ETF Savings Plans for Beginners: How to Start Investing with ETFs
If you find that your savings account offers little to no interest, you might consider investing in exchange-traded funds (ETFs) as a simple way to grow your money. Financial expert Swetlana Eberz, who runs the platform Aktienlust, compares setting up an ETF savings plan to ordering a pizza—easy and straightforward. You can even do it conveniently from your smartphone.
Opening a Depot Account
First, you need a depot account, also known as a securities account, to buy ETFs. You can open one at your local bank or choose an online broker, often called a neo-broker. Traditional banks generally charge higher fees than neo-brokers, which frequently offer free accounts. Neo-brokers also work with licensed banks, many of which are based in Germany.
Choosing a Broker and Setting Up Your Account
Eberz recommends beginner-friendly brokers like Trade Republic, Scalable Capital, and Smartbroker+. Start by downloading the broker’s app or software on your mobile device or computer. You will be asked to enter some personal information and create a login with a secure PIN.
During the registration, you might need to provide your tax ID number so the broker can handle tax payments on your ETF earnings. To verify your identity, you can either visit a post office with your ID (Post-Ident method) or complete a video identification using your phone or PC camera.
When asked about your stock market knowledge, avoid stating “none” to proceed smoothly. After agreeing to the terms and privacy guidelines, you will receive your new depot’s IBAN, although this may take a few days.
Funding Your Investment and Choosing ETFs
Once your depot is active, transfer money from your checking account to begin investing. Some brokers allow automatic withdrawals through a standing order, making it easy to fund a regular savings plan.
To buy ETFs, enter the International Securities Identification Number (ISIN) for the funds you want. Then decide whether to make a one-time purchase or set up a recurring savings plan.
Suggested ETFs for Beginners
For a solid foundation, Eberz highlights broad and diversified ETFs like the MSCI World (ISIN IE00B4L5Y983) or FTSE All-World UCITS (ISIN IE00BK5BQT80). Both cover many countries and industries.
You can also consider specialized ETFs as a smaller part of your portfolio. Examples include the Euro Stoxx 50 (ISIN LU0380865021), which tracks 50 large European companies, or the S&P 500 (ISIN IE00B5BMR087), representing 500 major U.S. companies.
Why Use a Savings Plan?
Eberz advises setting up an automatic monthly investment, even with small amounts like 50 euros. Over 20 years, with an average annual return of 8 percent, that could grow to over 28,000 euros thanks to compound interest.
Key Steps at a Glance
- Download your chosen broker’s app or software
- Provide personal details and create a secure login
- Verify your identity by Post-Ident or Video-Ident
- Accept terms and receive your depot account IBAN
- Transfer money from your checking account
- Select ETFs by ISIN and start investing via one-time purchase or savings plan
This guide reflects typical processes, but some steps or requirements may differ depending on the broker.
Start Your Investment Journey Today
Investing in ETFs can be accessible and manageable. By following these simple steps, you can build a diversified portfolio that suits your financial goals. If you want, follow Swetlana Eberz on Instagram at “swetlana.eberz.aktienlust” for more practical tips on money management and stock market investing.
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