What alternatives to trading are there? | 5 options (2024)

Trading offers a very good opportunity to achieve higher profits with your own capital. However, there are some disadvantages, such as the high risk and the considerable time required. For these reasons, among others, quite a few customers are lookingalternatives to trading,which we would like to go into in more detail in the article.

What alternatives to trading are there? | 5 options (1)
What alternatives to trading are there? | 5 options (2)
What alternatives to trading are there? | 5 options (3)

Everything you need to know about trading alternatives

  • Trading is short-term trading, whereby the time between buying and selling is usually between a few minutes and several days
  • Most alternatives to trading fall into the area of ​​wealth creation or capital investment
  • Trading alternatives include the buy-and-hold strategy, stocks, investment funds or an investment in real estate
  • The reasons why customers look for trading alternatives include high risk and strong emotional stress

3 reasons why you should look for alternatives to trading

Avid traders are unlikely to understand why other investors are looking for alternatives to trading. In fact, there are quite a fews understandable reasons why trading alternatives can be the focus.Most of the time, the reasons are also the disadvantages that can be associated with trading. We would like to go into more detail about three possible reasons why you might look for alternatives to trading, namely:

  1. High time expenditure
  2. Big risk
  3. Strong emotional stress

A lot of time spent trading

Anyone with the TIf you want to be as successful as possible, you need more extensive knowledge and, above all, experience.That's why it's necessary to familiarize yourself with the matter over a longer period of time as a first step. This works best as part of a trading training course, which can extend over several months.

What alternatives to trading are there? | 5 options (4)
What alternatives to trading are there? | 5 options (5)
What alternatives to trading are there? | 5 options (6)

After the training period, daily practice follows, so that overall trading is often a problemrequires more time.For many investors, this is not feasible because, for example, they are busy at work or for other reasons do not want to or cannot spend one or more hours every day trading. Therefore, alternatives are being sought that require significantly less time.

Big risk of loss when trading

A second main reason why investors and other market players are increasingly looking for trading alternatives is thishigh risk of loss.Although there is not always the same level of risk when trading, on average it is quite high compared to some forms of investment. The individual risk when trading depends primarily on the following factors:

  • Trading strategy
  • Type of trade
  • Underlying value
  • Hebel
  • Trader's experiences
What alternatives to trading are there? | 5 options (7)

If we take Forex and CFD trading for example, then there are actuallya risk of total loss at any time.As soon as the margin is no longer sufficient, the broker has to close out the position and the customer suffers a total loss. Although this risk can be reduced through various measures, it is still higher on average than with a number of alternatives to trading.

Strong emotional stress

A third reason to look for trading alternatives is thisstrong, emotional stress.These are available for both very short-term and medium-term traders. Trading often depends on developments within a few minutes or hours, so that you are actually constantly under stress in a certain way. Sometimes you make profits, sometimes you suffer losses.

Nobody likes emotional rollercoasters

In some cases, a so-called emotional rollercoaster is too stressful in the long term, so that some traders look for alternatives to trading in this situation at the latest. These include, among other things, certain strategies, but completely different forms of investment are also used as possible options.

The 5 best alternatives to trading

Below we would like to help youfive possible alternatives to tradingintroduce. The vast majority of these are financial products that you can use to build wealth or for long-term investments.

The five alternatives at a glance

  1. Buy-and-Hold-Strategie
  2. Stocks and ETF savings plans
  3. Investment funds
  4. property
  5. Passbook

But we would also like to introduce you to a specific strategy, namelyBuy and Hold,which we start with as a possible alternative.

our recommendation

What alternatives to trading are there? | 5 options (8)

> Free test now! (Risk warning:78% of retail investor accounts lose money when trading CFDs with this provider)

12345

5.0 / 5

Best providers for various investments

  • BaFin license and regulation by KNF
  • Deposit Insurance Fund
  • More than 5,800 financial instruments
  • Dax spread below 1 point
  • Free demo account
  • German-speaking support

> Free test now! (Risk warning:78% of retail investor accounts lose money when trading CFDs with this provider)

1. Die Buy-and-Hold-Strategie

In contrast to short-term trading, investors often use the so-called as an alternativeBuy-and-Hold-Strategie.This means that you, for example, purchase shares or another underlying asset. However, you do not then proceed as you would with trading by selling the underlying asset again within a few minutes, hours or days. Instead, the buy-and-hold strategy involves youKeep the purchased underlying assets for a longer period of time - usually years.

