10 ways to invest 10k

What are my options for investing € 10,000?

Investing is not as complicated as the finance world would like to suggest. However, there is still quite a bit that could be done wrong. Especially during low-interest phases, investors need to put in more effort in order to achieve the desired return. Nevertheless, € 10,000 can be invested in a profitable way. Each investor must decide for himself, which of the following 10 methods is most suitable for him.


Bank deposits include credit balances on overnight accounts as well as savings accounts and time deposits. These are assets on savings accounts, fixed-term deposits and time deposits. For example, the creditor of a fixed-term deposit enters into a contract for a term of two years, after which he will receive his funds back. The funds are a fixed investment for which the creditor will receive an interest return. Deposits with commercial banks are characterized by a high level of security. In Europe they are legally secured against the banks’ insolvency. In addition to that, they are also subject to a voluntary guarantee scheme in Germany. Due to their high level of security, bank deposits are subject to low interest rates. Their liquidity is always given, however investors will be subject to an interest cut in case of an early termination of the contract. With a regular current account you currently cannot expect interest rates. For conservative savers, the fixed-term account is still the safest way to make a profit.


When investing in open-end investment funds, funds brokers act as capital collectors who jointly manage funds from multiple investors. A distinction is made between shares, bonds, real estate, commodities, mixed assets, maturity, strategy and umbrella funds. Each investor acquires shares in the fund. With open-end real estate funds, brokers divide the capital across many offices or commercial properties. Since the funds are also managed as special assets, irrespective of the nature of the business of the fund, a high level of investment security is ensured. If prices and rents of the property rise, investors benefit from the fund spreads. However, the returns are not fixed, as is the case of a current account, but the income of open-end funds may fluctuate. Losses such as price losses may occur. Availability depends on the stock exchange market, but the revocation of shares can be skipped.


From EUR 10,000 at the beginning of 2016, a profit of ...*

* Average figures; interest rates may vary depending on the bank. Source: Bundesverband Deutscher Banken (The Association of German Banks), January 4, 2017.


An important factor of fund assets is the fee that costs the investor return. Compared to actively managed investment funds, daily exchange-traded index funds are more cost-effective because they lack administrative charges. These funds will generally be invested in a bond index, equity funds or real estate index. They don’t strive for an increase in the return like with managed funds, instead they develop according to their underlying market index. They passively emulate 1:1 indexes in full or via transactions. A physical ETF on the Euro Stoxx 50 purchases all the shares contained in this index. Investors do not have to select the shares themselves, they only have to keep an eye on the market. Due to the risk diversification, index funds offer a high level of investment security.


With Crowdfunding small investors rely on the knowledge of the community that completes a real estate project with small funds. Projects include individual residential and commercial objects. Subordinated loans with a return are used as capital. The returns depend on the commercial performance of the rented property units. The maturity lies between two and 15 years, before the funds are accessible. The advantages of real estate crowdfunding are the fact that the crowdfunded capital is only a supplementary part of the project financing and that only low costs are incurred. Despite careful selection of the investment object, the complete loss of the investment may occur due to the lack of risk diversification.


Private investors can purchase precious metals such as gold. Returns of physical gold assets are realized via the price. Gold does not accumulate any interest and is traded in USD. Thus, there can be losses due to exchange rates despite a price increase, which may exhaust returns in extreme cases. Additionally, storage costs decrease the profit. The security and viability of this commodity investment is very high. Gold is stable in value and is accepted everywhere. An investment in gold is mainly recommended to investors who have lost trust in the paper currency system or even fear the collapse of the financial system. If possible, the latter should buy coins in small amounts, so that they can use them for cash payments. If you buy physical gold for purposes of investment returns, you should favour big bars.


Bonds are debt investmentments for debtors. They include debt securities, debentures and covered bonds of companies, credit institutions or municipalities. For example, a bank takes a loan from the investor and issues a bearer bond. It promises that the funds will be returned to the buyer of the bond after a certain period of time. The private investor receives interest on the transfer of the investment. The higher the interest rate promise, the more uncertain is the repayment. Bonds are continuously traded on the stock exchange markets. If interest rates have increased, the price of the older, lower-return bond has decreased. Conversely, if interest rates have fallen since the issue of the bond, the higher-yielded bond has risen in value. Investors must pay particular attention to risks related to the issuer's insolvency.


Source: Bloomberg; Banque centrale du Luxembourg, November 2016


Investors can participate in a company by acquiring shares. The investor provides equity capital. Thus, he becomes a shareholder of the corporation and participates in the profits and losses of the company. The shareholder has the right to vote on major business decisions at the company's annual general meetings. The investor participates in the profit in the form of a dividend, if it is distributed. Shares are also classified as liquid investments, which are listed on the stock exchange. The exchange rates are determined by the company's future growth and business prognosis and may fluctuate severely. If the company has to file for bankruptcy, the capital may be lost completely. Equity prices rise over long periods of time. However, investing in one corporation only bears unacceptably high risks.


In the case of crowdfunding start-ups the investment focuses on the funding of young companies. Due to the company’s young character and innovative business ideas, the investment is considered risky. Newly founded companies don’t generate any profits yet and require a lot of capital. Investors speculate on an above-average return. Participation in start-up companies is carried out as a silent investment, with participation rights or subordinated loans. In all forms, investors do not have a say in the operational processes of the company. The investor is involved in the profit or loss of the company - partially even subordinated after all other creditors. This reflects the high risk of the investment, which may even lead to a total loss of funds in case of the company’s insolvency. The liquidity of the investment is usually only given after five to seven years.


Certificates are suitable for speculative investors. Investors who are quick to make a disproportionate profit can use leverage certificates. This applies under the premise that investors are well informed and are able to cope with the potential loss of € 10,000. Whoever selects a leverage certificate with a leverage of 4 on a stock index can profit four times as much from the rise of the index. If the investor needs to withdraw his funds soon, the investment must grow on the rising index for a limited period of time. If the price of the underlying asset falls, the investor also participates in the losses. If the index falls by 25 %, a 100 % loss of the invested capital is already achieved. If the issuer goes bankrupt, the certificate is worthless due to being an unsecured bearer bond.


Investment objects include real estate, forests, private equity, wind, hydropower or solar systems. These funds differ from open-ended investment funds in that they invest in only a few long-term properties and can only be subscribed to for a limited period of time. The investor usually does not have access to his funds prematurely. As high returns are the goal of the funds, the security of the investment is low. The investor is liable with his entire capital contribution for the success of the economic activity. However, since the investor has nothing to do with the supervision of the project and has only indirect influence on business decisions through the shareholders' meeting, he has to bear high external costs that reduce his return potential.


Which types of financial assets do you currently own?

Source: Bank of Scotland, November 2016

Conclusion: The secret of a good financial investment lies in the perfect combination of sufficient information and self-determined decisions. Whoever wants to invest € 10,000 today, can set up a diverse profile. High minimum investments and acquisition costs are an exception now.