ETF savings plans are suitable for building wealth with small amounts and low costs.
How investors can use the ETF savings plan calculator to find the best ETF savings plan.
What is ETF saving
and what
ETF savings plan costs
investors should expect.
What are the best ETF savings plans based
on different investor goals?
How
ETF savings plan calculators
can help you choose.
Does an ETF savings plan make sense?
For investors who want to save even with small contributions in the long term, an ETF savings plan is very suitable for building up wealth.
Put simply, an ETF is an exchange-traded fund that incurs hardly any purchase fees and very low management costs.
Because ETFs usually only invest according to a selected index and therefore do not require expensive active fund management, the ongoing management costs are significantly lower than with an actively managed fund.
ETFs can invest in various asset classes such as stocks *, bonds or commodities.
An ETF fund savings plan in shares has the advantage that, with deposits made through regular savings, the price fluctuations typical for shares are not as significant.
With a longer investment period, stocks often offer higher returns than other asset classes.
By investing inexpensively in many different stocks, the risk is broadly diversified compared to investing in a single stock.
ETF savings plans for children are, for example, well suited to finance education because of their low savings rates and low costs.
What an ETF savings plan costs
As with any fund savings plan, an ETF savings plan also incurs one-time and ongoing costs for the fund, as well as costs for ongoing deposits through the bank and for custody costs.
While actively managed funds incur a front-end load (agio) of up to five percent, buying an ETF on the stock exchange creates a spread - the difference between the buying and selling price, which is often less than 0.1 percent.
The ongoing management costs of an actively managed equity fund of around 0.8 to 1.5 percent per year are often a multiple of the annual management costs of an ETF.
These usually range from 0.05 to 0.4 percent.
Many banks also calculate costs for the implementation of the savings plans as a percentage of the purchase volume.
Usually 1.5 to 1.75 percent.
Other banks charge fixed amounts in euros, which are often between EUR 0.90 and EUR 1.50.
Some providers offer the implementation of an ETF savings plan for the ETFs they offer or a selection of ETFs free of charge.
What are the best ETF savings plans?
Which ETF is the best depends on the ideas and goals of the investor.
You can choose from various asset classes such as stocks, bonds or commodities and precious metals such as gold *.
ETFs are offered for a variety of indices for different countries and regions.
In the case of savings plans with an investment period of ten years and longer, it makes most sense to invest in stocks, as short-term price drops can be avoided and stocks have often shown the highest returns over longer periods of time in the past.
Investors may prefer certain countries or regions, for example because the underlying index includes well-known companies from their home country or are located in an economic region that has a common currency such as the euro.
Other investors, on the other hand, want to diversify their equity investments as broadly as possible across different countries or regions or cover regions with high economic growth such as emerging markets.
The better known an index, the greater the selection of ETF savings plans and the lower the ETF savings plan costs.
ETF savings plans on the DAX and on European stock indices
The best-known German share index is the DAX *, which measures the performance of the 30 largest companies.
The largest ETF on the DAX with fixed assets of more than six billion euros is the iShares Core DAX Ucits ETF with the international securities identification number (ISIN) DE0005933931.
The total expense ratio of the ETF, which was launched at the end of 2000, is 0.16 percent.
The second largest ETF with an investment volume of 3.6 billion euros, the Xtrackers DAX Ucits ETF (ISIN: LU0274211480), has costs of just 0.09 percent.
The European STOXX Europe 600 share index, which tracks the performance of the largest 600 companies from the euro area and other European countries such as Switzerland and Great Britain, is more widely diversified in terms of the number of companies and countries.
With an investment volume of six billion euros, the iShares STOXX Europe 600 UCITS ETF (ISIN: DE0002635307) is the largest ETF with 0.2 percent costs, but the second largest Lyxor Core Europe 600 (ISIN: LU0908500753) has a lower total expense ratio of 0.07 Percent.
All of these ETFs are available as a savings plan, with some providers also without savings plan fees.
ETF savings plans on the MSCI World and emerging markets
Savers who want to diversify their investment risk around the world can choose the MSCI World - the world's most popular index.
The MSCI World records the performance of 1,582 companies from 23 industrialized countries.
Stock companies from the USA, by far the largest stock market, have a share of around two thirds.
The iShares Core MSCI World UCITS ETF USD (IE00B4L5Y983) is the largest ETF on this index with fund assets of more than 30 billion US dollars.
The lowest costs, at 0.12 percent, are the SPDR NSCI World UCITS ETF (IE00BFY0GT14).
However, the MSCI World does not include companies from emerging countries such as China or India, whose economies make up a significant proportion of the global economy and which often grow at an above-average rate.
The MSCI Emerging Markets tracks the performance of the largest 1,380 companies from 27 emerging countries.
The largest ETF on this index is the Xtrackers MSCI Emerging Markets UCITS ETF (IE00BTJRMP35), the most cost-effective of the Lyxor MSCI Emerging Markets (LU0635178014) with 0.14 percent.
The MSCI ACWI (All Country World Index) is a comprehensive world index that contains stocks from industrialized and emerging countries.
The cheapest ETF with 0.2 percent is the iShares MSCI ACWI UCITS ETF (IE00B6R52259).
How ETF savings plan calculators can help savers
There are portals on the Internet that compare ETF and savings plan providers according to costs, minimum investment and deposit cycle.
For example, for a quarterly savings amount of 50 euros, the bank or broker with the cheapest ETF savings plan on the MSCI World can be selected.
Many investors are often only aware of the large direct banks or particularly inexpensive providers.
Whether the ETF savings plan from Comdirect, Ing-Diba, Trade republic or from a savings bank suits the investor best can be found out via comparison portals and publications such as justETF or extraetf.
In addition to these helpful comparisons of ETF savings plans, internet portals also offer other helpful functions.
Savings plan comparison offers an explanation of what to consider with an ETF savings plan for children.
The justETF ETF savings plan calculator provides information on how the different costs of a savings plan and the running costs of an ETF for a given savings rate at a certain rate of return affect wealth formation.
Investors who use this calculator get a good feeling about how wealth accumulation can work with an ETF savings plan.
* Merkur.de is part of IPPEN.MEDIA
.
