7 questions all ETF beginners ask themselves

justETF Logo

Answer these questions before you start with ETFs. justETF helps you step by step.

7 questions all ETF beginners ask themselves
  • Level: For beginners
  • Reading time: 7 minutes
What you will learn in this article

Do it yourself mit ETFs

With slogans like "Simple. Do it yourself." or "Make it your project", large home improvement chains are wooing customers with a thirst for action. Because doing it yourself saves money.
Do it yourself also applies to investing: with ETFs and a free brokerage account, you can easily invest by yourself or set up a savings plan.
We don't need to convince you that ETFs are the best way to get more out of your money. But before you get started, you should answer these 7 questions that all ETF beginners ask themselves.
Global ETF investment
Global ETF investment
Discover the best ETFs on the MSCI World Index in our investment guide!
Learn more

Answer these 7 questions before you start with ETFs

1. What amount can and do you want to invest?

To Do:
First think about how much you want to invest in ETFs. 25 euros, 50 euros, 100 euros, something in between or much more?
  • Do you want to regularly invest a certain percentage of your current income? For example, how much can and do you want to put aside each month for ETF savings?
  • Or are you planning to invest a larger amount all at once, for example from an inheritance or a bonus payment?
You should answer these two questions first.
How justETF helps you:
With our ETF savings plan calculator you can simulate how your assets can grow over time. Already tested?

2. Do you want to save regularly or invest once?

To Do:
Determine whether an ETF savings plan, a lump sum investment or a combination of both is right for you.
  • If you have determined a fixed amount that you want to save regularly, an ETF savings plan is best for accumulating wealth. Savings plans are ideal for beginners and very flexible: you can stop, resume and adjust them at any time. With some online brokers, this is already possible from a savings rate of 1 euro.
  • If you have a larger amount available for investment, it is advisable to invest it all in ETFs in a single purchase. If you feel uncomfortable investing a large sum in one go, you can also divide the total amount into two or three tranches, which you invest in quick succession.
  • You can also combine the two forms of investment by investing a larger amount immediately and then buying additional ETF shares as part of a savings plan.
justETF Tip:
Fees affect your return. So make sure to keep them as low as possible.

3. Which broker suits you best?

To Do:
In order to invest in ETFs or set up an ETF savings plan, you need a securities account - preferably with a low cost online broker.
Opening a securities account is quick and easy and is your ticket to the world of ETFs. If you live in Germany, you should ideally use a German online broker (because of the simpler tax treatment) with low costs. You can distinguish between two types of brokers:
  • You can either save and trade extremely cheaply with a neobroker like Scalable Capital or Trade Republic.
  • Or you can opt for an online full-service bank with a broker offer such as comdirect or Consorsbank. These are more expensive, but they also offer a current account and more services.
How justETF helps you:
Our online broker comparison (available for Germany, Austria, Italy, Spain and France) provides you with detailed information on the individual offers. If you live in the UK, please research a low-cost broker.

4. How long can and want to invest?

To Do:
Get an overview of your financial situation and define concrete investment goals.
  • Do you need the invested money at a specific time, for example to buy a car or for the next summer holiday (short-term: up to 3 years)?
  • In the medium term (3-10 years), do you plan to buy a property or go on a world trip?
  • Or are you thinking more long-term (more than 10 years) and want to build up a retirement fund with ETFs? If this is the case, you do not have to determine a fixed time period and can let the investment run its course with a clear conscience.
How justETF helps you:
Here we help with a tip. Generally speaking, your personal investment horizon has a decisive influence on how much risk you should take with your investment. The sooner you need your money, the less risk you should take.

5. How much risk can you take?

Which brings us to the question of risk tolerance.
To Do:
Determine your risk tolerance - in other words, what fluctuations are you willing to endure?
A pure stock market investment can lose 50 percent of its value within a few weeks. Of course, this doesn't happen often, but can you cope with such fluctuations psychologically? In the long run, investing in shares is worthwhile - but only if you don't immediately sell in panic during uncertain market phases, but stick to your strategy.
Besides risk tolerance, there is another factor to consider: If you have to sell your shares during a crisis on the stock market in order to pay the rent, this can lead to big losses. In this context, we speak of risk tolerance. Short- and medium-term expenses limit the share of your assets that you should invest in risky asset classes such as shares.
In other words: You are only able to ride out fluctuations in the stock market if you do not have to draw on the money you have invested in the meantime. When dividing your assets into high-risk and low-risk investments, consider not only your risk tolerance but also your risk-bearing capacity and investment horizon.
The good news: If you take your investment into your own hands, you should not only be aware of your personal risk tolerance, but also of the fact that the fluctuation risk becomes more and more relative with a long investment horizon.
How justETF helps you:
In our article on risk tolerance, we show you how to determine your personal risk tolerance and put together the right portfolio for you.

6. Which investment strategy do you want to choose?

To Do:
Decide on your investment strategy.
  • With ETFs, it is best to follow a long-term investment strategy, also called "buy & hold". This ensures low transaction costs and low effort - ideal for self-management. Annual costs can thus be reduced to a minimum, which benefits the return. Incidentally, ETFs tend to perform better in the long term compared to alternatives such as actively managed investment funds and investment certificates due to their very low costs.
  • With a long-term buy and hold strategy, the risk associated with shares decreases considerably. This has been proven over many years of observation. Even strongly fluctuating stock market investments lose their terror with a holding period that spans several economic cycles.
  • Optionally, you can focus on topics such as sustainability or dividends and, if necessary, add other asset classes.
  • As a self-decision maker, you can reduce the risk of your investment if necessary at the expense of the return. You only need to add a low-risk component to your buy-and-hold portfolio or increase an existing one. Low-risk components can be bond ETFs or overnight money. The best way to add low-risk components is to follow steps such as 30, 50, 70 percent, as suggested in our justETF World Portfolios.
justETF tip:
In any case, choose a passive, broadly diversified equity strategy.

7. Which ETFs should you choose?

To Do:
Once you have found the right investment strategy for you, you need to select the appropriate ETF for implementation.
Follow our tips and tricks for choosing the right ETF: Find an ETF that was launched at least three years ago, has a fund volume of more than 100 million euros and has low ongoing costs. Choose the income allocation according to your personal situation.
How justETF helps you:
Use our ETF search online or the justETF strategy planner.

Ready to start?

Have you answered the 7 questions for yourself? Then you are ready to start your ETF investment.
Our last tip:
In the long term, it hardly matters when you start investing. So don't let fluctuations on the global stock markets unsettle you. For many investors, the search for the right time (so-called "market timing") is a psychological hurdle - the right moment never seems to arrive.
Ignore this hurdle and just go for it, true to the above motto: "Simple. Do it yourself. Do." But keep in mind: the sooner you start, the faster and longer the invested money can work for you thanks to compound interest.
Stay up to date
Free newsletter including the latest news & knowledge about investing in ETFs.
Subscribe now
Become an ETF expert with our monthly newsletter
Sign up free now