Learning day trading: which path is right?

Learning day trading: which path is right?

Choose a suitable ETF in six steps

Choose a suitable ETF in six steps

A person with a basket as their head arranges different objects as a portfolio metaphor.
Investing

Choose a suitable ETF in six steps

Choosing an ETF depends on your financial planning and investment objective. These six steps take you from selecting a broker to choosing and buying an ETF.

Concept illustrationImage: TradeNeon

6Steps
  1. 1 The decision to invest
  2. 2 Find a suitable broker
  3. 3 Open a brokerage account
  4. 4 Savings plan or lump sum
  5. 5 Choose a suitable ETF
  6. 6 Buy and allow time
The six steps at a glance: From the decision to invest to your first purchase, this guide takes you through each step.

Many people want to build wealth over the long term without continually selecting individual stocksA stock is a security that represents a stake in the share capital of a stock corporation and grants its holder economic and participation rights.. A broadly diversified index ETF can be one component. Its fund management follows the rules of the chosen index; recurring fund costs and broker fees still matter. Reinvested income can generate further income. Performance fluctuates, and losses remain possible.

Long term
Plan equity investments with losses you can afford
Small amounts
Check the provider’s minimum contribution and costs
TER
Compare recurring fund costs
The essentials first

This article describes a long-term investment approach using broadly diversified equity index ETFs. Use money you can do without for an extended period. Your investment horizon depends on your goal and financial circumstances. A long period does not reliably protect against losses; reserves needed in the near term require separate planning.

01

The decision to invest

Before choosing specific ETFs, clarify your income, expenses, reserves and investment objectives. ETF units can normally be traded on an exchange. A short-term sale may, however, realise losses, and execution may become difficult under exceptional market conditions. Plan money for emergencies and foreseeable expenses separately from long-term equity investments.

  • How much do I earn each month after tax?
  • How much do I need for monthly expenses and reserves?
  • How much is genuinely available for long-term investment?
  • Do I have an accessible reserve suited to my ongoing expenses, potential emergencies and income security?
  • Which risks can I afford and am I willing to take?
What is an ETF?

An ETF(Exchange Traded Fund) is an exchange-traded investment fund. This article addresses index ETFs that track an index such as the DAX, S&P 500 or MSCI World. Actively managed ETFs also exist. The securities and markets covered depend on the index and fund: a broadly diversified equity ETF may hold many companies, while a country, sector or thematic fund may be more concentrated. Fund assets are held separately from the fund management company’s corporate assets under the applicable legal structure. German Sondervermögen is not liable for the management company’s obligations. This separation does not protect against losses in the investments held.

02

Find a suitable broker

You submit buy and sell orders through your broker or custodian bank. Custody follows the bank or custody arrangement specified in the account agreement. Compare account, order and savings-plan costs, as well as available execution venues. These costs affect your investment’s result.

For the long-term approach described here, we consider broadly diversified equity index ETFs. Compare the costs and execution quality of the venue offered. Exchange trading alone does not make a product low risk: certificates and warrants can also trade on exchanges.

A note on product selection
Service typeExamplesWhat should you check?
Neo-brokerTrade Republic, ScalablePlan and account costs, specific savings-plan conditions, available execution venues and support
Online broker or direct bankING, ComdirectCosts for your ETF and order size, account terms, available venues and service
International brokerageInteractive BrokersResponsible entity, products and permissions, routing and fee model, market data and tax administration
Important

Check whether your chosen ETF is available in a savings plan and which execution fee applies. Execution without an order fee may still involve product costs and spreadsThe price difference between the bid price and the ask price is called the spread.. Compare the venues actually available and costs in the current price list. Some providers offer multiple execution venues; the choice depends on the specific offer.

03

Open a brokerage account

Account opening and available identification methods depend on the provider and your country of residence. Check the required documents, contractual entity and investment products available to you. After checks and activation, you can deposit money through the specified payment route. The provider explains when deposits become available and any further trading conditions.

Consider trading hours

Compare bid and ask prices before placing an order. Trading time, venue and the markets of the securities held by the ETF can affect the spread. Regular Xetra trading runs from 09:00 to 17:30 German local time; retail investors also have extended trading hours. Check which sessions your broker supports. A particular window does not guarantee the narrowest spread.

