The power of a savings plan (Dollar-Cost-Averaging, DCA): Why saving $500 a month makes you richer than saving $50,000 all at once
November 17, 2025
10 min read
The Power of Savings Plans: Why CHF 500 a Month Beats CHF 50'000 Lump Sum
The one habit your future self will thank you for.
You brush your teeth every morning. Not because you think about it. Not because you check whether today is a "good tooth-brushing day". You just do it. Automatically. Without debating it with yourself.
That's exactly how investing should work. And that's exactly what a savings plan is.
A savings plan means this: every month, a fixed amount flows — automatically, via standing order — from your account into your investment. CHF 100, CHF 500, CHF 1'000. The amount is secondary. What matters is that it happens. Every month. Without you having to make a decision.
Because every decision is an opportunity not to invest. And that's exactly the problem.
CHF 995'000
CHF 500/mo. over 40 years (6% p.a.)
CHF 240'000
What you contributed
CHF 755'000
The rest is compound interest
That's the magic this article explains. Why the savings plan isn't the mathematically optimal strategy — but the only one you'll actually stick with for 30 years.
Why your brain is your worst enemy
Humans are terrible investors. Not because they're stupid — but because their brains are wired for the savannah, not the stock market.
When the market rises, your brain thinks: "Everything's getting more expensive. I have to buy now, before it gets even pricier." You buy at the peak.
When the market falls, your brain thinks: "Danger. Everything's collapsing. Save what you can." You sell at the bottom.
Buy high, sell low — that's the exact opposite of what you should do. And yet millions of investors do it, century after century, every single time.
The savings plan solves this problem. Not through discipline, but through automation. You take your brain out of the equation. Your future self doesn't have to rely on your present self to read the market correctly.
The savings plan isn't the best strategy because it delivers the highest returns. It's the best strategy because it's the one you'll actually stick with.
How Dollar Cost Averaging (DCA) works
The principle is simple: you invest the same amount every month — regardless of whether prices are high or low. What happens?
| Month | Price / Share | Invested | Shares Bought |
|---|---|---|---|
| January | CHF 100 | CHF 500 | 5.00 |
| February | CHF 80 | CHF 500 | 6.25 |
| March | CHF 60 | CHF 500 | 8.33 |
| April | CHF 90 | CHF 500 | 5.56 |
| May | CHF 110 | CHF 500 | 4.55 |
| Total | CHF 2'500 | 29.69 |
The magic is in the middle months. When the price falls, you buy more shares for the same amount of money. When it rises, you buy fewer. On average, your purchase price comes out to CHF 84.20 per share — even though the average price during the period was CHF 88. You automatically bought "cheap" without planning it.
That's the cost-averaging effect: falling prices are your friend, not your enemy — as long as you keep investing.
Savings plan vs. lump sum: what actually wins?
To be fair: academically, lump-sum investing beats the savings plan in about two-thirds of cases. Why? Because markets rise over the long term — the earlier money is invested, the longer it has to work.
But this comparison is irrelevant for most people. Here's why:
Most people don't have CHF 50'000 lying around. They earn monthly and can invest monthly. The savings plan fits real life — lump-sum investing is a theoretical option for a minority.
Anyone investing CHF 50'000 at once needs nerves of steel. Imagine investing everything — and the market falls 25% in the next three months. Could you stay calm? Most people can't. And they sell — at exactly the wrong moment.
The savings plan is the only strategy you'll stick with for 30 years. Not the theoretically optimal one — but the one that works in practice. The best diet isn't the one with the highest calorie efficiency. It's the one you stick with.
Want to run the numbers yourself? Use the arvy Compound Interest Calculator to see how your savings plan develops over 10, 20 or 40 years — with your own monthly amount.
The numbers: what a savings plan does over time
Here are the brutal facts. Assumption: 6% average annual return, monthly compounding, excluding fees and taxes.
| Monthly | 10 Years | 20 Years | 30 Years | 40 Years |
|---|---|---|---|---|
| CHF 100/mo. | CHF 16'400 | CHF 46'200 | CHF 100'500 | CHF 199'000 |
| CHF 300/mo. | CHF 49'200 | CHF 138'600 | CHF 301'400 | CHF 597'000 |
| CHF 500/mo. | CHF 82'000 | CHF 231'000 | CHF 502'800 | CHF 995'000 |
| CHF 1'000/mo. | CHF 163'900 | CHF 462'000 | CHF 1'005'600 | CHF 1'991'000 |
| CHF 2'000/mo. | CHF 327'800 | CHF 924'100 | CHF 2'011'200 | CHF 3'982'000 |
Look at the last column. CHF 500 a month becomes almost a million. Contributed: CHF 240'000. The rest — CHF 755'000 — is pure compound interest. Your money worked harder than you did.