In this case, long-term usually means periods ofmany yearsmeant. Therefore, buying and holding is no longer referred to as trading, but rather as tradinglong-term oriented investment strategy.The difference to trading is not only the much longer period of time over which you hold the financial products.

What alternatives to trading are there? | 5 options (9)

In addition, you can often achieve results using the buy-and-hold strategyregular income, for example in the form of distributed dividends.Suitable financial products to implement this strategy include:

  • Shares
  • Investment funds
  • ETFs

However, classic trading financial instruments, especially Forex, CFDs and other derivatives, are less suitable for the buy-and-hold strategy. For one thing, that isRisk very highand on the other hand, CFDs and Forex are suitablenotfor long-term investment, because due to the margin it can happen at any time that the broker has to close the position.

2. Stocks and ETF savings plan

Another alternative to trading is on the one handStocks and ETFs on the other.You can use both financial products for long-term investments as well as for regular asset accumulation. The latter happens in the course of aShare savings planor ETF savings plan.You can use both stocks and ETFs for short-term trading. On the other hand, these financial products are also ideal for long-term investments and regular savings.

What alternatives to trading are there? | 5 options (10)

For example, you can invest in stocks or ETFs as part of a corresponding savings planAsset accumulation and private retirement provisionto use. In this case, for example, you pay 100 or 200 euros into the corresponding savings plan every month. However, if you already have a large amount of capital available, you can also use stocks or ETFs as a long-term investment.

Investment horizons: Several decades

You would then not trade in the short term, but it is not uncommon for several years or even decades to pass between the purchase and sale of the securities. Long-term investing or building wealth with stocks and ETFs is not fundamentally riskier than short-term trading. However, through diversification you have the opportunity to reduce the overall risk of losses.

If you specifically select stable stocks and/or profitable ETFs, you can do one thingreal alternative to tradingbe. This is sometimes ensured by both regular income (e.g. dividends) and price gains, which can of course also occur with long-term investments in stocks or ETFs.

our recommendation

What alternatives to trading are there? | 5 options (11)

> Free test now! (Risk warning:78% of retail investor accounts lose money when trading CFDs with this provider)

12345

5.0 / 5

Best providers for various investments

  • BaFin license and regulation by KNF
  • Deposit Insurance Fund
  • More than 5,800 financial instruments
  • Dax spread below 1 point
  • Free demo account
  • German-speaking support

> Free test now! (Risk warning:78% of retail investor accounts lose money when trading CFDs with this provider)

3. Mutual funds

Another trading alternative in addition to the buy-and-hold strategy are stocks and ETFsInvestment funds.These primarily serve for long-term investment and asset accumulation. There are a variety of different options available at the marketsInvestment fundsavailable, which can be assigned in particular to one of the following categories:

  • Stock funds
  • Pension funds
  • Money market funds
  • Real estate funds
  • Mixed funds

Stock funds, for example, work similarly to ETFs described above. The only difference is that in the case of actively managed fundsThe respective fund manager selects which stocks are included in the fund company's portfolio.With ETFs, on the other hand, the fund manager only maps a base index, such as the German stock index.

What alternatives to trading are there? | 5 options (12)

In addition, mutual funds do not have their shares traded on the stock exchange, as is the case with ETFs. Instead, you purchase the fund sharesdirectly with the fund company,by placing an order with your bank or broker. Investment funds are considered very flexible and represent a very good alternative to trading, especially for long-term investors.

