ETF savings plans: How private investors are revolutionizing the DAX!

ETF savings plans: How private investors are revolutionizing the DAX!

The financial markets are currently caught between price falls and increases, which are influenced, among other things, by political events such as the tariffs imposed by Donald Trump. Nevertheless, a fundamental change in the stock market world is becoming visible, which is not exclusively influenced by such external factors. Of particular note is the rise in popularity of ETF savings plans, which allow investors to regularly invest in index funds. This type of investment is seen as a cost-effective alternative to classic investment funds and offers a broader diversification of investments, which ensures lower risk. This is done by the FAZ reported.

The influence of private investors is growing through the possibility of making regular deposits via ETF savings plans. At the beginning of June 2023, a net $439 billion flowed into stock ETFs, while $152 billion was withdrawn from classic funds. This movement not only shows retail investors' confidence in ETFs, but also a fundamental change in the market structure. The behavior of individual investors is particularly striking in times of crisis, when they tend to increase their savings rates in order to benefit from low prices - a behavior known as “buy the dip”.

Risks in the new stock market world

However, there are also risks to be observed in the new stock market world. The risks identified by the FAZ include that rising unemployment could jeopardize investors' savings plans. Demographic trends, particularly the retirement of baby boomers, could also lead to a decline in stock prices. Another worrying factor is the possible loss of confidence in stock markets, which could lead investors to turn away from stock markets.

Minor risks include, among other things, the preference for speculative ETFs and possible trading problems in stressful market phases. However, current geopolitical events, such as the conflicts in the Middle East, seem to have little influence on the markets. Investors should therefore not ignore the risks, despite the positive development of ETF savings plans.

Designing ETF savings plans

Designing an ETF savings plan requires careful consideration of the savings rate. Financial experts recommend a balance to avoid investors becoming financially or psychologically overloaded. The criteria that should be taken into account when determining the savings rate include disposable income after fixed costs, existing investment setups and professional conditions as well as personal investment goals. The 50-30-20 rule is also mentioned as a useful guide: 50% of net income for living expenses, 30% for leisure and 20% for savings.

A structured approach could, for example, look like this: With a net salary of 2,500 euros, 1,250 euros would be used for living expenses, 750 euros for leisure time, 375 euros for an ETF savings plan and 125 euros for a high-interest daily savings account. The flexibility of ETF savings plans allows investors to adjust or even stop deposits at any time. A good strategy is to start with a small savings rate to gain initial experience.

Potential losses in the first few years of a savings plan are possible, but patience is required. The prerequisite for this is a sufficiently large emergency fund, which ideally includes 3-6 net salaries and is invested in a daily money account with good interest. Only after the emergency fund has been replenished should investors invest the savings portion in building assets in order to benefit from the advantages of ETF savings plans in the long term Financial tip.