With investment savings, every investor can invest in securities or in real estate as part of open real estate funds without having to invest large sums of money. The acquisition of investment units is easy, the only requirement is a securities account with a bank or an online broker.
- Investment saving is convenient for investors because they can leave the buying and selling of each security to the fund manager.
- You only have to choose the right portfolio and funds for your investment strategy once .
- The choice is wide: Funds differ in terms of investment duration, costs, return and risk.
The story of investment saving
Investment saving has been enjoying increasing popularity since 1924. This year, the US investment house Pioneer launched the first ever equity fund that was open to all investors as a mutual fund. In the 1950s, Templeton, also based in the USA, founded the Templeton Growth Fund, one of the most successful investment funds of all time. For many years Dr. Marc Mobius, one of the gurus in the investment world. According to abbreviationfinder, ISA stands for Investment Savings Account.
In Germany, investment saving slowly but steadily gained popularity from the 1970s onwards. In contrast to the Anglo-Saxon countries, Germany was not a country of stockholders. At the beginning of investment, however, it was mainly equity funds that collected customer money. Pension funds and money market funds came later. Today there are over 10,000 mutual funds to choose from in Germany, covering every conceivable form of the capital markets.
This is how investment saving works
Once the appropriate fund has been selected, there are two ways of investing in investment funds: Either the investor saves regularly in a fund or he purchases fund units for a one-off payment. Investment funds are subject to price fluctuations – equity funds, of course, more so than bond funds. Recurring investments use the average cost effect, since more or less shares are acquired for a fixed monthly amount. The payment of fixed amounts is possible because, in contrast to other securities, fund units can also be purchased in fragments, which are calculated with an accuracy of up to four decimal places.
Investment saving as a small asset management
Investing in an investment fund, regardless of its type, also means a form of asset management for the saver. He does not have to worry about the selection of securities in terms of buying or selling. The fund managers take on this task, so that investment saving can be seen as the most convenient form of capital investment in securities.
Suitable funds for personal risk-taking
The wide selection of investment funds ranges from conservative money market and real estate funds to high-risk warrant funds. Each fund is assigned to a specific risk class, which investors can use to determine whether the fund fits into their personal risk / reward profile.
A securities account is required to open a savings plan or to make a one-off payment. There are huge differences in costs across the banking landscape. Direct banks are increasingly reluctant to charge a custody account management fee – a circumstance that increases the net return on investments significantly.
Investment period depends on the fund
The duration of the financial investment in the context of investment saving naturally depends on the respective fund type. A money market fund is suitable for short-term investments if no sales charge is charged. Stock savers, on the other hand, should be aware that their funds are tied up for five years or more if a solid return is sought through price increases. However, if you need your savings at a fixed point in time, you should refrain from investing in equity funds, as it is never possible to predict how the stock market will be positioned at precisely this point in time.
When making your selection, consider the cost structure
For investors who choose to invest in savings, it can be said that costs can be reduced. Open-ended investment funds are subject to a front-end load. This varies depending on the type of fund, investment company and bank, as some institutions discount or remove the issue surcharge entirely. In addition to the costs, the net return naturally also plays a role in investment savings. In order to be able to compare this, similar to the APR, the Federal Association of Investment Companies (BVI) has specified a standard to determine the return minus the costs inherent in the fund. However, positive short-term developments should not be taken into account when selecting a fund. The longer a fund has operated successfully over the years, the greater the likelihood
Promotion for employees
The long-term potential that stocks hold as capital investments is illustrated by the fact that the state rewards the investment of capital-building services in stocks. After all, those entitled to the employee savings allowance receive a state subsidy of 20 percent on a maximum annual savings of EUR 400.