The budget you need for ETF investing
How much budget is needed to get started in trading or investing in ETF’s? The answer is simple, you can start trading ETF’s at any budget but in order to make a good spread among your portfolio you will need a higher budget. Without spreading your ETF investments you will end up with variable annual results.
To give you a good insight about the budget needed I will give some examples here. Of course this is no personal advice as it really depends upon many factors.
Budget lower than € 5.000,-
You may be able to invest in ETF’s with a budget divided in amounts of € 500, although small budgets of € 1.000,- would be better. As you will be able to invest in only a few positions you must be sure not to invest in more or less the same ETF’s.
So a bad idea would be to buy a DAX ETF and a CAC 40 ETF at the same time as they move along similar lines. A combination of a DAX ETF and a commodities ETF would be a smarter move.
With a budget of less than € 5.000,- you may follow a short term strategy but in absolute numbers your returns would be very small so I would prefer to go for a long term strategy. By doing that you do not have to really sit and wait until the maximum return has been reached.
Getting out at an earlier stage when for instance a return of 10% is attained would be a good alternative. To cut on costs it would be smart to stick to ETF’s in 1 currency. You should also look into the exchange where the ETF is traded.
Some exchanges are more expensive than for instance the Euronext exchanges in Amsterdam, Paris or Brussels. You would be doing fine if you would only follow 2 groups I am trading in. For instance group A combined with group J or K would be a great mix or group F in combination with J or K.
Budget between € 5000,- and € 20.000,-
Best thing to do is to divide your budget in smaller parts of € 1.000 to € 2.0000,-. I would prefer to have at least 10 different partial budgets so you would be able to invest in 10 different ETF’s at the same time making a fine spread.
Still, with this budget a longer term strategy is the most interesting one although you can combine it with some short term positions. At a short term strategy commodities or the commodity sector would be interesting as here you may be able to get nice returns in relatively short periods of time.
Making a smart spread among different ETF’s will be important here. You may decide to have a few ETF’s in different currencies than your local one but I myself would predominantly stick to Euro’s. Following 3 to 5 groups would be sufficient. In the price list you will see packages of different groups that make sense with a discount.
Budget 20.000,- to € 50.000,-
Ideally the budget may be divided in parts of € 2.000,- to € 2.500,-. You will need to divide your total budget in 10 to 20 parts in order to obtain the desired spread.
Investing for the short term as well as the long term is possible and of course a mix of the two is also an option with this budget. It will also be wise to reserve a part of the budget for Dollar ETF’s.
This makes for still a better spread and some very interesting ETF’s are only traded in Dollars. Following 5 groups would be all right, you will find some nice combinations of groups with a discount in the price list.
Budget higher than € 50.000,-
With higher budgets you may want to divide your total budget over more than 20 partial budgets. If the budget is large enough I recommend even up to 50 parts. Both short term and long term strategies are possible.
For even a better spread you can invest in both Euro’s and Dollars. You will also be able to buy in new ETF’s when a temporary dip takes place in an existing position of index ETF’s.
Following at least 5 groups would be advisable but of course all 12 groups would be a better idea. In the pricelist I offer combination discounts. At the bottom of this price list I offer a very special deal to follow all 12 groups.
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