Month: May 2024

SAFE Finance Blog, 27.05.2024 | Peter Andre, Philipp Schirmer, & Johannes Wohlfahrt

“Successful stock investment does not require investing in companies with higher expected earnings. The reason is simple. You pay a higher stock price for companies that are expected to be more successful. However, retail investors often neglect this important principle when thinking about stock returns, which reveals an important gap in households’ financial literacy. […] The fact that stock prices are forward-looking means that investing in the stock market is — in many respects — much easier than retail investors think. […] [Households] can earn the average market return by investing in large and broadly diversified index funds (ETFs) with low fees.”