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Lump-Sum ETF Investment

Lump-Sum Investment in ETFs

💡Take Away

  • As an ETF investor, you have the choice between

    • a lump sum investment, where you invest a fixed amount all at once, and
    • a savings plan, which is executed at regular intervals with an amount you determine.

    You can also combine both methods.

  • Should you invest in ETFs as a lump sum or through a savings plan? That depends on your strategy and how much money you have already set aside.

  • As a buy-and-hold investor, you should only invest an amount that you can afford to do without for the next 10 years. This way, you benefit from long-term market development and avoid having to sell your ETFs under unfavorable conditions in the short term.

  • To make a lump sum investment in ETFs, you need to open a brokerage account and deposit money into it.

  • Profits from lump sum ETF investments are taxed the same way as profits from ETF savings plans.

Ways to Invest in ETFs

  • Lump sum investment: invest a fixed amount all at once

  • ETF savings plan: set up a direct debit to invest a chosen amount into your ETF portfolio every month

  • Lump sum + saving plan: e.g., invest €10,000 as a lump sum and continue investing monthly through a savings plan

  • Top up your ETF investment with one-time payments whenever you have extra money to invest

Ultimately, it depends on how much money you have available. Not everyone has enough savings from the start to make a lump sum investment. -> Savings plans are a great way to gradually build wealth while staying invested in the market.

Lump-Sum ETF Purchase

Before buying ETFs, you should understand how the funds work and establish an asset allocation, meaning you should consider how much risk you’re willing to take. Then, choose the indices that match your strategy and decide on an ETF.

Opening a Brokerage Account

Select Your ETF

Buy ETF

Use the search function of your broker to find the ETF you’ve chosen.

  • The easiest way to find it is by entering the international securities identification number (ISIN), which ensures that you’ve selected the correct ETF and not an alternative or similar one.

  • Before placing your order, you’ll see the current value of the ETF, the number of shares, and the purchase price. You can now choose a stock exchange.

Tip: Buy during the trading hours of reference exchanges like Xetra, not on the weekend. This can help you save on transaction costs.

Stay Calm

We recommend investing passively in ETFs. This saves time, reduces stress, and generally provides the best long-term return.

What You Should Consider When Making a Lump-Sum ETF Investment

Only invest in stock ETFs with money that you wo NOT need for the next few years!

  • If you require the money for a major purchase, you might be forced to sell at an unfavorable time, potentially realizing temporary losses and losing money.

You can also combine a one-time investment with a savings plan.

Lump-Sum vs. in Tranches?

If you’re starting from scratch, a savings plan is a great option, allowing you to invest continuously with your chosen savings rate.

If you’ve already set money aside and are looking for the best strategy to invest in ETFs, you have two options:

  • a lump sum investment or
  • investing in tranches over a set period

Spreading out your investment over time introduces a form of temporal diversification.

The Statistics Favor a Lump-Sum Investment

From a purely statistical perspective, a lump sum investment is the better choice.

  • The reason is simple: the more money you invest in ETFs, the more your money can “work for you.”
  • The expected return on stocks is always greater than zero—statistically, it is seven times higher than that of a savings account.
    • That means every day you wait to invest your money (whether you’re waiting for the next tranche or trying to time the market), you’re theoretically losing out on returns.

This holds true even if you don’t invest at the perfect time. Despite the idea of time diversification, delaying your investment means missing out on potential gains. Statistically speaking, ETF investments tend to grow positively over the long term, regardless of when you enter the market.

However, even though statistics paint a clear picture, you don’t have to take a purely rational approach. One aspect that should never be underestimated in investing is the emotional component.

  • If investing your savings as a lump sum into an ETF doesn’t feel right to you, a savings plan with tranches may be a better option.
  • Your investment should feel comfortable and not keep you up at night! Fear often leads to irrational decisions, which is something passive investors should always seek to avoid.

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There is NO “Right” Time to Invest

One of the most common mistakes investors make is believing that they can achieve higher returns through market timing. In most cases, this is simply NOT true.

If you still prefer to split your investment into tranches instead of making a lump sum investment, it’s best to set a fixed schedule for your investments.

  • E.g., invest 10% of your capital every month or 20% every four months
  • This way, you avoid the temptation to time the market. -> A rule-based approach helps you keep emotions out of your investment decisions.

Many investors mistakenly believe that when stock prices rise for months, they must eventually fall soon. Conversely, they assume that during downturns—like the 2008 financial crisis—it’s best to wait before investing. -> This kind of thinking prevents many people from investing at all and costs them valuable time during which they could already be earning returns—regardless of when they entered the market đŸ€Ș.

ETF Investment: Lump-Sum vs. Saving Plan

Investment TypeETF Lump Sum InvestmentETF Savings Plan
TimingThe timing of your investment matters:
  • If you buy at favorable prices, you benefit more than with a savings plan, which invests gradually.
  • Conversely, poor timing can lead to greater losses. However, this usually balances out over time.
    		• ETF savings plans eliminate market timing. It’s a rule-based investment strategy that invests automatically, regardless of current prices or valuations.
    Worst-Case ScenarioIf you invest a large amount at a bad time, it may take longer to achieve positive returns. However, this is typically balanced out over time with broad diversification.Your savings plan is executed automatically. You could increase contributions when prices are good or pause the plan when prices drop, but this would be counterproductive đŸ€”. A fixed savings amount allows you to buy more ETF shares at lower prices—otherwise, you’d miss out on market downturn opportunities.
    Best Suited ForLarge investment amounts, e.g., from an inheritance or when switching strategies/starting ETF investments with existing wealth.Regular savings for long-term wealth accumulation, reducing risk through time diversification.

    Reference