My intention is to bring the newcomers closer to the ETF world in several posts. If you have any wishes or suggestions for the next article, please let me know in the comments.

Common beginner mistakes with ETFs:

1. ETF hopping

When ETF hopping, the ETF's are changed regularly or the invested money is moved back and forth between several ETFs. Since investing money in ETF's should be done over a long period of time without constantly switching products, ETF hopping is negative.

There can be several reasons why switching ETF's initially makes sense:

- Cheaper providers

- Switching for strategic reasons

- Changes in tax legislation

None of these reasons, however, justifies a regular change of ETF where switching is done once a year or even more frequently.

Above all, the price comparison of the providers makes sense, if at all, only at the beginning, because in the subsequent period, after a certain product has been selected, there will always be a cheaper provider to find in the context of marketing campaigns. However, these are only temporary offers that become more expensive again over time.

A change for strategic reasons is rather a conceivable option. On the one hand, this change can be made if another ETF reflects one's own investment strategy better than the previous one. On the other hand, a change of strategy can also take place if the new ETF performs better than the ETF in which money was previously invested. A change of strategy is usually not worthwhile or necessary in retrospect if an ETF has been chosen carefully. If a new ETF is chosen for strategic reasons, then the new ETF must perform significantly better or match one's expectations to justify this change. And even then, such a switch should only be made once every five or ten years.

Tax legislation in Germany or in the country of the ETF provider can influence the amount of the running costs in such a way that investors have to pay more, then it simply has to be calculated comparatively whether there is another ETF that performs just as well compared to the previous ETF, but which has a lower tax impact.

Background knowledge:

Tax pitfalls also arise when switching ETFs. If the previous ETF shares are sold, withholding taxes must be paid on the gains from the investments if the exemption amount has been exceeded. Only then can the new ETF be purchased.

Omission of compound interest effect of untaxed capital gains:

If through the sale Abgeltungsteuer must be paid, you lack capital, which can continue to work for you. So just if the ETF already contains some profit, then you should rightly consider whether because of -0.07% TER the ETF should be changed.

(thanks to @RisingAktie )

Conclusion:

An ETF change can make sense in large time intervals, whereby the mentioned valid reasons must be present. Regular switches are to be strictly rejected and are rookie mistakes in response to discount advertisements, loco offers or a sign of insecurity and impatience in investing.

A serious mistake is investing in products that you do not understand and have no knowledge about. -> Lorena's post - Synthetic / Physical etc.

I too have switched here e.g. just because of the cost. But does not make much sense with ETFs, if the difference is only 0.07% TER eg.

Finanzfluss has a calculator to assess whether switching an ETF is worthwhile due to lower costs: https://www.finanzfluss.de/rechner/etf-wechseln/

Thanks to @JohannesWo

Now also a "useful" contribution from me. At least I hope so...

But the good @Lorena with her contribution already a good piece taken ahead... no matter!

What else would you like to know?

I thought in the next post times to compare the providers with each other or present. Or closer to the difference regarding synthetic / physical replicated.

Horrido!