If the stock markets perform surprisingly well even in times of crisis, this is not least due to the injection of funds by the central banks.

But in artificially busy markets a handful of bad news is enough and already the values ​​plummet.

And finally, every crash is a nightmare for the investor.

Secure Deposit: There are funds against falling prices

However, sleepless nights can be avoided with the right tools.

There are a number of ways to secure the deposit and also to take advantage of falling prices.

With some products, one can make a virtue out of necessity and enjoy profits when others lose.

But since every commitment involves both costs and risks, every investor should first consider whether this fits in with his or her investment and investment goals.

If you rely on different asset classes over the long term and with a broad base, you can save yourself the trouble and simply let time work for you. Over longer horizons, short-term losses are barely noticeable.

The situation is different when an investor mainly calculates with stocks and shorter time periods. In this case, there are a few possibilities of depot security: ... 

Risk diversification can provide you with that security and protect your entire portfolio against losses. Therefore, as an investor, you should know how to most skillfully build your portfolio and make the risk so calculable.

The fact is: you can never completely avoid the risk

Risk diversification is certainly not one of the most exciting topics of the investment. Nonetheless, most investment professionals agree,  that diversification is the best way to achieve long-term financial goals while minimizing risk – even when there is no guarantee against losses, of course.

However, you can never completely avoid the risk , even if your portfolio is very versatile. So what do you need for a well-stocked, balanced portfolio? There are three main things to look out for to optimally spread your wealth:

• Your portfolio should include a wealth of different financial instruments – such as cash, stocks, mutual funds and, if possible, real estate.
• Your investments should be exposed to different levels of risk. You do not necessarily have to limit yourself to first-class stocks. The opposite is true: if you invest in different investment products with different returns, it is more likely that the total return will compensate for individual losses. However, this does not mean that you should fall for particularly risky investments (such as penny stocks ).
• Invest in companies as diverse as possible. Thus, the unsystematic risk that you incur with several small companies in the same industry is as small as possible.

Another important question is how many shares should one buy to minimize the risk to his portfolio. The so-called portfolio theory says that with 10 to 12 different possible stocks is already very close to the optimal risk diversification.

That does not mean that your assets are well invested in 12 different stocks of the IT industry. Instead, you should pay particular attention to the size and industry of companies. ... 

Many private investors are currently facing a puzzle. The safe harbor or checking account only casts off minimal interest. Experts therefore advise the money to invest in the stock market. But how can investors there simultaneously increase their money safely and with low risk?

Current situation for investors

With key interest rates just above the 0% mark, savings accounts with banks are no longer worthwhile, because there are also only just over 0% interest rates per year. In addition, the savers in Cyprus and Spain have already been asked to pay and subsequently expropriated by the state.

The logical consequence: if possible, only very small amounts should be parked on the bank so as not to end up even losing money. In addition, an annual loss in value through inflation can in no way be offset by interest on the savings account, or overnight money. Already now, savers pay extra – even if they do not get it as directly held as in expropriation.

Investing in the stock market

It is still advisable to invest a portion of your own capital in equities. It is important to rely on high-yield companies. Naturally, investors can do a lot wrong with the thousands of public companies. Therefore, even here, the risks can be limited when investors buy shares of companies whose value hardly fluctuates. ... 

Stock prices fluctuate – that’s well known. How much they fluctuate is expressed in terms of volatility. Another word for it is fluctuation, which says very exactly what it is about.

If you want to invest in a company and consider buying shares in shares, then a look at the volatility – or “Vola” for short – is often appropriate .

Decision using the volatility model

With this model you can decide how many shares can be bought. The calculation is based on the fluctuation range of the share. You have to be clear about how much money you are willing to risk per share. Furthermore, it is important to set a stop-loss level, which regulates from when the securities should be sold again, if the price falls.

The next step is to choose an individual period and determine the highest and lowest price of the stock. For stock investments, the period should be rather larger, often at least one month is recommended. But there are also 10 days, as well as 60 days or more. If these two values ​​have been determined, their difference or distance is calculated. ... 

In general, one can distinguish between two types of risk – the systematic risk and the unsystematic risk. A systematic risk is involved in most investments. For example, a significant political event could affect multiple investments in your portfolio. It is almost impossible to protect yourself from this risk.

The unsystematic risk is also called “specific risk”. This type of risk affects only a few investments. An example of this is bad news that has a negative impact on the stock of a particular company – such as a sudden strike.

Risk diversification is the only way to protect yourself from this risk. There are many special risk forms that apply especially to stocks and investments.

Credit or default risk

The credit risk (or default risk) is the risk that a company or individual will not be able to meet financial demands or pay the interest associated with these claims. This type of risk particularly affects investors who have bonds in their portfolios.

Government bonds, and Bunds in particular, have the lowest default risk and the lowest returns, while corporate bonds tend to carry the highest risk of default, but also bring a high return. Low-risk bonds are generally safe investments, while high-risk bonds are considered scrap bonds. ...