2Yrยท
Opinion for $N/A
๐Ÿป Bearish

๐‘ผ๐’๐’‘๐’๐’‘๐’–๐’๐’‚๐’“ ๐‘ถ๐’‘๐’Š๐’๐’Š๐’๐’ ๐’›๐’– ๐‘บ๐’‘๐’‚๐’“๐’‘๐’รค๐’๐’†๐’


Why the basic idea is good, but I cannot understand different variations

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1) Basic concept and why it would make sense if used as stated.


2) savings plans on shares


3) short-term savings plans


4) Savings plans During EXECUTION change


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1) ๐‘ซ๐’Š๐’† ๐’๐’‚๐’๐’ˆ๐’˜๐’†๐’Š๐’๐’Š๐’ˆ๐’† ๐’‚๐’ƒ๐’†๐’“ ๐’”๐’Š๐’๐’๐’—๐’๐’๐’๐’† ๐‘ฎ๐’“๐’–๐’๐’…๐’Š๐’…๐’†๐’†.


World ETFs rise over the long term. As long as our economic system is built on growth, it will stay that way.

Long term here means =/> 8 years. This works, among other things, because companies gain more in value than others (that go bankrupt) are worth.


Therefore, a savings plan on a world ETF makes a lot of sense, because in the long term the prices are higher than the purchase value and timing is difficult.



2) ๐‘บ๐’‘๐’‚๐’“๐’‘๐’รค๐’๐’† ๐’‚๐’–๐’‡ ๐‘จ๐’Œ๐’•๐’Š๐’†๐’


Provided one takes the significantly higher risk and invests in individual companies.

Do savings plans then still serve the purpose of achieving an average entry point? Yes.

Just as with the ETF, does anything prove that this stock will go up in the long run, so does an average entry point bring you anything?? NO.



Does it therefore make sense to buy batches at random times ? Nope.

What do I get out of a permanent savings plan on something of which I do not know whether it will bring me long-term returns?


Everybody knows the 2 statistics

I : Market timing does not work better than buy and hold (for a large part of investors)

II : Stock picking does not work better than the broad market (for a large part of investors)


So if you buy individual stocks, you assume against the statistical average probability that you are better at the big game of the stock market than many others.


Nevertheless, some then decide to let good buying opportunities pass in favor of monthly fixed buying times.


Even without TA knowledge or the like; buying when prices are cheaper and waiting when prices are expensive (at ATH) is the only way to make money with individual stocks even over bear phases.


Then beating the market is one thing, but over 20 or more years to find the few stocks that always beat the market on average over time (= run savings plan on these stocks), is an even more difficult task.


No strategy makes sense anymore if savings plans are used; for example the deep value strategy of Charles Munger is completely invalid, as it says that you buy when prices are falling, if the intrinsic value is higher.


Single stock strategy = timing.


So why use it? Either one invests passively with little risk or one invests actively, to invest passively is perhaps not so bad in Bull times, but in every other case simply only gambling.


An investment does not become less risky if one follows the statistical recommendations partly observed.


Conclusion: Actually nonsensical, if you are too impatient to wait for opportunities and always have to keep your money in some stock, you should not create a savings plan (then you actually have nothing lost in investments in individual stocks).



3) At this point, nothing is really rational anymore:

๐‘บ๐’‘๐’‚๐’“๐’‘๐’รค๐’๐’† ๐’Š๐’ ๐’†๐’Š๐’๐’†๐’Ž ๐’Œ๐’–๐’“๐’›๐’‡๐’“๐’Š๐’”๐’•๐’Š๐’ˆ๐’†๐’ ๐’๐’†๐’Š๐’•๐’“๐’‚๐’–๐’Ž ๐’๐’‚๐’–๐’‡๐’†๐’ ๐’๐’‚๐’”๐’”๐’†๐’. (Or in addition to savings plans re-buying, partial selling, etc).


I already find savings plans on shares pointless, but if they are then only executed in the short term (3 months, 1 year, something like that), I no longer even understand the original basic thesis?

The intention of savings plans should be first of all the avoidance of market timing, by savings plans that only last a short time or only fill a certain position size, you don't achieve EXACTLY THAT!

Definition of successful market timing: the attempt to achieve above-average profits by purchasing at a subjectively selected point in time.


Let's say a stock goes public in 2010. It is bought out again in 2050 and taken off the stock market. I bought in 2 batches 2020 and 2021, Max had a savings plan going for 10 months in 2020.

Both equally: Market timing.

The short and medium term average does not have to be advantageous for the investor in the end for shares in any case.


So if you run a savings plan only temporarily, you yourself recognize that it makes sense to time the market, but do not really want to admit it? Or how?


Some had even in the 2021 Bullrun savings plans run, the positions now run into the minus and it is no longer re-bought.

