How do fund savings plans work?
If the share prices on the stock exchanges attract attention with ever new highs, one or the other may start pondering about the obviously missed opportunity to win. Shouldn't you just quickly buy stocks now? Or will the highs of the most important stock indices soon be followed by price drops? With fund savings plans there is an opportunity to enter the booming stock market with a manageable risk.
The right time is decisive purchase from shares essentially about profit or loss. No one can say with absolute certainty when this will be the case.
Fund savings plans - invest regularly in securities
Business optimists believe that you can always invest in stocks in a positive environment. Even if you don't share this view, you can still benefit from the stock market. A fund savings plan offers the opportunity to limit risks through regular share purchases. Investments are made in an equity fund.
- In addition to equity funds, there are other types of funds, such as bond funds, mixed funds, funds of funds or exchange traded funds (ETF), in which a fund savings plan works according to the same principle. All savings plans use the cost average effect. With the fund savings plan, you do not invest your money once, but gradually and regularly.
- This approach is particularly recommended for a longer investment horizon. If the price drops, you can buy more at any time. When prices rise, you invest with fixed savings rates.
- Fund savings plans work very easily. You regularly (preferably monthly) pay a fixed sum into selected equity, bond or real estate funds or ETFs. Many Banks and brokers offer you an automatic deposit service in this regard.
For investors, due to the low capital market interest rates, alternative ...
Benefit from the cost average effect with a fund savings plan
The aforementioned cost-average effect means something like smoothing price fluctuations. Investing regularly makes you less dependent on price fluctuations. They use the average price effect.
- You buy shares one time at a higher fund price, another time at a lower price. In this way, your fund assets increase by fewer or more units. If the fund price is lower, you will receive more fund units.
- If prices rise over time, the cheaply acquired shares have a significantly positive effect on the total return. The cost advantage is evident even when stock exchange prices stagnate.
You should consider a fund savings plan suitable for you if you want to profit from the stock market with reduced risk. If you are convinced of the sharp rise in the stock market, invest a large sum of money in one on a one-off basis Funds or directly in stocks.
