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How to invest in the Austrian Traded Index
In that case, investing in the Austrian Traded Index could be the right move for you. There are numerous ways to do so, and having that much choice can be a little intimidating if you’re just starting out, so we’re here to guide you through the entire process to help you make an informed decision about how to invest your money.
Where can I buy into the Austrian Traded Index?
What is the Austrian Traded Index?
The Austrian Traded Index is the benchmark index for the Wiener Börse – Vienna’s only stock exchange. It consists of 20 of Austria’s most prominent stocks hailing from a number of different sectors, including banking, telecommunications, insurance, natural resources, and more.
Is it a good investment?
It certainly can be, but it depends on your investment goals. The Austrian Traded Index offers an alternative to larger indexes such as the S&P 500 and FTSE 100, while still being filled with blue-chip stocks and having a good track record in terms of economic performance. By investing in an index of 20 of Austria’s most prominent stocks, you gain the advantage of diversification, and because the index has a limited number of stocks you also have the opportunity to research all of the companies it tracks and ensure you’re making a sound investment.
That said, there’s also risk involved. Stock indices can fall hard when a bear market takes hold, and the Austrian Traded Index is no exception. Make sure to analyse market conditions and ensure you’re putting your money in at a time when the market is looking bullish.
How do I invest in the Austrian Traded Index?
Take the time to go through these three important steps before you start Austrian Traded Index investing:
- Choose an investment type
- Choose a platform
- Use our top tips to succeed
1. Choose investment type
There are many different methods you can use, so you need to be selective. Just as you would typically evaluate multiple banks before choosing one in which to open a savings account, you’ll want to do the same for various Austrian Traded Index investment options before making your selection. Here are the most popular options available:
An ETF (exchange-traded fund) is an investment fund that can be traded on a stock exchange during trading hours, much like a stock. ETFs can hold different assets, such as individual stocks, bonds, or commodities, and also serve as a proxy for a stock index such as the Austrian Traded Index. Still, an Austrian Traded Index ETF can become volatile and dangerous during a bear market, when market indices fall sharply.
This method of investing is a good idea if you want the diversification of the Austrian Traded Index, combined with low fees and owning an asset that’s quick and easy to trade.
Another option is to use an online broker to buy shares of all 20 stocks that the index tracks. This way, you can decide which stocks you want to keep longer-term, and which ones you want to sell – something you can’t do if you invest in the index as a whole. The downside is that making 20 separate transactions to buy each stock (as well as separate transactions whenever you sell any of the stocks you think won’t perform well) will lead to hefty transaction fees and also take up more of your time.
This method of investing makes sense for you if you want to try out all 20 Austrian Traded Index stocks, then gradually whittle down that list to a smaller number of top performers. The transaction fees associated with this strategy are large, so this is best left to investors with larger investing budgets and time on their hands. That said, as the Austrian Traded Index only tracks 20 stocks, this is a more viable option than with larger indices such as the S&P 500.
A mutual fund is a professionally-managed investment fund that pools money from many different investors in order to make profit for everyone putting money into the fund. An Austrian Traded Index mutual fund offers similar advantages to an ETF in that you’re invested in all 20 of the index’s stocks, but they have different trending rules. Unlike ETFs, mutual funds must be bought through a broker or directly from the company that administers the fund, and this can only happen at the start and finish of each day, rather than at any time during trading hours. Another negative of mutual funds is that they charge higher fees than ETFs do, and you won’t be able to pick and choose stocks as you will if simply choosing to buy all the stocks tracked by the Austrian Traded index individually.
Given all of those factors, Austrian Traded Index mutual funds make the most sense for investors who want to buy and hold for a longer period of time, since they’re more difficult and more expensive to trade than an ETF.
2. Choose where to invest in the Austrian Traded Index
Once you have decided how you want to invest, you’ll need to find a service that will execute your trade. Here are some of the most popular options.
- Brokers & trading platforms. Brokers and other online trading platforms offer low transaction fees, making them especially attractive for higher-frequency traders. That said, online brokers tend not to offer much in the way of personalised investment advice. If you’re looking for more hands-on help, you may want to consider other investment options.
- Robo advisors. Robo advisors also offer low transaction costs (although not quite as low as brokers), and they rely on algorithms to execute trades automatically. Many robo advisors will also allow you to discuss your investment strategy with an advisor to help you make the right decisions. This can be an effective hybrid approach, albeit one that requires more work from you personally than investing through a licensed financial advisor.
- Financial advisors. Financial advisors offer the most hands-on help when making investing decisions, explaining the pros and cons of various different investment options in detail. This can be an especially big help to less experienced investors when making complex investment choices. However, this comes at a cost, and as investing in the Austrian Traded Index is a fairly simple process it might not be worth the expensive fees that financial advisors charge in this particular case.
- Banks. You can invest through your bank. Using this method, you gain the convenience of having all of your financial instruments (for example, your checking account, savings account, line of credit, and investments) with one financial institution. The problem is that banks usually charge high fees for this convenience, without offering the high level of advice that a good financial advisor offers. Unless having everything in one place is your number one priority, then investing through your bank is unlikely to be the best option.
3. Use our top tips to be a successful investor
Before you invest, you should review these top tips, and keep them in mind for all future trades to give you the best chance of success.
- Do your research. Before putting any money in, be sure to research the pros and cons of investing in the Austrian Traded Index, as well as the different methods you can use to invest in it. Having a plan ahead of time will improve your odds of success, and help you minimise the effect of emotions such as fear and greed which can cloud your judgement.
- Set a budget. Set a budget that suits your lifestyle and your tolerance for risk. If you invest more than you can afford to lose, you could run up losses so large that it destroys both your confidence and your ability to make future trades.
- Select the right platform. We’ve already highlighted the different trading platforms you can use. Choose the method that works best for your investing needs – this will not be the same for each investor and so it’s important to ensure you’re picking the option that best fits with your personal circumstances.
- Grow your investments gradually. For beginner investors, it makes sense to start by investing a smaller amount of money. You can always invest more as you gain more experience and expertise.
- Think long-term. Investing in index funds is often a long-term strategy, and with this form of investment you’re usually trying to rack up gains during the course of an extended bull market. Those market conditions are vital, as a bear market can wreak havoc on your bankroll – so always analyse market conditions before investing in the Austrian Traded Index.
Ready? Here’s our top recommended broker
What should I do now?
If you’re ready to invest, great! Simply go to the website of your online broker or whichever method you’re using to trade, punch in the ticker symbol of the investment asset you’re buying, then click Buy. Congratulations, You’re now invested in the Austrian Trading Index!
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Fact-checking & references
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