regularly invest in ETFs

Why and how to regularly invest in ETFs

You can now invest in exchange-traded funds (ETFs) on BUX. Buying an ETF is like buying a basket of stocks all at once. For example, you could buy an automotive ETF that contains a bunch of car stocks. Or a FTSE 100 ETF which tracks the 100 largest companies in the UK. On BUX, for example, you can invest in the Xtrackers UK FTSE 100 Index ETF.

In our previous article, we explained the simple benefits of an ETF. Today, we’ll talk about why investors often buy ETFs on a recurring schedule, such as weekly or monthly.

How does recurring ETF investing work?

Now you can invest with a plan! Instead of trying to time the market and guess the perfect moment to invest (which almost never works), you make a regular investment at the same time each month. When you do this, timing doesn’t matter too much.

If the ETF is lower one month, you’ll end up buying more shares for your money. And if it’s higher in the next month, you’ll get slightly fewer. Over time, it tends to average out.
You can be flexible too. Maybe you skip one month and invest a larger amount the following month. The key is trying to make it a regular habit.

Even small sums will get you ahead

ETFs are particularly good if you want to get exposure to a broad range of stocks with a small amount of capital. This works best with regular investments. For example, you could start with £25 or £50 every month. Some invest quarterly but with bigger sums.
Let’s do some sums. Imagine you invest £50 every month with a return of 5%. After ten years, you’ll have deposited £6,000. On top of that, you’ll get a return of £1924.

In the long term, compound interest will help you if you reinvest any dividends you get along the way. Some ETFs automatically reinvest your dividend. These are called accumulation ETFs. In the BUX app, for example, the iShares Germany DAX 30 Index ETF is an accumulating ETF.

How do I regularly invest in ETFs with BUX?

It’s quite easy. You can set up a standing order from your bank account to your BUX account, then use that money to invest in an ETF of your choice each month. By the way, we’re working on an automatic recurring Investment Plan for ETFs which will make it even easier. We’ll keep you posted!
All views, opinions and analyzes in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.