For smaller amounts, it is best to invest your money in a “savings plan” at a bank. The plan allows you to set aside money on a regular basis. You choose a fixed amount that is deducted from your account monthly or quarterly. This will help you establish a savings routine and achieve your financial goals.
For example, you can invest the money you save using a savings plan in a fund. It contains shares from several companies as well as bonds or other investments. The dividends and interest income you receive on your invested money are immediately reinvested. This is how you get a return on your investment (compound interest effect). This means your assets can grow exponentially in the long term.
The longer the investment horizon, the lower the risk
Because you invest regularly, it’s not a matter of getting it at exactly the right time. In addition, price fluctuations are less significant with a long investment horizon. The longer the horizon, the lower the risk of negative returns. In the last 100 years, there have only been three years in which the 10-year return was negative.
Most savings plans are flexible. This means you can change the amount of your contributions or stop the savings plan at any time if your financial situation changes and you need money from the fund.
These two options are available to choose from
If you want to set up a savings plan, you can either choose an exchange-traded index fund or an actively managed fund: A exchange-traded index fund (ETF) tracks a specific stock index, for example the MSCI World. This means that the fund develops like this index.
At a actively managed funds Fund managers, on the other hand, take care of your assets. They aim to outperform the overall market. At Migros Bank you can invest in an actively managed fund for as little as 50 francs per month.
Invest in a fund savings plan
You can find further information about the Migros Bank fund savings plan and the forecast calculator here.
Pay attention to the fees
Whether actively or passively managed: In a fund, your money is always distributed across a variety of investments. This makes it easier to mitigate the risk of losses than if you invest your money in an individual investment. Additionally, you don’t have to select and monitor all assets individually, which requires time and expertise.
Tipp: When choosing an investment product, also pay attention to the fees that apply, for example for the custody account and the purchase of securities. With a fund savings plan from Migros Bank, both are free.
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Angélique Schweizer is a customer advisor at Migros Bank and an expert on investment topics.
