann Stern has incurred a loss or roughly 80% on his Meyer Burger stocks. That would be USD 1,600, if the investment had been - as in Mike's plan – USD 2,000. With an investment of USD 8,000 per year, this amount is already smaller and after five years. With an investment volume of up to USD 40,000 (five years with four quarters with USD 2,000 francs investment volume each), it is already negligible.
It’s likely that the stock markets will perform poorly in any given year. If that happens, your portfolio won’t have a positive balance. However, you have to keep on investing regularly and maintain your investment rhythm as you benefit from low stock prices and will soon have a positive return on your portfolio.
The fact is that in the case of regular stock purchases, the portfolio cannot become negative after only a few years, excluding the possibility of wars and global natural catastrophes.
Hermann Stern has demonstrated this by analyzing the PIGS countries (Portugal, Italy, Greece, Spain). These four markets have been particularly bad in recent years. Nevertheless, you could have had a positive return in three out of four countries by making regular investments. Only Greece has remained negative throughout. The problem with Greece was that the companies on the Greek stock market are so closely linked to the local society that all the people involved were caught up in the market. This is unlikely in Switzerland, as many companies are positioned globally.