This is what a simple investment strategy looks like
The following overview shows how you can invest broadly in stock markets using ETFs. This is quite easy to do with one product, but you can also diversify even more widely and invest in more products:
Stock investment strategy with an ETF
By investing in an ETF, you can participate in the development of the global stock markets and thus in 3,000 to 4,000 stock companies. This is completely sufficient. To do this, the ETF should, for example, replicate one of the following two stock indices:
You can usually find corresponding ETFs by searching for ETFs that contain the name of the above-mentioned indices, i.e. MSCI All Country World ETF or FTSE, either directly on the Internet or in the online banking of the bank where you have opened a securities account All World ETF. There are also websites specifically for ETFs where you can compare. Or you can look at the fund comparison at Stiftung Warentest. As long as the ETFs track exactly the same index, their performance will be very similar.
You can then choose between two variants regarding the use of income: Either the income is “distributing” or “accumulating“. The latter means that income is automatically reinvested in the same fund.
If you want to know exactly, you can compare the running costs of the providers and the annual performance. But always pay attention to the currency when comparing returns. The fund currency, like the index performance, is sometimes shown in euros and sometimes in US dollars. But the currency doesn't matter to you, because because you always invest in euros, you bear a whole basket of currency risks either way. Your money is then invested in almost 50 countries with their own currencies.
Stock investment strategy with multiple ETFs
As an alternative to the convenient one-product solution (100 percent of the investment amount: world), you can also put together a very broad portfolio yourself. For example, by creating indexes combine the most important investment regions such as Europe, USA, Asia and emerging markets. However, this is not absolutely necessary and it does not mean that you will drive better in the long term. If you prefer things simple, then stick with the one-product solution.
If, on the other hand, you want to invest in several ETFs in order to diversify even more widely, then be careful not to divide the investment amount into too many small amounts. Because of the minimum fees for buying and selling, you may otherwise incur high one-off costs that could have been avoided.