And here's the wild part: between year 30 and year 40, the portfolio grows from CHF 503'000 to CHF 995'000. That's an increase of nearly CHF 500'000 in just 10 years — more than the first 30 years combined. That's compound interest on steroids. And the reason why waiting is the most expensive mistake you can make.
Run your own numbers with the Compound Interest Calculator, plan your target amount with the Savings Rate Calculator, or model your path to financial independence with the FIRE Calculator.
The savings plan in a crisis: your greatest ally
Picture this: March 2020, Covid crash. Markets fall 30% in three weeks. The news is apocalyptic. Everyone is talking about the end of the world.
The investor without a savings plan opens the app in panic, sees −30%, sells everything "before it gets worse". Locks in the loss. Only re-enters months later — after the recovery has already happened.
The investor with a savings plan does nothing. On April 1, the next contribution flows automatically. At the lowest prices in years. May 1, again. June 1, again. Without a single decision, this investor bought massively at the bottom — and captured the entire recovery.
Savings plan investor
+62%
CHF 500/mo. throughout, end of 2024
Lump sum investor
+48%
All in January 2020, end of 2024
Panic seller
+11%
Sold March 2020, back in June
The savings plan investor won — not through cleverness, but through automation. They did in the crisis what everyone should theoretically do, but almost nobody actually manages: they bought.
Falling prices are bad when you're selling. They're fantastic when you have a savings plan — because you're shopping the clearance sale.
Why savings plans work especially well with Quality Investing
A savings plan makes sense with any provider. But with a Quality Investing strategy, it unlocks a special kind of power. Here's why:
You regularly buy the best companies in the world. Not an anonymous index of 3'000 firms, but ~30 quality companies with strong cash flows: Nestlé, Visa, Microsoft, LVMH, Roche, ASML. Every month, your stake in these businesses grows.
You understand what you're buying. And that makes the difference in a crisis. When the market falls and your savings plan buys automatically, you know: "I'm buying more Nestlé — cheaper than last month. Nestlé is still selling coffee tomorrow." That conviction is priceless when everyone else is panic-selling.
You become a better investor every month. Not just because your wealth grows — but because each month you understand a little more about why a company is in the portfolio, how markets react, how you react to volatility.
Most investors underestimate how much fees eat into returns over 30 years. 1% per year sounds small — but on a long-term savings plan, it can easily cost CHF 100'000+. Calculate it with the arvy Fee Calculator.
How to set up your savings plan in 5 minutes
Here's the beautiful part: it's absurdly easy.
Step 1: Decide how much you can invest per month. Rule of thumb: what's left after fixed costs, your emergency fund, and enjoying life. CHF 100 is enough. CHF 500 is great. But start — no matter the amount.
Step 2: Set up a standing order at your bank — ideally 1–2 days after payday. The money flows before you can spend it.
Step 3: Forget it. Seriously. The whole point of the savings plan is that you don't have to do anything. No timing. No analysis. No daily portfolio checking. Let the standing order do the work.
Step 4 (optional, but powerful): Increase the amount by 5–10% every year. When your salary goes up, your savings plan should too. CHF 500 today, CHF 525 next year, CHF 550 the year after. The effect over 20 years is enormous.
Our recommendation
Start sustainable, not ambitious. Better CHF 300/month for 30 years than CHF 1'000/month for 6 months before you give up. Pick an amount you won't miss even in a bad month. You can always increase — and at arvy you can adjust, pause, or stop your savings plan any time, without fees.
The five golden savings plan rules
Rule 1: Automate or forget it
No "I'll transfer when I remember". No "not this month, I need the money for X". Standing order. Period. If you have to actively decide every month, you'll eventually stop. Guaranteed.