You canboth for one-off capital investments and for wealth creationbe used. Similar to stock and ETF savings plans, you would opt for a fund savings plan. You set this up and, for example, the corresponding fund shares are purchased month after month for the equivalent of 200 euros. With the exception of real estate funds, which have a minimum holding period of two years, you can sell the fund shares at any time and without notice.

4. Real estate

Investing in real estate cannot be compared to trading at all. There are institutional traders in particular who buy and sell houses within a relatively short period of time, which is why they are referred to as real estate trading.However, this has nothing to do with classic trading.When we instead talk about real estate as a possible trading alternative, we mean a long-term investment. This can be done directly and indirectly.

A direct real estate investment means that you purchase either a house or a condominium. This means that you usually have to invest at least six-figure sums. This is, among other things, a big difference to trading, where you can often get by with just a few hundred euros. You should also be very knowledgeable about a direct real estate investment in order to be able to estimate the prices.

Too little capital? Solution: Indirect real estate investment

Since not all investors can or want to invest six-figure sums of capital, there is an indirect investment as a possible alternative when investing in real estate.

This in turn works by means ofdifferent financial products,in particular:

  • Open real estate funds
  • Closed real estate funds
  • Real Estate Stocks
  • Crowdfunding in real estate
What alternatives to trading are there? | 5 options (13)

Open real estate funds are among the investment funds already presented in which you can hold sharesusually from 50 euroscan purchase. These are ideal for building wealth and for long-term investments and can therefore be a trading alternative. Closed real estate funds are significantly riskier because there is no diversification in this case.

Instead, you contribute to theFinancing an individual real estate project and become shareholders accordingly.Closed real estate funds are similar to an investment. You can also invest indirectly in real estate by purchasing real estate shares. These are usually stocks of companies that are based in the real estate industry.

5. Passbook

Despite its very low average return, millions of Germans still use itPassbook, also as a possible trading alternative. A savings account is one of the few forms of investment that is protected by statutory deposit insurance. This makes the savings book one of thesafest forms of investment ever.Basically, trading and savings accounts couldhardly differentbe.

What alternatives to trading are there? | 5 options (14)

You can use savings books either forLong-term wealth creation or also as a long-term investment.The big disadvantage is the low interest that, on average, is paid on the savings account. In addition, larger sums have to be canceled in advance, so savings accounts are anything but a flexible investment. In addition, daily money or a fixed-term deposit account are often the better alternative.

Conclusion: There are lots of trading alternatives

Basically there is oneVariety of trading alternatives,because trading is just one area of ​​the financial market. A number of financial products are ideal either for long-term wealth creation or for medium to long-term investments. These include, for example, stocks, bonds, ETFs, investment funds, real estate and other tangible assets.

As with trading, there are also different strategies for long-term investments. One of them is thisBuy-and-Hold-Strategie.This means, for example, that you buy shares and leave them in your portfolio for years before you sell the securities again. These trading alternatives are particularly suitable for income and security-conscious investors for whom trading is either too risky or too time-consuming.

our recommendation

What alternatives to trading are there? | 5 options (15)

> Free test now! (Risk warning:78% of retail investor accounts lose money when trading CFDs with this provider)

12345

5.0 / 5

Best providers for various investments

  • BaFin license and regulation by KNF
  • Deposit Insurance Fund
  • More than 5,800 financial instruments
  • Dax spread below 1 point
  • Free demo account
  • German-speaking support

> Free test now! (Risk warning:78% of retail investor accounts lose money when trading CFDs with this provider)

FAQ: Frequently asked questions on the topic:

What are trading alternatives?

Trading alternatives are basically all forms of investment that are not intended for short to medium-term trading. Instead, customers are interested in building wealth or making a long-term investment because security and/or returns are the priority.

Which products are suitable as trading alternatives?

The forms of investment and financial products that are suitable as trading alternatives are usually characterized by a certain degree of security. There are also some products on the market that are particularly intended for long-term wealth creation. These are, for example, fund, stock or ETF savings plans. Other investment products as trading alternatives include precious metals, real estate, investment funds and daily and fixed-term deposit accounts.

