Why invest in ETFs at all?
Generations of investors use classic funds, be it in stocks or bonds, to build and expand their assets. These funds had one goal. The active management wanted to be better than the respective index. This was done by purchasing better-performing titles and exchanging so-called “underperformers”. However, history has shown that beating the index is more difficult than previously thought.
ETFs take a different approach. They replicate the index. The advantage is that the fund management does not have to be actively involved. It only intervenes when there are changes within the index. It is clear that this approach must be clearly reflected in the management fees. This makes ETFs significantly cheaper.
ETFs, Exchange Trading Funds, are not sold and bought back by a fund company. They are tied up in bundles and then traded on the stock exchange. When buying, the investor pays the commission charged by his bank and no front-end load. With an investment of 10,000 euros, this can certainly save 495.05 euros. Why? The premium for an equity fund is usually five percent. Some brokers offer the purchase of securities for a flat rate of 4.95 euros, brokers of the latest generation, so-called neobrokers, even offer ETF trading free of charge, for example finanzen.net zero1.