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Fondsdiscount – buy funds without subscription fee (agio)

Sunday, January 14th, 2018 | bitcoin updates

After reading the fund heading in Euro am Sonntag, Elke Gebhardt bought 15 years ago DWS fund shares worth 10,000 euros. A wise decision, because their deposit has now become more than 27,700 euros. What Mrs. Gebhardt does not know: When buying through the house bank she had paid for her DWS fund a sales charge of 6.25 percent. A cost block that would not have been incurred when buying through a fund discounter. A whopping 625 euros, which landed at the house bank as a sales commission and had not arrived in the fund assets.

Subscription fee is the decisive cost factor when purchasing funds

The front-end load is the most significant cost factor in buying mutual funds. The fee, also known as premium, is determined by the investment company and can be consulted in the sales prospectus. For more than half of the mutual funds approved in Germany, the initial charge is at least five percent, with just under a quarter even more than six percent. The high fee serves primarily to cover distribution costs. The premium therefore largely flows to the distribution partner of the fund company, for example the bank of Elke Gebhardt.

Fund Discount: Fund Agents offer funds without a sales charge

Nowadays, some fund agents are offering to buy funds without a front-end load. Other "discount funds" offer discounted funds and attract investors with a discount of 25, 50 or 75 percent on the premium. Unlike the house bank, however, fund-discount providers completely leave the selection of investment funds to the investor. Advisory liability is therefore excluded for investors. In return for the fact that investors refrain from consulting, the fund brokers reduce the most hefty distribution fee. Often the investor is reimbursed the premium after the fund purchase. Even one or the other online broker now offers the fund purchase without a subscription fee. For example, finanzen.net brokerage customers can buy more than 9,000 funds without an initial charge. Information about this offer can be found at www.finanzen-broker.net.

The premium works twice negative

The example of Ms. Gebhardt illustrates that the issue surcharge for the investor has a doubly unfavorable effect. After 15 years, she has tasted the agio significantly more than "only" 625 euros. The reason: The purchase fees are becoming more expensive in the long run, as they are lost forever and thus do not yield any return. If Gebhardt's subscription fee had not moved to the house bank but had been transferred to the fund assets, today it would have DWS funds worth more than EUR 29,500 in the custody account. A difference of about 1,850 euros to the actual account balance.

Even when saving funds is worth the view of agio

The purchase is the profit! Even for fund savers this old merchant wisdom applies. With a fund savings plan, investors invest small amounts in a fund savings plan every month. In addition to the premium should fund savers in particular, the order fees of your house bank under the magnifying glass.

With the premium, the savings for fund savers is only a few euros per month. Over a longer period of time, however, fees in the three-digit euro range also come together if the fund units are acquired without a discount on the sales charge. Even with a fund savings plan of only 50 euros per month, the initial charges add up. For a ten-year fund savings plan come together over the years 375 euros (with a premium of 6.25%). In addition, there are the "return losses", which drive the disadvantage even for savings plan fans quickly in the four-digit area.

The order fees also play an important role for fund buyers. Providers who calculate a minimum fee of, for example, "only" € 6.00 for each purchase, drive the cost of fund savers at small 50 euro savings plans to more than 10 percent. Fund savers should therefore exclusively rely on providers who waive order costs for fund savings plans. Customer-friendly here are the conditions in the finanzen.net brokerage depot. Fund savers pay neither order fees nor issue surcharges. The investor money thus flows entirely into the selected investment funds.

Alternative no-load funds?

By the way, investors should be wary of so-called no-load funds. Although no-load funds are generally tradable without a premium or sales charge. However, these funds tend to target traders or investors looking to invest over a few months. For the fund companies, these funds pay off mainly because of the comparatively high management fees. Especially the high management fees make these funds but for fund savers and long-term investors uninteresting.

To read more:
»Buying funds – 8 important tips on fund purchase and asset accumulation with investment funds
»Funds and fund prices

Author: Volker Altvater

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