Also referred to as stock baskets or stock indices, stock indices are a grouping of stocks or markets. These groupings are used to represent the summary of the value of the stocks included within them and consequently to give an idea of the value and trend of the related market. Let’s take a closer look at the DAX 30 index and why it might be worth investing.
What is the DAX 30 index
Among the various indices that represent state markets, we find one that is particularly significant not only for its status, but also as an indicator of the health of the European economy. We are talking about the DAX 30 index, the German stock index.
This basket is one of the most important in Europe and among the best in the world. Introduced by the Frankfurt Stock Exchange back in 1988, in 2021 it undergoes a major change and becomes the DAX 40, the principle remains the same but 10 companies are added to its listing.
Index Composition: List of Companies Included
Synonymous with security and stability, the index fully represents the German state and its healthy and competitive economy. It consists of the 30 (+10) largest capitalization stocks on the Frankfurt Stock Exchange, Germany’s most important stock exchange.
It is useful to provide a list of the stocks present to give an idea of how important and varied this basket is. Among them: Adidas, Allianz, BASF, Bayer, Beiersdorf, BMW, Continental, Covestro, Daimler, Deutsche Boerse, Deutsche Bank, Deutsche Post, Deutsche Telekom, E.ON SE, Fresenius Medical Care, Fresenius, HeidelbergCemen, Henkel, Infineon Technologies, Lufthansa, Linde PLC, Merck, Muenchener Rueckversicherungs-Gesellschaft, RWE, SAP, Siemens, Thyssenkrupp, Vonovia SE, Volkswagen, Wirecard.
As can be seen from the outset, the sectors most represented are industrial goods and services, the automotive sector, characteristic of a nation like Germany, and not to be underestimated are the chemical/pharmaceutical and insurance/banking sectors.
Quotation and Historical Trend
Obviously, even though we find ourselves considering one of the most solid and secure indices in which to invest and one of the main 3 in the European Union together with the CAC 40 (France) and the FTSE 100 (England), it is necessary to make some considerations. It is of vital importance to dwell on the analysis of the charts and on the in-depth study of the price trend before any trade.
Investing through indices is definitely less subject to fast price fluctuations and allows us a high level of diversification. Investing in a diversified way is to hold in our portfolio many different companies, this allows us to divide the risk of loss between the various securities in our possession so that if a stock will fall drastically, the loss, will not weigh heavily in our account.
Stock indices allow us this diversification. Investing a sum in 30 or more companies is certainly less risky than investing the same sum in a single stock.
In the last year, we can identify a trend that denotes a great growth due largely to the increase in prices of chemical and pharmaceutical companies but not only. From 13,432 in January 2021 it rose to 15,000 already in March 2021. Slight growth until December 2021 where the price is around 15,800. In recent months it has dropped significantly. Will it be the right time to invest?
How to Buy DAX 30 Shares
To invest in the various actions that we find within the German Index, we can use various solutions. The procedure for buying is the same for each type of index and action. The most convenient and fast solution is to rely on one of the many platforms and exchanges on the net.
However, you can also consider some banks, traditional or online. Many traditional banks allow you to invest by offering a wide range of products, including, for example, the aforementioned German stocks and the DAX 40.
Another possible method of investing in stocks is to use an intermediary. The securities broker or SIM is a company that invests our money in the market in exchange for a payment. This type of investment is defined as passive because we will not do anything except register on the broker’s platform and set some useful data for the type of investment we want to make on our behalf.
It is often convenient to rely on an online broker. Among the many platforms we point out eToro, which, thanks to millions of registered users, a constantly updated blog and an always active community has become one of the best and most used platforms for equity investment. eToro, an industry leader, has commissions among the lowest in the current market and a truly intuitive and attractive graphical interface. It allows the quick check of the trend of our investments also from the dedicated app that can be found in all major stores. Remember also that eToro is safe and reliable because it is regulated by Cysec, the body of the European Union that deals with offering licenses to various brokers on the continent.
To invest through brokers will need to subscribe to the platform chosen, follow the simple directions, upload the documents and in a very short time we will be enabled to operate on international markets. To invest in stocks we will then search for the chosen stock and, consulting the charts and the historical price trend we will decide the right time to buy a certain amount of shares. With eToro these few steps will be easy even for newbies who will find a simple, intuitive and user-friendly platform.
Not only that, before investing with real money, eToro offers us the opportunity to understand the features and functionality of the site through the free use of a demo account from which to operate with virtual money, without risking anything of our own pocket. An excellent training ground to study the market and its operation and to become familiar with the platform and therefore the purchase and sale of shares.
Final Considerations: Forecast for the Future
Investing in shares linked to the DAX 30 could bring a good dose of stability and security to our stock portfolio. As with any investment, however, care must be taken. The study and preliminary analysis of graphs and historical trends is necessary to operate in a conscious and informed way and not to run into serious mistakes.
Investing in the German market could bring interesting advantages in the medium-long term. The economy of a nation like Germany has been solid and reliable in the past, will it be so in the future? Forecasts say there is a good chance it will remain like that for a long time to come and continue its growth towards higher and higher peaks, but they are still forecasts, not certain data. However sure and popular a forecast may be, it remains uncertain and liable to twists and turns that could create serious consequences to our finances. Study of charts and personal analysis before any operation must always be done.