- You keep investing a small amount at regular intervals with a crypto savings plan.
- Many investors fulfill their small to large wishes with such a savings plan.
- The concept can also be applied to cryptocurrencies.
- The platform co-indexes, and other brokers and exchanges offer a crypto savings plan.
- That’s why this crypto-simple article takes a look behind the scenes.
What Is A Crypto Savings Plan?
Many investors are interested in cryptocurrencies like Bitcoin and Ethereum, but for whom the crypto market is still uncharted territory. The crypto exchanges, their game rules, wallets and so much more are new and involve unknown risks.
But there is another way. Some providers have included a crypto savings plan in their program, with the help of which you can invest in cryptocurrencies like with a normal savings plan.
This allows you to build up a steady wealth over a long period.
The crypto savings plan works like any other savings plan. You automatically pay a pre-determined contribution to a savings account with the provider, which the provider then invests in cryptocurrencies.
The money will be withdrawn and deposited automatically. Investors do not have to make an effort to invest in cryptocurrencies every month. You don’t need to watch the markets, and you can avoid any FUD and FOMO.
Even small amounts can be paid in regularly. Over the years, this can still be profitable, especially if you take the price fluctuations of the cryptocurrencies into account. Many years ago, an investment of several hundred euros in Bitcoin is worth many times over today.
However, the crypto savings plan offers opportunities and harbors risks. The same risks apply as in the common crypto market. The prices of Bitcoin and Ethereum can be subject to high fluctuations within a short period.
However, a crypto savings plan is not aimed at short-term gains, so these fluctuations play less of a role in the long term. Bitcoin and other cryptos are at the specified time to buy, no matter where the course is level.
How exactly the crypto savings plan works can vary from platform to platform. Some buy real Bitcoin and keep it in a separate account. Over time, the ownership of BTC grows.
Other platforms are a Bitcoin ETF, more precisely an ETP, based on cryptocurrencies such as Bitcoin. Over time, more and more money is paid into the ETF, and the investment grows.
The amount deposited and the time of deposit can be customized depending on the provider. A one-time deposit per month is common; it can also be done weekly or bi-weekly.
Why Are Crypto Savings Plans So Popular?
A crypto savings plan can be flexibly adapted to individual requirements. Whether deposits with small amounts or large amounts, whether monthly or weekly, it is ultimately in the investor’s hands. In this regard, they are no different from ordinary savings plans.
The purchase is automatic, which eliminates some psychological issues. Many investors allow themselves to be driven by fear and greed regarding cryptocurrencies.
When prices go down, which happens repeatedly, the frightened investor quickly sells and ultimately makes a loss.
Large fluctuations are normal for cryptocurrencies because it is still a very young asset class. Therefore, it is particularly important that you only make losses if you actually sell. Those who are patient and keep their nerves do not sell and instead sit out the price fluctuations.
Investors in the crypto market often make mistakes, wait too long, or don’t wait long enough. They wait for the price to fall to buy cheap and then buy hastily because the price goes up instead just because they don’t want to miss the opportunity.
A regular crypto savings plan does not expect investors to develop a strategy and wait for the right time to make their investments. Consistency and regularity have a value in themselves, expressed in the cost-average effect.
This effect, also known as the average cost effect, means that exchange rate fluctuations are evened out over time. By always paying the same amount, the price developments are less dramatic.
In addition, the cost-average effect means that the investor buys more BTC when prices fall. If prices rise again, this investment has a particularly positive impact. However, this also means that less BTC will be bought when the exchange rate increases.
The cost average effect is still one of the main reasons for a crypto savings plan. This investment strategy compensates for high fluctuations and offers higher returns with a lower risk in the long term.
A crypto savings plan is particularly worthwhile for long-term strategies; it can yield high profits over many years and thus helps, among other things, for private retirement provision.
