Beginner’s Guide: Six steps to an ETF portfolio

In the past few years, millions of Germans have gone public. Digitization has made it easier than ever to save some money. It’s a bad idea to just leave money under your pillow – with current inflation, wealth is dwindling fast. Savings books, overnight money or current accounts also only promise interest rates just above zero in the best case – if at all. The best way for novice investors is to simply create a portfolio and fill it with ETFs. These are the six steps to your own depot.

Step 1 – The Basics

The three letters are now encountered everywhere among investors and in the financial industry as if they were the abracadabra: ETF. It’s not that far, but they are actually a kind of magic word with which inexperienced investors can easily get into the stock market world. ETF, which stands for Exchange Traded Fund, in German it is often translated as “exchange traded index fund”. It just doesn’t make you any wiser. The provider simply places exactly those shares in an ETF that are contained in an index, such as the Dax. If the Dax increases by 7 percent in one year, the ETF also increases by 7 percent. The big advantage of these ETFs: They are significantly cheaper than managed funds. And that’s important for investors: Every percent less fees goes directly to the investor’s account. To be more specific: If you invest 1000 euros and have average fees of 6 percent, 60 euros per year go to the bank. Money that the fund first has to play back. In order to make a 1 percent profit, it must therefore increase at least 7 percent in the first year. There are also numerous studies that do not show that ETFs have any disadvantages compared to actively managed funds, and even give them advantages.