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ETF Savings Plan
What is an ETF Savings Plan?
An ETF savings plan is a way of regularly investing money in securities. You pay an amount of your choice into your securities account at fixed intervals. You can start from as little as one euro and benefit from advantages such as the compound interest effect and flexible savings adjustment.
They were invented in Germany in 2010. Since then, savings plans have become one of the main reasons for the success of ETFs in this country. At almost eight million, savings plans are more popular than ever for long-term wealth accumulation - and rightly so.
ETF savings plans offer you these advantages
✓ Simple
ETFs are transparent and easy to understand. Starting a savings plan with an online bank is very straightforward.
✓ Inexpensive
Costs are a particularly important factor in long-term asset accumulation, as they significantly reduce your return in the long term. With an ETF savings plan, both the management fees for the ETFs and the execution of the installment are generally very low.
✓ Flexible
You can save flexibly, adjust or suspend installments if necessary, and get your money by selling your securities.
✓ Manageable risks
If you invest in many different securities, in different asset classes such as equities, bonds or precious metals, in different regions, sectors and themes, you can significantly reduce your risks. ETFs make this diversification very simple and efficient.
Our tip: A number of ETFs are approved for the employer's allowance for asset accumulation, the capital-forming benefits, or VL for short. Specialized websites, as mentioned below, show which ETFs are VL-eligible.
Development of an ETF savings plan by investment period
Example: 100 euros monthly payment into a world ETF
| Investment period | Deposits | Return | Deposit value |
|---|---|---|---|
| 5 Years | 6,000 Euro | 1,410 Euro | 7,410 Euro |
| 10 Years | 12,000 Euro | 6,630 Euro | 18,630 Euro |
| 15 Years | 18,000 Euro | 17,617 Euro | 36,617 Euro |
| 20 Years | 24,000 Euro | 37,337 Euro | 61,338 Euro |
| 25 Years | 30,000 Euro | 70,281 Euro | 100,281 Euro |
| 30 Years | 36,000 Euro | 123,241 Euro | 159,243 Euro |
MSCI World in Euro (8.65 p.a. based on the annualized index return 2003-2023, distributions reinvested), source iShares.
Performance of the sample savings plan
Create a savings plan in 3 steps
Opening a securities account
First open a securities account via your banking system or with a broker. You can find comparisons of the various providers at extraETF, JustETF, finanzfluss or Finanztip, for example.
Select ETF
This is less complex than you might think. You can find videos and articles on this topic in the box on the right.
Set savings rate
Decide the amount, savings interval and time of execution. And if something changes, you can adjust your ETF savings plan at any time.
Let time work for you
Albert Einstein already knew: “The compound interest effect is the eighth wonder of the world”. Benefit from the exponential growth of your assets over a long investment horizon.
Our tip: If you want to take advantage of ETF savings plans, your bank should execute the savings plans via Xetra. This is possible with many well-known brokers and banks.
Why Xetra?
Xetra is one of the leading trading platforms for ETFs in Europe. It offers high liquidity and transparency, which brings major advantages for investors. Xetra enables ETFs to be traded at low cost, which has a positive impact on the profitability of an ETF savings plan executed via this platform.
Costs of ETF Savings Plans
The costs of an investment have a kind of negative compound interest effect. All amounts of 1 to 2 percent, whether per year or per installment, seem small at first glance, but have a noticeable effect on your return in the long-term investment. After a 20-year investment period, 1 percent higher costs reduce the profit by 22 percent. This also applies to savings plans. There are two types of costs: direct costs for the individual installment and indirect costs of execution.
The direct costs are usually stated as a percentage, occasionally also in absolute terms. Some providers charge costs per savings plan plus a basic fee. The range of installment costs extends from several percent to zero. This is because some banks offer free savings plans. This is possible for several reasons:
- ETF providers refinance the costs over a limited period of time.
- The trading platform pays a certain amount for the brokerage of the order by the custody account provider.
- The savings plan is executed via Xetra. Because that is free*.
The indirect costs are much more difficult to determine. They depend on when your savings plan is executed on which platform. They are made up of the trading margin and the quality of the price for which your shares are purchased.
Our tip: Call your custodian bank and ask how your savings plan is executed. In principle, highly liquid platforms such as Xetra are advantageous during peak trading hours.
Start building your long-term wealth now
Broad diversification and low costs make ETF savings plans a simple and effective investment strategy for long-term wealth accumulation. They offer the right securities for all individual goals and risk tolerances.
* Execution on Xetra is free of charge. A separate fee is only charged for clearing. The actual costs are determined by the custodian bank.
Explanatory Video: ETFs for beginners (In German)
"Diversification is the only free lunch in investing.“
– Harry Markowitz
Further information on ETF investment
“The compound interest effect is the eighth wonder of the world. Those who understand it earn from it, everyone else pays for it.”
– Albert Einstein
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