How do I buy 5 ETFs cheaply each month

sabretoothtigger

Index tracker funds dont have a spread any more afaik and with a management charge of only .5% for a ftse fund its hard to see the point of buying etf long term really.

Buying every quarter increases the risk of missing the growth either end of the payment and just buying into the peak of the market at that point

ozzage

OK I've done more calculations.

It will take 11 years for an ETF with 2.5% upfront and 0.25% TER to outperform a fund with 0% up-front and 0.5% TER.

If you can buy in a way that reduces the up-front to 1.25% then it will take only 6 years.

I would still go with the ETFs but try to find a way to reduce the up-front cost. Pound-cost-averaging can swing both ways anyway and I see little difference between buying monthly or three-monthly when we're talking about long-term investments.

turbobob

Something like the iShares FTSE100 and 250 ETF's have a 0.4% TER. Bonds are lower and some of the more exotic ones can be a lot higher than this.

Selftrade and others have a regular investment facility where they will charge you £1.50 per purchase instead of the normal £12.50. It is on a small range of IT's and ETF's. http://www.selftrade.co.uk/services/other/investment-list.php There is of course also a bid/offer spread with ETF's.

I'd personally be using OEIC/UT funds for this sort of regular saving.

The other thing I'd be concerned about is that you can't buy a fraction of an ETF share like you can buy a fraction of a unit. I'm not sure how that would work if you opted to pay a fixed amount each month, I would imagine some of your savings would have to be carried forward?