CHF 50 left over to invest each month? We’ll show you the best way to do it

When investing smaller amounts, it’s best to put your money into a "savings plan" with a bank, allowing you to set money aside on a regular basis. You select a fixed amount that’s debited from your account on a monthly or quarterly basis. This helps you to establish a savings routine and achieve your financial goals.

The money saved via a savings plan can be invested in a fund, for example. This fund would acquire equities of a number of companies as well as bonds and other investments. The dividends and interest earned on the money you put in are immediately reinvested. This enables you to generate a return on your investment (compound interest effect) and achieve exponential asset growth in the long term.

The longer the investment horizon, the lower the risk

As you’re making regular contributions, getting the timing of when to start investing just right doesn’t matter so much. Price fluctuations are a less significant factor too over a long investment horizon. The longer the horizon, the lower the risk of suffering losses. Over the past 100 years, there have only been three years in which the 10-year return fell into negative territory.

Most savings plans allow for a measure of flexibility. This means that you can adjust the amount you pay in or close the savings plan at any time if your financial situation changes and you need money from the fund.

Two options available

If you’d like to set up a savings plan, you can opt for either an exchange-traded index fund or an actively managed fund: an exchange-traded index fund (ETF) tracks a specific share index, for example the MSCI World. This means that the fund’s performance is in line with this index.

As for actively managed funds, fund managers look after your assets. They aim to outperform the overall market. Migros Bank allows you to invest as little as CHF 50 per month in an actively managed fund.

Check for any fees

Whether it’s managed actively or passively, your money is always distributed across a variety of investments in a fund. This is a better way of reducing the risk of losses than putting your money into one single investment. It also avoids having to select and keep track of all your investments yourself – something that takes time and expertise.

Tip: When choosing an investment product, check for any applicable fees, for example for the custody account or the purchase of securities. Both are free of charge with a fund savings plan from Migros Bank.

Angélique Schweizer is a customer advisor at Migros Bank and an investment expert.