Automated investment strategy

Does a do-it-yourself investment strategy really save costs?

Are you dissatisfied with your current way of investing? Or just unsure whether you have chosen the right option?

Then you're in the same boat as most investors in Germany. Many people avoid the subject of investing because it is dry and complex. Similar to a visit to the dentist, it is postponed again and again.

Yet, with every lost year, investors give away a huge potential added value due to the lost compound interest. Most investment products have the disadvantage of being too complex and expensive.

Because banks and advisors also want to make a healthy profit from them. Investors interested in finance are therefore increasingly taking their investments into their own hands.

One solution: ETF savings plans

Regular saving is essential for efficient wealth accumulation. For this purpose, savings plans offer the best option. The investor therefore invests a fixed amount regularly, for example monthly.

It is now undisputed and supported by extensive research that a broadly diversified portfolio generates a higher long-term return than almost all active investment funds.

With the help of ETFs, such a solution is easy to implement — countless banks offer low-cost ways to buy such funds. The regular frequency with a constant amount fits best with a savings behaviour with regular monthly income.

In addition, it motivates people to keep an eye on monthly monthly expenses. Additionally, the moment of purchase is distributed over several points in time, thus avoiding the risk of a single purchase at the "wrong" time, and investors then benefit from the "cost-average effect".

Savings plans are offered by some direct banks free of charge, i.e. without fees at purchase, and without ongoing costs. This is important to keep the return as high as possible, as this is also influenced by one-off fees.

But one point is usually ignored: Since usually only a limited selection of free savings plans is offered, an optimal portfolio cannot be put together. The investor therefore compromises on the achievable return.

Advantages of automated ETF savings plans

The best possible return is achieved by a portfolio that is as broadly diversified as possible and is optimally complemented in its composition of countries and industries. Such an automated approach offers the following advantages:

1. Mapping the entire world market

Optimum diversification is necessary because the average of the world economy has been proven to achieve the best possible return. An investment diversified in this way includes all large and small companies in all countries and sectors. To date, however, there is no separate index representing this. Specialist providers map this near-optimally, but are sometimes not available to private investors.

2. Regular adjustment

The service for the initial configuration of a "do-it-yourself" portfolio is widely used. But what happens next? The world economy changes — but the investment does not. Gradually, the portfolio deviates from the optimum. An automated solution, on the other hand, regularly checks the correct composition and adjusts the weightings to changed circumstances.

3. Transaction costs included

Direct banks usually have only a limited selection of free savings plans — the rest incur fees, which makes small savings rates in particular unprofitable. For automated solutions, however, such fees are usually included.

Conclusion

Automated investment strategies offer significant added value! The cost savings of the "do-it-yourself" approach that appear at first glance gradually disappear completely. In addition, there is the higher return achieved with automated ETF savings plans.

Significant time savings and no longer necessary administrative effort additionally convince many investors to set up their investments automatically. More information on automated investing with robots.