One of the most important stock market rules is that investors should never put all their eggs in one basket. The magic word is therefore: diversification. If you have different asset classes in your portfolio, you increase the chances of a high return immensely and at the same time reduce the risk of a (total) loss.

However, trading different financial products also means higher costs. This is because each transaction entails fees. This makes it particularly difficult for investors with less capital, such as students, to create a diversified portfolio. And that is why ETFs (Exchanged Traded Funds) are becoming increasingly popular: anyone who invests in an ETF or an ETF savings plan spreads their investments quite automatically. An ETF always tracks a reference index such as the DAX. The ETF is therefore based on several individual values of the entire index it tracks - these can be shares and bonds, for example.

This means that just one trade of an ETF invests in many different values and asset classes. This means that market fluctuations are better balanced, which greatly reduces the risk of loss. ETFs are also significantly cheaper than investment funds, as the latter are managed by an active fund manager, which entails higher fees.

Be aware of risks

Despite the fact that ETFs are becoming increasingly popular, the risk to capital and return must not be ignored, just like in regural trading in https://exnesslatam.com/pt-br/conta-profissional/. Unlike the lower-yielding time deposit and overnight deposit accounts, investing in securities is not guaranteed. Market fluctuations can occur at any time, which can have not only a positive but also a negative effect on the price. Therefore, it is important that beginners acquire a good basic knowledge of securities trading and start slowly.

Furthermore, as a student or young professional, you should not invest at any price - literally. It is true that a savings or call money account does not bring a high return. However, if you don't have any reserves yet, you should open such an account for the time being and save up a financial buffer. After all, the money put into a savings plan is invested for the long term and should therefore be easy to spare.

Conclusion: ETF savings plans are suitable for students

Students and young professionals often ask themselves why they should even think about investing money with their low net worth. Is it worth investing small sums at all? Yes! For those who save earlier, the return increases enormously in contrast to savers who invest money well after they have started their careers.

However, it is important that you do not start investing in the blue and that you are well informed about the asset classes in advance. Furthermore, it is fundamental that you only invest when you have money that is not needed in the long term. Reserves should not be invested, as they provide liquidity in case unexpectedly high costs arise - for example, because the laptop breaks down and a new one has to be bought.

If you invest some time at a young age and familiarise yourself with the basics of investing money, you can start investing early and thus get more out of your savings later.