So far, cryptocurrencies, especially Bitcoin, have proven profitable asset classes. No other asset has developed, and coins and tokens in recent years (see also: Cryptocurrencies with potential ).
A monthly investment of only 25 euros over a whole year makes 300 euros. After a while, however, this investment can multiply. Take a look at the courses over the past few years. Five years ago, Bitcoin’s price was a fraction of today’s.
Ultimately, it is not possible to say with certainty where the price of cryptocurrencies like Bitcoin will be in the future. However, a crypto savings plan is a good means of expanding the portfolio over a longer period and allowing it to go quietly.
Which Providers Are There?
Trade Republic: The Trade Republic is a broker for stocks and ETFs. The platform offers savings plans for all available, tradable assets. This also includes cryptocurrencies. The Trade Republic enables the purchase of real cryptos.
There is a flat rate of 1 euro at the Trade Republic for third-party costs for every purchase and sale. Bitcoin, Ethereum, Litecoin, and Bitcoin Cash are offered. The cryptocurrencies are securely stored in a cold wallet.
Scalable Capital: Originally, Scalable Capital was a digital asset management company focusing on ETPs and ETNs. Scalable Capital now also offers crypto savings plans. However, these are only ETPs or ETNs on cryptocurrencies.
The minimum savings rate is 25 euros, the payments for the savings plan can be made monthly. The exchange offers various ETPs and ETNs on Bitcoin, Ethereum, Litecoin, Cardano, Binance Coin, Polkadot, and Ripple.
Consorsbank: Consorsbank offers a free deposit with a savings plan on Bitcoin. The warranty is free for the first three years and can remain so if sufficiently active. Bitcoin investments are ETPs. The fees are 1.50 euros.
Bitpanda: The Austrian-based crypto exchange Bitpanda offers savings plans on all available digital assets on the platform. In addition to Bitcoin, that would be a whole series of almost 70 coins and tokens.
Savings plans can be flexible, interrupted in between, and resumed later. The euros for purchasing the cryptocurrencies can be paid via Visa, MasterCard, or SEPA direct debit.
Companion: Dating also from Austria companies, Companion offers index-based portfolios. The crypto portfolios are preconfigured and differ in their risk level. Investors can save the selected portfolio with a crypto savings plan.
Coindex: The broker co-indexes offers index-based crypto savings plans on Bitcoin and other cryptocurrencies, similar to ETFs. The savings plans are whole crypto baskets, so you don’t just invest in one coin or token.
The coins and tokens can then be transferred to your wallet.
Assets available on coindex are Bitcoin, Ethereum, Litecoin, XRP (Ripple), Bitcoin Cash, Stellar Lumen, EOS, Chainlink, Polkadot, Uniswap, Ethereum Classic, and Dogecoin.
Crypto Savings Plan At Coindex
At coindex, you trade with an index-based portfolio. You can also put together a crypto index yourself. According to the savings plan, you then regularly invest the specified amount.
You don’t need any prior knowledge or your wallet on coindex. However, it would help if you had an ID card ready when you register, and you may require your tax ID. It can take a while until the transfer details are available for the new account, as a deposit with an individual IBAN is created.
You will then find the data on the dashboard under “Deposit.” There are also portfolio configurations for your own savings plan. The monthly amount can be set here. There is a minimum investment of EUR 1 and a maximum of EUR 10,000.
The deposits are deducted from your house bank’s account every month. To do this, you set up a standing order on coindex. First, a one-time, manual transfer is required to confirm the report.
You then invest directly in certain cryptocurrencies or an index of coins and tokens. The euros are then deducted monthly and automatically invested in the cryptocurrencies.
Conclusion Crypto Savings Plan
A crypto savings plan enables beginners, in particular, to easily get started with investing in “cryptocurrencies.”
A savings plan is easy to set up, easy to implement, and some of the fluctuations are offset by regular investments in cryptocurrencies.
I can also flexibly adapt crypto savings plans to my options.
So, a very promising tool!