Börse Express – Do you want to get rich? Then bet on these ETFs!

Admit it, Fool: You too want to get rich with ETFs … don’t you? There is absolutely nothing wrong with such a thought. After all, it is precisely this topic that is about building up your wealth in the best possible way. And ETFs can be an interesting tool of choice to achieve this.

But not all passive funds are the same. Some have other focuses, such as dividends. Or also value or growth approaches. Or they map certain segments of individual indices.

In any case, if you’re aiming to get rich, you’d better bet on one type of ETF: low-cost index funds, which should be the focus of most investors. Why are you wondering? There are some very clear answers to this.

The best diversification!

Basically, as a passive investor, you should finally try to somehow map the broad market. And that is best possible if you imitate the market. The better you can do this, the greater the chances you will have of a market performance. Not every index is equally suitable.

The MSCI World and the S&P 500, for example, offer strong diversification and in some cases a solid allocation. With the US cross-section, one can consider whether the so-called FAANG shares are not somewhat oversized. In general, however, there are also 500 large, opportunity-oriented stocks that shape this US cross-section and allow investors to benefit from the broad possibilities of the US economy.

Such indices thus offer a strong opportunity to benefit from a broad market, while others, like the DAX with its 30 stocks, have some disadvantages. But if you choose cleverly, you get a solid return potential. And that can make you rich for years and decades.

An overview of the potential return

How rich is shown by very simple calculation examples with free savings plan calculators that can be found everywhere on the Internet. Basically, however, an important note at this point: Even if one reads in many places about average market returns somewhere between 7% and 9%, most ETFs will rarely show such performance in individual years.

In reality, many indices fluctuate very strongly in individual years. Last year, for example, the global stock exchanges rose significantly in double digits. In this rather short year on the stock exchange, however, we are experiencing a crash. Exactly such extremes form this average in the long term. In positive terms, yes, a correction or a crash is also part of a market performance.

In any case, if we assume an average return of 7% over many, many years and decades, this would mean that your stake will double approximately every 10 years. I think that should clearly demonstrate the power of compound interest with a market return. With low-cost index funds in particular, wealth can be built up over years and decades.

Fees and risks are low

Finally, the fees and risks for low-cost index funds with an ETF approach also speak. To cut a long story short: Many global or well-known indices are popular with passive investors and have high volumes. This sometimes leads to cost ratios of less than 0.1%, which means that a large part of the average market performance remains with the passive investor.

But not only the fees are low, but also the risks. Those who invest broadly in the market will have to worry less about larger individual risks and risks of certain segments. The oil and natural gas sector, tourism and retail in particular are showing just how important broad diversification is these days. Anyone who would have increasingly focused on these areas would regret their decision.

A market-wide approach distributes these risks across many areas and smoothes individual performances on average. This may sometimes limit the return potential, but it leads to less risk. Something that you should always keep an eye on as an ETF investor.

The easiest and best way: ETF index funds

So if you want to build up some wealth with ETFs over years and decades, you are at the ideal address for low-cost index funds. In other words, if you follow this approach, you are already doing a lot of things right.

The index funds are diversified if you choose the right indices and offer a solid return with a market-wide risk. A mix that will pay off over years and decades and can also change your financial life significantly.

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