Alternatives to savings accounts: 4 investment ideas for Australians looking beyond a savings account
Annabelle Dickson
Related articles
Better investing starts here
Get Betashares Direct
Betashares Direct is the new investing platform designed to help you build wealth, your way.
Scan the code to download.
Learn more
Learn more
The investing landscape in Australia is evolving rapidly. Savvy investors are increasingly seeking strategies that blend simplicity, cost-effectiveness and long-term growth potential. One such strategy is the ETF savings plan. But what exactly is an ETF savings plan and should you consider starting one?
What is an ETF savings plan?
An ETF savings plan is an investment strategy that allows individuals to invest fixed amounts of money in a portfolio of exchange-traded funds (ETFs) at regular intervals. In practice, an ETF savings plan works by automatically purchasing units of one or more ETFs according to a schedule and an amount you select.
Unlike traditional lump-sum investing, this approach emphasises steady, disciplined contributions over time. Instead of trying to guess the best time to invest, this strategy involves putting in the same amount of money at regular intervals. This is called dollar-cost averaging, and it can help you stay consistent and avoid making emotional investment decisions.
Why are ETF savings plans gaining momentum?
More investors are looking for simple, consistent ways to build their wealth over time and ETF savings plans are emerging as a popular solution. By automating regular investments, these plans can help take the emotion out of investing and make it easier to stay disciplined through market ups and downs.
Whether you’re just starting out or looking to streamline your existing strategy, an ETF savings plan offers a practical, low-effort way to stay invested and focused on long-term goals.
The core benefits of an ETF savings plan
- Accessibility and simplicity: ETF savings plans lower the barriers to investing, enabling anyone to start with modest amounts. There is no need to monitor the markets constantly or make complex investment decisions.
- Diversification: ETF investors may benefit from instant diversification – reducing risk compared to putting all their money into single shares or sectors.
- Cost efficiency: ETFs typically have lower management fees than actively managed funds. A savings plan allows investors to further reduce their costs by automating regular investments and avoiding unnecessary trading fees.
- Discipline through dollar-cost averaging: Dollar-cost averaging could reduce the overall impact of price volatility and may smooth the average cost per unit. However, a lower average cost may not be achieved, especially in a consistent rising market, where lump sum investing may outperform.
- Long-term growth potential: ETF savings plans encourage consistent, long-term investment behaviours that align with wealth accumulation goals.
Better investing starts here
Get Betashares Direct
Betashares Direct is the new investing platform designed to help you build wealth, your way.
Scan the code to download.
Learn more
Learn more
The risks of an ETF savings plan
- Market risk: The value of your investments may fluctuate due to changes in share or ETF prices driven by economic, political, or market events.
- Rebalancing Risk: Regular rebalancing may trigger transactional costsor capital gains tax.
- Diversification limitations: While diversified, each portfolio follows a specific model. Depending on your financial needs, it may not be fully aligned with your personal goals or risk tolerance.
ETF savings plan vs lump-sum investing
One of the more common queries people have is whether to invest a lump sum or to adopt an ETF savings plan. While lump-sum investing can sometimes yield higher returns in rising markets, it can also expose you to the risk of market timing – an area where even professionals can falter. An ETF savings plan, by contrast, prioritises steady participation and mitigates the anxiety of picking the ‘right’ moment.
Over time, a disciplined strategy that involves regular investments could deliver satisfactory outcomes for investors – especially those concerned with risk management and emotional discipline.
This comparison is for general information purposes only and does not take into account your individual objectives, financial situation, or needs. ETF savings plans and lump-sum investing are not directly comparable strategies and may suit different types of investors or financial situations. You should consider seeking advice from a licensed financial adviser before making any investment decision.
How to set up an ETF savings plan in Australia
Getting started with an ETF savings plan in Australia is straightforward, especially with the emergence of platforms like Betashares Direct. Here’s how you could begin a plan of your own:
- Define your goals and time horizon: Are you saving for retirement, a property or your children’s education? Your objectives will shape your plan.
- Choose your Portfolio: Choose from a Betashares Managed Portfolios, constructed by our investing experts . If you’re unsure where to start, our Portfolio Assistant will recommend one best suited to you.
- Determine your investment amount and frequency: Decide how much you can commit on a weekly, fortnightly, monthly or quarterly basis. Even small amounts can grow substantially when invested consistently over time.
- Automate your plan: From within Betashares Direct, set up regular investments into your portfolio via direct debit from your bank account, making the process seamless and hassle-free.
- Monitor and adjust: Review your plan regularly and adjust your contributions or ETF selections as suits you.
Common questions about ETF savings plans
Are ETF savings plans suitable for beginners? Absolutely. Their simplicity and automation make them ideal for those new to investing as well as experienced investors seeking efficiency.
How much money do I need to start? Betashares Direct ETF savings plans require a minimum direct debit of $100, making it easy to begin without a significant upfront commitment.
What are the fees? For Managed Portfolios, a flat fee of $3/month applies to balances under $10,000. For balances over $10,000, the portfolio fee is 0.20% p.a. up to $100,000, 0.18% p.a. up to $500,000, 0.16% p.a. up to $2 million, and 0.14% p.a. for balances above $2 million. Brokerage is free across all balance tiers.
Can I access my funds if needed? ETFs are traded on the ASX, so your investments are typically liquid and accessible should your circumstances change.
Take the next step
If you are seeking a trusted, straightforward way to build wealth and take control of your financial future, an ETF savings plan could offer a proven, globally recognised solution. Betashares offers a user-friendly direct ETF savings plan tailored to local investors’ needs. With a range of diversified ETF options, simple automation and low fees, Betashares empowers you to start investing smarter today.
Ready to begin? Explore Betashares’ direct ETF savings plan and take your first steps towards building a secure financial future. Visit the Betashares website and discover how easy it is to set up your own ETF savings plan.
See the range of low-cost, diversified Portfolios