04

Savings plan or lump-sum investment?

A savings plan and a lump-sum investment may suit different circumstances. First distinguish newly available regular income from a sum you already hold. Also consider your objective, capacity for losses, costs and whether you can follow the plan during price declines.

CriterionSavings planLump sum
Starting amountProvider’s minimum contributionConsider unit price, fractional-unit rules and costs
EffortSet up the plan and review contributions and selection as neededPurchase according to your plan; further purchases as needed
CostsExecution fees, fund costs and possible spreadOrder and venue charges, fund costs and possible spread
Time in the marketRegularly available money is invested incrementallyExisting capital is invested in full earlier
ImplementationFixed contributions may help you follow the planAn early price decline after purchase must be financially and personally manageable
Cost averaging

Investing a fixed amount each month buys fewer units when prices are higher and more when prices are lower. This can help you stick to a plan. Splitting an investment does not guarantee a lower purchase price or a higher return. A savings plan funded from future income is also different from deciding whether to invest an existing sum immediately or in stages.

Existing capital: In Vanguard’s historical comparison, an immediate lump-sum investment often outperformed investing the same existing sum in stages. Results depend on the market, period and phasing plan and do not predict your future return. A blanket EUR 5,000 threshold does not determine the choice. Compare costs against your investment amount and choose a process whose loss risk you can bear.

Investment calculator

Explore how your savings contributions could develop over the years.

Calculate your savings contributions
05

Choose a suitable ETF

Index ETFs manage their holdings according to the reference index’s rules. Recurring costs are often lower than those of actively managed funds. Your actual net return also depends on market performance, tracking quality, trading costs and potentially tax. This does not automatically produce a higher future return.

Check the index first

Which countries, sectors and company sizes does it cover or exclude? Then examine the actual fund using its key information document, factsheet and ISIN or German WKN. Similar ETF names may refer to different indices, share classes, income policies or currency hedging. Trading currency alone does not describe the currency risk of underlying holdings.

An example two-ETF portfolio
  • 75 % MSCI World ETF — large- and mid-cap stocks from 23 developed countries
  • 25 % MSCI Emerging Markets ETF — large- and mid-cap stocks from 24 emerging markets
2ETF mix
  • 75 % MSCI World large and mid cap ·23 developed countries
  • 25 % MSCI Emerging Markets large and mid cap ·24 emerging markets
Example allocation: 75 percent MSCI World and 25 percent MSCI Emerging Markets combine developed and emerging markets. The 75/25 allocation is a deliberate illustrative choice. Both components are equity investments whose value can fluctuate substantially.

Indices do not distribute weights equally across countries or companies. Individual markets and large companies may represent substantial proportions. A mix of two equity ETFs therefore does not diversify across multiple asset classes. The fund documents show which securities your chosen ETF actually holds.

One broad fund or two separate components?

An appropriately broad index can also cover developed and emerging markets in one fund, with weights following the chosen index methodology. With two separate ETFs, you set and review the allocation yourself. The suitable option depends on your desired coverage and investment plan.

FeatureWhat does it mean?What should you check?
IndexDetermines markets, sectors, company sizes and weightsCoverage and risks suited to your objective
TERRecurring fund costs relative to fund assetsFor comparable ETFs, assess alongside tracking quality and trading costs
Fund sizeOne selection factor; alone it does not prove narrow spreadsAssess assets alongside age, underlying holdings, costs and actual tradability
ReplicationPhysical holdings or synthetic tracking, such as through swapsUnderstand how the method works, its documents and risks
Income policyAccumulating reinvests income in the fund; distributing pays it outChoose according to payout needs, reinvestment, costs and your tax circumstances
Assess costs and tracking quality together

The TER is only part of costs. Fund transaction costs, order and venue fees and spreads on purchase or sale may also arise. For index ETFs, tracking difference shows how fund returns differ from the reference index. Recurring costs and other fund effects already contribute to it; TER and tracking difference are therefore not two independently additive fees. A total-cost assessment is also called TCO and is not a single additional charge.

Hypothetical calculation: 0.2 percent of EUR 10,000 is EUR 20 in annual recurring costs assuming constant reference assets. The 0.2 percent is an illustrative parameter, not an actual tariff of a recommended ETF. In practice, recurring costs are reflected in fund assets and performance, and the reference value fluctuates.