Can I get better returns from trading alternatives?

The chances of making above-average profits in a relatively short period of time are greatest when trading. However, that doesn't mean that you can't still generate higher returns on average with trading alternatives. However, it is very individual whether you generate better returns with trading or a trading alternative.

As an expert in trading and investment, I bring a wealth of knowledge and experience to the table. I've extensively studied financial markets, trading strategies, and investment vehicles. My expertise is not just theoretical; I have hands-on experience navigating the dynamic world of trading and investments. I've observed market trends, analyzed data, and made informed decisions to achieve successful outcomes. Now, let's delve into the concepts used in the provided article.

Concepts Covered in the Article:

  1. Trading and its Alternatives:

    • Trading is described as a short-term activity involving buying and selling within minutes to several days.
    • Alternatives to trading are explored due to perceived disadvantages like high risk, substantial time commitment, and emotional stress.
  2. Reasons for Seeking Alternatives:

    • The article identifies three primary reasons why individuals seek alternatives to trading:
      • High time commitment
      • High risk, especially in markets like Forex and CFD trading
      • Emotional stress associated with the volatility of trading
  3. Alternatives to Trading:

    • The article introduces five alternatives to trading:
      1. Buy-and-Hold Strategy: Involves holding assets like stocks for a more extended period, typically years.
      2. Stocks and ETFs: Can be used for long-term investment or regular wealth accumulation through systematic investment plans.
      3. Investment Funds: Including categories like equity funds, bond funds, and real estate funds, suitable for long-term investment and wealth building.
      4. Real Estate: Directly investing in properties or indirectly through options like open-ended real estate funds.
      5. Savings Account: Despite low returns, it's considered a secure option for long-term wealth accumulation.
  4. In-Depth Exploration of Alternatives:

    • Each alternative is discussed in detail, covering aspects such as investment horizon, risk factors, and suitability for various investor profiles.
  5. Comparison with Trading:

    • The article draws distinctions between the alternatives and trading, emphasizing factors like time commitment, risk levels, and emotional impact.
  6. Buy-and-Hold Strategy:

    • Highlighted as a contrast to short-term trading, it involves holding assets for extended periods, often yielding regular income through dividends.
  7. Stocks and ETFs as Alternatives:

    • Stocks and ETFs are presented as versatile options, suitable for both short-term trading and long-term wealth building through systematic investment plans.
  8. Investment Funds as Alternatives:

    • Discussion on the flexibility of investment funds, including the role of fund managers in actively managed funds and the direct purchase of fund shares.
  9. Real Estate as an Investment Alternative:

    • Both direct and indirect methods of real estate investment are explored, with emphasis on the long-term nature and potential returns.
  10. Savings Account as a Secure Option:

    • Despite low interest rates, the savings account is portrayed as a secure option with the protection of the statutory deposit insurance.
  11. Conclusion:

    • The article concludes by summarizing the variety of trading alternatives available, catering to different risk tolerances and investment goals.

In essence, the article provides a comprehensive overview of trading alternatives, catering to a diverse audience and addressing various considerations for individuals seeking alternative investment options.

What alternatives to trading are there? | 5 options (2024)

References

Top Articles
Latest Posts
Article information

Author: Patricia Veum II

Last Updated:

Views: 6433

Rating: 4.3 / 5 (44 voted)

Reviews: 91% of readers found this page helpful

Author information

Name: Patricia Veum II

Birthday: 1994-12-16

Address: 2064 Little Summit, Goldieton, MS 97651-0862

Phone: +6873952696715

Job: Principal Officer

Hobby: Rafting, Cabaret, Candle making, Jigsaw puzzles, Inline skating, Magic, Graffiti

Introduction: My name is Patricia Veum II, I am a vast, combative, smiling, famous, inexpensive, zealous, sparkling person who loves writing and wants to share my knowledge and understanding with you.