I started investing in Exchange-traded funds (ETFs) in 2016. From the beginning, my ETF strategy was very simple and consisted of four main principles.
My ETF principles:
- Low risk. Invest in slow-growing low-risk little-fluctuation slow burner ETFs. Be modest and expect annual growth of 4-6%
- Diversify. Invest in a maximum 4 ETFs covering global markets
- No trading. No panicking. Keep and hold – I am in for the long shot on a 10+ year investment horizon
- Keep costs low. Total Expense Ratio at maximum 0.30%
My ETF Portfolio:
- 78% MSCI World: A physical ETF that includes shares from 1600 companies globally. Looking at the 6 year growth chart, one can easily see that this is a slowly growing, low-risk, stable ETF with an average growth rate of 4-6% p.a.
- 18% DAX: A replicate ETF, mirroring the German DAX. Admittedly, I would no longer invest in a DAX ETF today and I am planning to sell my shares in the near future (see home country bias)
- 4% MSCI Emerging Market: A physical ETF that includes 1100+ companies from emerging markets (including Tencent, Alibaba, Samsung).
ETF’s in my portfolio
|UBS ETF (LU) MSCI World UCITS ETF (USD) A-dis||LU0340285161||0.30%||Physical||USD||Distributing|
|ComStage MSCI World UCITS ETF||LU0392494562||0.20%||Synthetic||USD||Distributing|
|Xtrackers DAX UCITS ETF Income 1D||LU0838782315||0.09%||Physical||EUR||Distributing|
|Amundi MSCI Emerging Markets UCITS ETF EUR (A)||LU1681045370||0.20%||Synthetic||EUR||Accumulating|
How I started?
After I had decided that I wanted to invest in ETFs, I was uncertain about when and how to start. The best piece of advice at the time was to break the total investment amount into four equal peices (each representing 25%) and to invest one piece/quarter every three months for 12 months (4 x 25% = 100%). This approach allows to account for seasonal or temporary volatility. I did that and was confident with the decision.
Looking back, one thing I would do different is that I would not invest in a DAX ETF. I clearly became a victim of the home country bias at the time.
How I buy and sell ETFs
In order to buy and sell ETFs, I opened a free online trader account at an online bank. I chose ING-Diba as the trader account is absolutely free and more than 200 ETFs can be bought totally free. When selling ETFs, ING-Diba charges 0.29% which is the lowest I have seen on the market. More about ING-Diba and their trader account here: https://www.ing-diba.de/wertpapiere/etf/