Build Up Assets with a Share Savings Plan

Interest rates at banks have been tending toward zero for years. Other forms of investment are also no longer very lucrative. Recently, some banks have started offering share savings plans. In these securities savings plans, the customer pays a certain amount each month, which is then invested in shares of a specific company or companies. The return is no longer dependent on the development of interest rates, but on the success of the companies.

With the share savings plan the risk is reduced by the so-called cost-average effect. The following article and the website inform you comprehensively about the topic of saving shares. In addition, you will learn why a stock savings plan comparison is useful if you want to choose a savings plan that is tailored to your needs.

How a share savings plan works

You take out a savings plan for securities savings with an appropriate provider. Often there is not only one share savings plan, but several. In this case, the broker should offer you a plausible share savings plan comparison. Then you pay in a certain amount every month. If this is too low to buy a share of the company, simply combine several months.

Over time, a large sum accumulates. From this you can either fulfill a long-cherished wish or use it as a retirement provision.

What is the cost-average effect?

In connection with a fund or share savings plan, there is often talk of a cost-average effect. In principle, it is quite simple: You start with a savings plan at a certain amount. The shares you have chosen are a bit expensive at the moment. In the following months the value decreases. This means a loss for you at first, but you buy the shares at a lower price. For the same money you get a higher number of shares.

At some point, the low point is reached. The shares rise again. Now you make a profit when saving for securities, because the shares that you previously bought at a lower price increase in value. When you do a stock savings plan comparison, you should always keep a long-term goal in mind. The longer you invest your money in stock savings, the lower the risk usually is.

You should pay attention to the following when concluding a contract

When you take out a share savings plan, you should find out what the company produces. This will give you a rough idea of what your profit will be when you save on securities. There are areas that are very lucrative and are more profitable when saving in shares. In addition, it is important that you identify with the company’s product.

Suppose you are interested in the preservation of rainforests in South America, then a stock savings plan with shares of companies known to use wood from the rainforests is not recommended. Before you sign a savings plan, clarify this in a stock savings plan comparison.

What are the advantages of such a savings plan?

Let’s take a look at the advantages that you can get from a share savings plan:

  • In a share savings plan comparison, there are also many offers where you only have to pay a small contribution.
  • Through a share savings plan you become a shareholder. You receive your annual invitation to the shareholders’ meeting and receive a profit distribution, the dividend.
  • The return through this savings plan is in most cases higher than with a savings bond or overnight money.
  • The cost-average effect reduces the risk of price fluctuations when saving shares.

Leave a Comment