Savings plan (Sparplan)
A savings plan (Sparplan) is a standing instruction to move a fixed amount into a savings or investment vehicle at regular intervals, automatically. Setting up a Sparplan replaces a monthly decision ("should I save this month?") with a recurring transfer the bank or broker executes on a fixed date, whether into a Tagesgeldkonto (flexible savings account) or an ETF.
Why it matters
Pay-yourself-first — treating savings as a fixed line item rather than whatever is left over at month's end — only works if the transfer actually happens without a fresh decision each time. A Sparplan is the mechanism that makes that automatic: money moves before it can be spent on something else.
For anyone building a position in an ETF (Exchange Traded Fund, a basket of securities tracking an index), a Sparplan is also the standard way to invest regularly rather than through occasional lump sums. It is the operational basis for cost averaging — an effect that only shows up once purchase prices vary between periods.
Worked examples
1. A savings-account Sparplan. A Dauerauftrag (standing order) moves €200 from a Girokonto (checking account) to a Tagesgeldkonto (flexible savings account) on the 1st of each month. After 12 months, €2,400 has accumulated, plus any interest the account pays. The amount transferred and the destination both stay fixed.
2. An ETF Sparplan and cost averaging. A Sparplan on a broker Depot (custody account) buys €150 of a stock ETF every month. Because the share price moves, €150 buys a different number of shares each time:
| Month | Price per share | Shares bought (€150 ÷ price) |
|---|---|---|
| 1 | €10 | 15.00 |
| 2 | €20 | 7.50 |
| 3 | €5 | 30.00 |
Total invested: €450. Total shares: 52.5. Average price paid per share: €450 / 52.5 ≈ €8.57 — lower than the simple average of the three quoted prices (€11.67), because the fixed euro amount buys more shares when the price is low. This is the mechanical basis of cost averaging.
This lower average is an arithmetic property of buying a fixed euro amount — more shares get bought when the price is low — not evidence that spreading purchases out beats investing the same money all at once. Long-term research does not crown cost averaging the winner: analysing decades of market history, Vanguard found that investing a lump sum immediately outperformed spreading it out in roughly two-thirds of periods, because markets rise more often than they fall [1]. Spreading purchases out mainly reduces the risk of committing everything just before a drop. A Sparplan's real strengths are behavioral and logistical: it invests income as it arrives, removes the recurring decision, and sidesteps the paralysis of trying to time an entry — a mechanism for investing consistently, not a technique for beating a lump sum.
Check yourself
An ETF Sparplan buys €150 of a fund every month. The share price is €10 in month 1, €20 in month 2, and €5 in month 3. What is the average price paid per share (in euros, total invested divided by total shares bought)?
What is a Sparplan, most precisely?
Which of the following are true of a Sparplan? (Select all that apply.)
Sources
- Vanguard — Dollar-cost averaging vs. lump-sum investing (historical analysis: investing a lump sum immediately outperformed cost averaging in about two-thirds of periods), https://investor.vanguard.com/investor-resources-education/online-trading/dollar-cost-averaging-vs-lump-sum (2023)