Build wealth steadily with regular investing

Saving money for your children, paying off your mortgage as soon as possible or retiring early. These are all wishes for which you need assets. By investing every month, you can go a long way in achieving those goals. Even if you don't have a lot of money to spare. This has to do with the ‘return on investment effect’. We explain to you what is meant by this.

Monthly investing

Most people start investing because they want to build wealth. By investing you make your money work for you and your wealth can grow without you having to work harder yourself. If you invest with a monthly deposit for the long term, you can build a nice wealth even with small bits. It is especially important that you take your time and keep depositing money structurally, because then the return-on-return effect has a chance to start rolling in.

In the image below, you can see how much capital you can build up with Peaks if you deposit a fixed amount every month for 20 years.

Return-on-return effect

The key to success in investing is the return-on-return effect. In short, this means that you receive returns on the profits you have made. Suppose you invest with a monthly deposit of €100, you will be investing €1,200 on an annual basis. If you make a 5% return, that's €60. That's not a fortune all at once, but the following year you therefore have a head start and receive that 5% return not on €2,400, but on €2,460. Your profit that year is €123. And so that €3 is a gift from your return. The return-on-return effect works the same as the snowball effect: more and more keeps sticking. The longer you invest, the bigger the gift of your return. After a number of years, this return-on-return is even bigger than your deposit-and that's when your money is really working for you.

Returns are never fixed

Before you start investing, it is important to know that expected returns are never fixed. Expected returns are usually the average of the past ten years. Which means that there were also years in between when there were lower returns, or even a negative percentage, but also that there were years in between when there were returns above 5%. The same goes for the future, the return you will achieve with monthly money investing is different every year and nobody knows exactly how it will turn out.

How much do you want to invest monthly in ETFs?

To determine how much you want to invest monthly, you can do several things. For instance, you can look at how much you want to have set aside after X years. Or, if you don't have a specific amount in mind, you can look at how much you have left over to set aside each month. One thing is certain, whether you invest €50 or €500 every month, after a year you will have started building equity.

Costs of investing

On our website, we usually calculate with the net expected return. This means that the costs have already been deducted from the expected profit. That's nice, so you can clearly see where you stand. Investing is never free, as there are fund costs, transaction costs, spread and brokerage fees. We believe it is important that investing is accessible to everyone, which is why you pay no transaction costs every time you invest or withdraw money. Here you can find a complete overview of the costs at Peaks.

Investing involves risks

Investing can give you a nice return, but on the other hand, you take more risk with your money. It could happen that your investments fall in value - if the economy slows down for a while, for instance. Do you need your money during this dip? And do you sell (part of) your investments? Then you realise a loss. Very annoying and a shame. By investing each month with money you can miss for a longer period of time, you don't suddenly have to sell your investments when their value has just fallen.

Know that investing takes risk and that you may lose (part of) your investment. And know that the calculations above are based on an expected gross return of 5%. In reality, an expected return can always deviate negatively or positively.