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Cost-effectively investing in equity markets



Although there is a real up and down on the stock markets, there are many private individuals who want to get started right now. In view of recent price developments, it is advisable not to invest all the capital at once. This would not be very clever anyway: it is advisable to spread the savings across different asset classes to minimize risk.

Especially since it is safer to invest gradually

Especially since it is safer to invest gradually

Especially since it is safer to invest gradually. Those who do not invest all their capital at once, but make monthly investments, will benefit in addition. The risk is redistributed, as it offers the opportunity to buy cheap at falling prices. One also speaks of the so-called cost-average effect, which can be used very well by private investors.

Investing in selected stocks promises high opportunities, but is also considered risky. Private investors can reduce their risk by not focusing on individual stocks but instead on funds. This is also often done: stock funds are still considered relatively popular.

Traditional equity funds are relatively expensive

Traditional equity funds are relatively expensive

However, traditional equity funds are relatively expensive. The problem is the high sales charges. Depending on the fund management company and online brokers, between three and five percent of the initial charge is due – a considerable amount that significantly reduces the return on the investment.

Clever investors bypass the sales charge by not buying traditional equity funds, but instead relying on ETFs. This is a special variant of the index funds. They allow you to invest in selected stock market indices at very low cost. A sales charge is usually not incurred. In addition, the difference between buying and selling is only tight.

Reason is the low commissions

Reason is the low commissions

Unfortunately, it is comparatively rare that banks or investment advisers advise them to buy the corresponding funds. Reason is the low commissions, which lure in the mediation. But from a private investor’s point of view, ETFs are particularly attractive because they have a lot to offer in terms of cost and risk diversification.