ETFs for beginners: How to invest smartly and cost-effectively!

ETFs for beginners: How to invest smartly and cost-effectively!

Exchange traded funds (ETFs) have established themselves as popular investment options in recent years. These funds, which are traded on the stock exchange, usually track a specific index and are passively managed, meaning that they are not actively controlled by fund managers. Purchasing ETF shares allows investors to invest in a variety of companies included in the relevant index, minimizing the risk associated with individual stocks, such as t-online.de reported.

To invest in ETFs, investors need a securities account at a bank, although many banks offer these accounts either free of charge or for a small fee. When selecting suitable ETFs, the costs, in particular the annual management costs (Total Expense Ratio, TER), as well as risk diversification should be taken into account. Compared to actively managed funds, the fees for purchasing and managing ETFs are significantly lower.

Cost factors for ETFs

An ETF portfolio should consist of different ETFs that invest in different indices to reflect different markets. Beginners are advised to initially invest in a few broad-based ETFs to make management easier. An example of a global index is the MSCI World, for which numerous ETFs are available. ETFs that only reflect certain industries, countries or assets involve higher risk and are less suitable. It is important to find out about different types of ETFs and choose a wide range of options. A long-term investment strategy, be it through one-off investments (buy and hold) or through regular savings plans, is of central importance.

How finanzfluss.de As noted, ETFs are not only cost-effective investments, but monitoring costs plays a crucial role in investment success. The most important expense factor, the Total Expense Ratio (TER), varies between individual ETFs and can be found in each fund's fact sheet. This key figure includes all of the ETF provider's administration costs and is deducted from the fund volume annually. Additional costs may arise when buying and selling ETFs, including custody fees and trading venue fees.

• Wichtige Kostenarten bei ETFs:
  • Transaktionskosten: umfassen Kauf- und Verkaufsgebühren sowie Depotführungsgebühren.
  • Total Expense Ratio (TER): beinhaltet Verwaltungsgebühren, Marketingbudgets und Lizenzgebühren.
  • Spread: die Differenz zwischen dem Kauf- und Verkaufskurs.

ETFs have become very popular, particularly because annual management costs, typically between 0.05% and 0.8%, are far lower than the costs of managing individual stocks. Investors should ensure that the TER is stated in the fact sheets and thus provides an overview of the ongoing costs of an ETF.