Because the "positions are now full".




4) ๐‘พรค๐’‰๐’“๐’†๐’๐’… ๐’…๐’†๐’“ ๐’ƒ๐’†๐’ˆ๐’“๐’†๐’๐’›๐’•๐’†๐’ ๐‘ณ๐’‚๐’–๐’‡๐’›๐’†๐’Š๐’•๐’†๐’” ๐’†๐’Š๐’๐’†๐’” ๐‘บ๐’‘๐’‚๐’“๐’‘๐’๐’‚๐’๐’” ๐’…๐’Š๐’†๐’”๐’†๐’ ๐’—๐’†๐’“รค๐’๐’…๐’†๐’“๐’. ๐‘ถ๐’…๐’†๐’“ "๐’‡๐’“รผ๐’‰๐’›๐’†๐’Š๐’•๐’Š๐’ˆ ๐’”๐’„๐’‰๐’๐’Š๐’†รŸ๐’†๐’"


Now let's see that in point 4) everything from 2) and 3) is true.

If you plan to save on a stock (for whatever reason) with a time-limited savings plan (for whatever reason) and then cancel the whole thing, for example, after a price drop...

Is the savings plan then used for anything other than avoiding the purchase fees?




๐‘ญ๐’‚๐’›๐’Š๐’•, if you have other arguments feel free to post in the comments:


Savings plan on World ETFs for low risk โœ…

Savings plans on shares โŒ


#learn
#opinion
#personalstrategy

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91 Comments

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Aha 80% All World suddenly not so unsexy after all? ๐Ÿ‘€๐Ÿคก
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Savings plans to invest in overvalued tech bucks ๐Ÿ˜‡ If you can't afford a whole stock one time investment + savings plan to buy the dip๐Ÿฅด Savings plans to use your remaining money onm clearing account, nvm that can also go to waste
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I also don't think much of savings plans in individual shares. I therefore think your thoughts are good ๐Ÿ‘Œ @ccf
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In principle, I agree with you about the holding period, etc.. However, savings plans on individual stocks are not only made nowadays to avoid market timing, but also because there are many popular individual stocks that most people cannot afford to buy as whole shares. If I want to participate in Amazon or Alphabet, for example, and I'm not exactly among the top ten thousand, I can't do that without savings plans. Personally, I'd like it if - as with cryptocurrencies - it were also possible to buy shares of individual stocks outside of savings plans. For a fee, if you like...
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So rather like 80% of users here once a week ask whether you should wait for a setback or rather buy directly? Rather collect the money in the account for months? I use savings plans now for the beginning to build up positions and later, when the money sits a little looser in individual purchases to switch. When Telegram group for buy signals? I think for people who want to run the stock market on the side, a savings plan is a good means to an end, who is active in the stock market, who will be more likely to take your opinion ๐Ÿ‘
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I have 4 savings plans on ETFs - I don't use single stock savings plans anymore, EXCEPT: if a stock is too expensive for me (>2k at Amazon or similar) I buy a fraction of it via a one-time savings plan, because fractions are not possible as single purchases at TR/Sacalble.
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What's wrong with first building up a few positions with stock savings plans? Personally, as a student, I can't just put aside hundreds of euros. That's why I prefer to steadily build up my portfolio in the form of savings plans.
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I actually only use savings plans to empty the clearing account of my securities account. Everything else is done via individual purchases
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2)is the classic "I want risk" and it can pay off. 90% of us would be better off if they would just save the ACWI. But then where is the appeal 3) Can be useful if you want to take advantage of the market situation but do not have enough money for a whole stock. (Alphabet falls by 30% costs but still no idea 2000โ‚ฌ - savings plan pure zack ready)
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So... The way I do it is to invest 1/3 of my savings rate in a "boring and very unerotic 70/30 portfolio". One third to make sure that if I'm wrong about individual stocks, I still have a more than good backup. The other 2/3 I invest in individual shares when I think I have found a suitable investment opportunity. Since an index can often be a blessing and a curse at the same time - because it always contains companies that you wouldn't buy if you had analyzed all the companies it contains - I also try my luck with individual stocks. I generally try to invest around โ‚ฌ1000 per position in an individual share. I also use savings plan purchases for individual shares. My reasons are, for example, situations like with Nvidia... no suitable entry point for a long time and to reduce the risk. With Sea I recently did it exactly wrong and am currently paying more or less for it... but so be it... Another situation in which I use a savings plan is when the shares are worth more than โ‚ฌ1000 each, as I can't buy fractions in a one-off purchase... All in all, I find that this makes it easier to track and or time the price or further purchases. Of course, I understand that not everything conforms to theory... but this is the solution I feel most comfortable with and that's more or less what it's all about...
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