Where can you find suitable ETFs?

Two ETF search portals in the German-speaking market are justETF.com and extraETF.com. You can filter ETFs by factors including fund size, replication method and distribution policy. Compare information against the provider’s fund documents. For portfolioThe portfolio is the collective term for all assets owned by a client, a company or an investment fund. tools, check which features are free and which require a different plan.

06

Buy and allow time

Once your investment plan, ETF selection and cost assessment are complete, you can prepare the purchase or savings plan. With EUR 1,000 and an illustrative 75/25 allocation, the target amounts are EUR 750 for MSCI World and EUR 250 for MSCI Emerging Markets. This calculation excludes possible order fees. Whether you can invest those amounts exactly depends on unit prices and your broker’s fractional-unit rules.

Check before placing an order
  • Specific fund and correct share class: ISIN or German WKN.
  • Amount or number of units, fractional-unit rules and available account funds.
  • Execution venue, trading time, displayed spread and expected fees.
  • Order type and conditions: a limit order sets a price limit and may execute partially or not at all. Savings plans follow the provider’s execution rules.

“We are not talking about two months, but 15 years or more. Following prices every day will drive you to distraction. You are a long-term investor. Take a step back.”

Oliver Sparing — TradeNeon Academy

This personal perspective describes a long-term approach. Whether the period suits you depends on your goal and financial circumstances. A long holding period does not guarantee a positive return. What matters is a sustainable plan that you do not replace in response to every short-term price movement.

Common mistakes when investing in ETFs

Selling in panic, frequently changing ETFs without a plan or making unnecessary transactions can cause costs and additional risks. More ETFs do not automatically mean more diversification: their holdings may overlap. Follow your investment plan and review it regularly and when your financial circumstances change. Minimal activity does not guarantee a permanent optimum return.

Review your plan and allocation

Decide when to review your objective, capacity for losses and portfolio. With multiple ETFs, allocation can drift as prices develop differently. Deliberate review and any necessary adjustment can help keep risk closer to your plan. Consider transaction costs and potential tax consequences. Rebalancing does not guarantee a return advantage and does not require daily responses to price movements.

Frequently asked questions
How much money do I need to start?

Savings plans can start with small amounts; the provider sets the minimum contribution. The appropriate amount depends on your available funds and reserves. For a lump-sum investment, compare unit prices, fractional-unit options, order and venue fees against the amount invested. This does not establish a general EUR 500 minimum investment.

Are my ETF units protected if the fund management company becomes insolvent?

Fund assets and the management company’s corporate assets are held separately under the applicable legal structure. German Sondervermögen is not liable for the asset management company’s obligations. Asset separation depends on legal form and fund domicile, not just physical or synthetic replication. Read the fund documents. This structure does not guarantee the market value of your units or protect against losses in the investments held.

Which ETF should a beginner buy?

One example used in the ETF course combines an MSCI World ETF and an MSCI Emerging Markets ETF. The 75/25 split shown here is an illustration. A suitable allocation depends on objectives and capacity for losses. The two indices cover large- and mid-cap stocks in developed and emerging markets respectively. The securities held by the actual funds selected are listed in their documents.

Explore the ETF online course (in German)

What is the difference between accumulating and distributing?

Accumulating ETFs reinvest income within the fund. Distributing ETFs pay it out; you can reinvest or use it yourself. Each approach can suit different objectives. Consider your need for payouts, reinvestment costs and personal tax situation. Reinvested income remains part of an investment whose value can fluctuate and decline.

What does an ETF really cost each year?

The TER describes recurring fund costs reflected in fund assets and performance. It is not a complete overview of all costs. Fund transaction costs and broker charges may also arise, including order and venue fees and spreads. A total-cost-of-ownership assessment(TCO) is not a separate additional fee. Compare the key information document, factsheet and price list and, for index ETFs, tracking quality. A TER below 0.3 percent alone does not make an ETF suitable for you.

Which tax rules apply if I am taxable in Germany?

For funds held as private assets in Germany, distributions, advance lump-sum amounts(Vorabpauschalen) and sale gains may be relevant for tax. Accumulating does not automatically mean tax-free until sale. The current savings allowance is EUR 1,000 per person or EUR 2,000 for jointly assessed spouses. For private investors in funds qualifying as equity funds for tax purposes,30 percent of income is generally partially exempt. The conditions depend on the fund and your circumstances. Advance lump-sum amounts already assessed are taken into account when calculating a subsequent sale gain. This context concerns Germany and private fund investments; other countries have different rules.

