When investing in stocks, there are two approaches. What these two approaches are and how they work, you'll learn in the following lines. To make money with stocks, you first have to invest in them, and when investing in stocks a distinction is made between active investing and passive investing. With active investing, you research individual stocks closely, invest in them, and try to achieve high returns through clever strategies. With passive investing, you don't invest in individual stocks but in the market itself, that is, in global stocks; with this method you don't try to beat the market but rather to move with it. Since the index, that is the global market, grows by about 7-8 percent a year, you try to follow it and invest in global stocks, such as the MSCI World, in order to achieve average returns. Because passive investing spreads risk particularly well, this approach is especially advantageous.

Making money with stocks

Making money with stocks through the 2-account model

To make money with stocks, you also need a one-time or monthly savings amount. So that this amount doesn't weigh too heavily, a 2-account model is useful, where a certain sum is transferred every month for saving or investing. To stick to this savings amount while still having enough money for other costs, it's an advantage to set up a spending account and a savings account. The spending account covers your ongoing fixed costs, such as rent, your phone bill, or electricity and water. Variable costs, such as trips to the pool or sauna and spending on clothing or shopping, also come out of the spending account. The savings account, by contrast, serves only to build wealth and you should never dip into it, for example to move a little money over to the spending account. To make money with stocks, a certain savings amount from your monthly salary has to be transferred to the savings account at the start of the month. With this savings amount, which you can set yourself, you can then invest every month.

The following costs come out of the spending account:

  • Fixed costs
  • Variable costs

The following costs come out of the savings account:

  • Investment costs

What you need to keep in mind

If you want to build long-term wealth, passive investing will be significantly more successful than active investing. With active investing you can achieve higher returns over shorter periods, but over the long term, meaning a period of 10 years, passive investing is significantly more effective. To make money with stocks, one more thing plays a very important role. You have to pay attention to whether a fund is distributing or accumulating. Here it's advisable to choose an accumulating one, because the returns are reinvested and you can benefit from the compound interest effect. So there are a few things to keep in mind to make money with stocks, but if you do and invest for the long term, you can achieve quite high returns.