The investment costs…
Whether you invest in an ETF on the MSCI World, buy shares or invest your money in mutual funds – the investment costs can make or break an investment. Cost control is therefore an important factor in asset accumulation – especially for long-term success (read our investment guide).
To compare the costs of ETFs, you can use the total expense ratio, also known as the total expense ratio (TER). Contrary to what the name suggests, the TER does not reflect all costs, the TER only indicates the running costs per year, for example the annual management fee of the ETF and the index license fee, legal fees, administration, marketing and many other costs .
In addition to the total expense ratio (TER), as an investor you also have to consider the so-called TCO (Total Cost of Ownership), i.e. the total costs over the entire holding period of an investment. These include taxes and expenses for buying and selling individual shares in physically replicated ETFs. In the case of synthetically replicated ETFs, there is a so-called swap fee, which is incurred when exchanging (swapping) various securities of the ETF issuer with another bank (you can find out more about the swap transaction for synthetically replicating ETFs in our Buying an ETF). Unfortunately, the total cost of ownership is rarely published by ETF providers. The reason: There are legal regulations for the TER that make the key figure comparable, but for TCO these do not yet exist. Still, you should consider TCO when choosing an ETF.
There are also external expenses that are incurred with every stock market investment, for example custody fees, order fees and other trading fees. These costs are the easiest to keep under control. The first thing to do is to open a securities account that is cheap or even free. Order fees, which are always the same regardless of the order volume, make it easier to calculate the costs that arise when buying and selling shares, ETFs or certificates. If you want to use a savings plan to buy shares in an ETF on a regular basis, for example monthly, and thus build up long-term assets, then your broker or bank should offer cost-effective savings plans.
Our recommendation: at finanzen.net zero1 you pay neither custody account nor account management fees, securities trading is completely free of charge and you don’t pay a cent for savings plans on investment funds and ETFs.
Some other providers can come up with a similar offer, including onvista bank, Comdirect or Flatex. Flatex offers a particularly large selection of ETFs, but has been charging penalty interest on the clearing account since the beginning of 2017 and only recently increased the order fees for its customers. Our broker comparison will help you in your search for the right provider for your securities account. If you “only” want to set up an ETF savings plan, compare the most popular ETF portfolios with ours ETF savings plan comparison.