How long should I remain invested in ETFs?

Your investment horizon should fit your goal, financial circumstances and the risks of the selected ETFs. The long-term equity approach described here requires time and the ability to bear interim losses. Losses remain possible even over long holding periods. Historical index returns depend on the period, currency and inclusion of dividends; they do not guarantee your ETF’s future performance. No universal claim about every 15-year period can be made without a completely defined and verified dataset.

Sources and context

Editorial sources checked 6 October 2026. Historical data and views are identified by their respective periods.

  1. ETF selection: Index, identifiers and income policyProvider guide; not an individual product recommendation.
  2. MSCI World FactsheetCountry coverage checked as of 30 September 2026; no return forecast or reproduction of MSCI charts.
  3. MSCI Emerging Markets FactsheetCountry coverage checked as of 30 September 2026; holdings are not equated with companies.
  4. ETF costs and tracking differenceVanguard cost guidance; older market-average figures not adopted.
  5. Active ETFsDWS documents active ETF strategies; not a product recommendation.
  6. ING ETF savings plansProvider conditions; qualitative fee and contribution checks, not a universal minimum.
  7. ING fees and conditionsProvider’s price list read 6 October 2026; not a market-average tariff.
  8. Scalable products, order types and fractional unitsProvider’s terms; individual residence, account and order requirements not checked.
  9. Interactive Brokers: European feesDifferent routing, fee and country models; no size or price ranking.
  10. Execution venues and execution qualityING distinguishes exchange and over-the-counter execution.
  11. Exchange trading of certificates and warrantsDeutsche Börse: venue is not a universal product-safety feature.
  12. Existing capital: Lump sum versus phased investmentVanguard studies specified historical markets and periods; no future guarantee or claim about income not yet available.
  13. Xetra trading calendarRegular and extended trading; check broker access and actual spreads.
  14. ETF liquidity and market structureBlackRock explains primary and secondary liquidity; fund size alone is not a quality guarantee.
  15. Portfolio rebalancingVanguard 2 September 2026: risk allocation, not guaranteed additional return.
  16. Global ETF planning and currency riskGeneral investment principles from provider guidance; UK account and tax rules not adopted.
  17. KAGB section 93: German SondervermögenGerman legal structure; not a blanket equivalence across international fund forms.
  18. iShares fund structures and income policyProvider structure; no general insolvency or market-value guarantee.
  19. Planning an emergency reserveU.S. public-agency guidance for circumstance-dependent planning; not German law.
  20. EU key information documentConsumer information on product, risk and cost documents.
  21. justETF searchSearch and filter functions checked; no overall or free-versus-premium ranking.
  22. extraETF searchSearch and filter functions checked; no overall or free-versus-premium ranking.
  23. InvStG section 16: Investment incomeGermany, private fund investment; exceptions not comprehensively discussed.
  24. InvStG section 18: Advance lump-sum taxationPossible taxable deemed income without a cash distribution; no personal calculation.
  25. InvStG section 19: Sale gains and prior advance amountsPreviously assessed advance amounts are taken into account.
  26. InvStG section 20: Partial exemptionGenerally 30 percent for private investors in qualifying equity funds; official indexed source and consolidated law checked.
  27. InvStG section 2: Equity-fund definitionQualification follows law and fund terms, not merely the ETF name.
  28. EStG section 20: Savings allowanceEUR 1,000 or EUR 2,000 under the stated conditions; official indexed source and consolidated law checked.
Oliver Sparing
Oliver Sparing
Founder & Head of Trading · TradeNeon
Oliver Sparing has been actively trading the financial markets since 2011. His professional roots lie in precious metals trading in Hamburg; in 2017 he learned at a London trading floor. At TradeNeon he leads the day trading and swing trading programmes and is responsible for the trading methodology, with a focus on order flow, market structure and fundamental market data. Level of Interest, Futures Insights and Lab of Trades grew out of this work. Platforms such as ATAS, Bookmap and WH SelfInvest regularly invite him as a guest. All guest appearances