The nest egg must be there

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Often, ignorance and fear are the reasons for not investing money for old age. There are simple rules that can be used to invest successfully. In any case, always have a reserve in hand, says Thomas the Sparkojote. And: start as early as possible.

Do you have basic rules when investing?

Thomas Kovacs: One of my basic rules is: if the dividend is cut, I will see to it relatively quickly that I will sell. At least with an extreme cut. The best example is General Electric. They cut their dividend by 50 percent, which was a no-go for me. I go out there. That’s just my personal opinion. In the General Electric case, that was a good decision because, although I took a loss with me, I also saved some losses. The dividend was then cut to a symbolic cent I believe. Maybe I use it to reach into the toilet when a turnaround comes up. But I do not care. You should act according to your rules and have no regrets. You don’t know whether the price will go up again or not. Nobody knows, otherwise, we would have millionaires and billionaires everywhere.

As a basic principle for investing for beginners, I find it important: Even before you even invest, you have to build up an emergency reserve, a nest egg. I always say you should have three to twelve months of fixed costs, monthly expenses, on the high edge. For me, for example, it’s always three to four months. There are people who want twelve, others want eight. The money is not invested. A lot of people ask me if they couldn’t better invest that and take returns with them. No! That remains cash, it really is for emergencies. That has to be available, you don’t give a shit about inflation and negative interest rates. Then you can invest and if the money is lost in the worst case, you still have the nest egg. You can survive. Even if you give notice now, you have these months left. This is my approach.

You have to have that nest egg, and if you don’t, then you’re not investing. Finished. You have to define how high this nest egg needs to be. When you have it, you are free. Do you want to invest in P2P lending, stocks, real estate? This is my tip that I advise everyone. Many underestimate that. You are so over-motivated: “I’ve got money now, I want to invest in the stock market right away, everything in, first dividend payment.” All well and good, but the nest egg, the reserve, has to be there.

And don’t confuse the nest egg with a cash reserve. This is something else. Cash reserve is there for investing in the event of a crash or you want to make additional purchases. The nest egg is intended for emergencies. It looks different when you are an entrepreneur or self-employed. Because then you take even more risk because you are self-employed. You can invest again in your own business yourself. It looks different there. I’m talking about the normal employees now, I was also employed before. The nest egg has to be simple and separate from the cash reserve. It is inviolable and only there if something happens.

You had your first depository at the age of 18. Do you think everyone should start investing this early?

The sooner the better. Then you have the experience. Otherwise, you keep putting it off. I start at 25, then it’s still too early. 26? Still too early. After graduation? Well after the bachelor? But then it starts. That doesn’t work in my opinion. Go for it! I started a business when I was 16 or 17 years old and sold things on eBay. Before that, I always sold WoW gold. The sooner the better! This is my personal opinion. It might not suit everyone, but that’s how it works for me.

Can anyone be a millionaire at 30?

I mentioned this as one of my goals and then was partially limited to that. That just happens, I can’t help it. It’s one of the financial goals. I noticed that as an employee it doesn’t work that way. In purely mathematical terms, this does not work in most cases. That’s why I answer your question directly: It doesn’t work for most of the people because most of them are employed. That’s why I’m going the other way. I would like to be self-employed and go from self-employment to entrepreneurship. This is how it can then work. It’s not a guarantee, but that’s definitely a better chance. If it works and becomes successful, you have a much better chance than if you are employed. That is, the answer for most is that it will probably not work. Most want to be employed and in fact, are.

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