Investment strategies for everyone

Current and former Mannheim financial researchers publish a guide on easily implementable wealth strategies based on the results of their research on Behavioral Finance

The Corona crisis has taken a firm grip on the stock markets. Many investors are trying to mitigate losses and are considering adjusting their investment strategies at short notice. However, short-circuit actions are at no time a good choice. Banking expert Martin Weber from the University of Mannheim pleads for a clear understanding of one's own risk preferences – regardless of current events – and for everyone to create a long-term life plan for individually optimized saving and dissaving as early as possible. The senior professor of the Business School of the University of Mannheim, together with of his academic students, published a guide for private investors on this topic which was published by Campus-Verlag: „Die genial einfache Vermögensstrategie: So gelingt die finanzielle Unabhängigkeit“ (“The ingeniously simple asset strategy: How to achieve financial independence”). 

On 255 pages, Weber and his co-authors provide readers with scientifically validated strategies to help them design an individual life cycle model. They focus on the financial aspect of planning: How do I invest my assets in the best way possible? How do I get as much of a return as possible at a later date if I am already prepared to consume less in the first place? The researchers avoid formulating any supposed “insider tips”. Instead, they recommend a long-term investment that is as cost-effective as possible and in line with one's own risk preferences.   

“Deciding on the right investment strategy is inseparably linked to personal risk preferences,” explains Weber. “The question about how risky to invest has to be answered by each individual. However, research can provide valuable support to identify personal risk preferences on the one hand and to reasonably deal with probabilities or by showing how an investment risk can be measured objectively on the other hand.” In addition to many factors that depend on personal preferences, general recommendations can well be made, says Weber. Paying a high fee for fund management is in any case a disadvantage. Historical data can also be used to draw conclusions about long-term market development, which provide a starting point for realistic yield expectations.

The book is an example of how research results can also generate benefits outside of the scientific community. The authors' collaboration at the Chair of Martin Weber was essential for the composition of the content. “Thanks to many years of joint research, we were already well coordinated,” summarizes Weber. “Interaction, good discussions and constructive criticism helped to ensure that everyone was able to contribute their expertise in the right place.”

About the authors:

Prof. Dr. Dr. h.c. Martin Weber has been Senior Professor at the Business School of the University of Mannheim since August 2017. From 1993 to July 2017 he held the Chair of Finance and Banking at the University of Mannheim at the University of Mannheim.

All of the following co-authors obtained their doctoral degrees at the chair of Professor Weber.

Prof. Dr. Heiko Jacobs obtained his doctoral degree in 2011 and has held the Chair of Finance at the University of Duisburg-Essen, Essen Campus since 2017.  

Dr. Christine Laudenbach obtained her doctoral degree in 2012 and has been teaching and researching at the Goethe University in Frankfurt am Main since 2014.  

Prof. Dr. Sebastian Müller obtained his doctoral degree in 2011 and has been Professor of Finance at the Heilbronn Campus of the TUM School of Management since September 2019.  

Prof. Dr. Philipp Schreiber obtained his doctoral degree in 2014 and has held a professorship in the field of investment and financing at Esslingen University of Applied Sciences since February 2020.