Rule 2: Make the amount sustainable, not ambitious
Better an amount you can sustain for 30 years than an ambitious one you abandon after 6 months. The best contribution is the one you don't miss even in a bad month.
Rule 3: Don't check your portfolio every day
Once a quarter is plenty. The savings plan is working for you — let it work. Daily checking only creates unnecessary emotions and tempts you into activity that hurts your returns.
Rule 4: NEVER stop your savings plan in a crisis
This is the golden rule. When the market falls, your savings plan is buying cheap. The crisis is the moment the savings plan unleashes its magic. Anyone who stops in a crisis loses exactly the advantage they set up the savings plan for.
Rule 5: Increase regularly
Salary raise? 50% into the savings plan. Bonus? One-time deposit into the portfolio. Inheritance? Invest part of it. Every increase acts like a turbo on compound interest.
Savings plans for Pillar 3a: the double effect
The savings plan is especially powerful in Pillar 3a — because you benefit twice.
Effect 1: Compound interest on your invested wealth. As described above. CHF 500 a month grows to almost a million over 40 years — in any investment vehicle.
Effect 2: Tax savings every single year. Every franc invested in Pillar 3a is tax-deductible. At a marginal tax rate of 35%, an annual 3a contribution of CHF 7'258 saves you around CHF 2'500 in taxes per year. Over 35 years: CHF 87'500 — just from the tax savings alone.
A savings plan in Pillar 3a is the only investment where you get returns and the government rewards you for it.
Calculate your personal 3a tax savings with the 3a Tax Calculator.
The ultimate savings plan: for your child from birth
If a savings plan is powerful for a 30-year-old — how powerful is it for a newborn?
CHF 100 a month from birth, at 7% returns, until the 18th birthday: roughly CHF 43'000. Left running until age 40: over CHF 190'000. A CHF 21'600 contribution becomes close to CHF 200'000. Because time is the most powerful lever you have — and a newborn has more of it than any other investor on Earth.
The best parents don't give their children money. They give them time in the market.
For parents
A savings plan from birth is the most valuable financial gift you can give your child. At arvy you can open a dedicated child portfolio from CHF 50/month — with the same ~30 quality companies, the same weekly education, and the same CFA-charterholder team. → The arvy Child Portfolio Guide
Frequently asked questions
What's the minimum amount for a savings plan?
At arvy you can start from CHF 1. More important than the amount is consistency. Even CHF 50 a month grows to roughly CHF 50'000 over 30 years at 6% returns. Better to start small than not at all — you can always increase.
Is a savings plan or a lump sum better?
Mathematically, lump-sum investing beats the savings plan in about two-thirds of cases — but only if you already have the money and can emotionally handle a crash right after investing. In practice, the savings plan wins because it matches monthly income and prevents panic selling.
Should I stop my savings plan in a crisis?
No — absolutely not. A crisis is exactly when you buy cheap. Anyone who stops in a crisis loses the most important advantage of the savings plan. The only exception: when you urgently need cash for living expenses or have to rebuild your emergency fund.
What's the best day of the month for a standing order?
Studies show: the difference between early, mid, and late month is negligible over 20+ years. What matters is that the standing order exists. Recommendation: 1–2 days after payday — so the money flows before you can spend it.
How much should I invest per month?
Rule of thumb: 10–20% of your net salary — but only what's left after fixed costs and an emergency fund of 3–6 months of expenses. Better CHF 200 a month sustainably than CHF 800 you abandon after three months.
Can I adjust or stop my savings plan any time?
Yes. At arvy you can increase, reduce, pause, or end your savings plan any time — without fees. Your money stays flexible and accessible. That's one of the biggest advantages over classic savings contracts or life insurance products.
Does a savings plan still make sense after 50?
Yes — especially combined with Pillar 3a. Even 15 years of compound interest makes a big difference. CHF 1'000 a month from age 50 grows to roughly CHF 290'000 by 65 at 6% p.a. And the 3a tax savings come on top, every year.
Savings plan or ETF — what's the difference?
This isn't an either-or question. A savings plan is the method (investing monthly, automatically). An ETF is a product you can invest in. You can run a savings plan into an ETF, into a Quality Investing portfolio (like arvy), or into individual stocks. The savings-plan habit matters more than the specific product.
Calculators & further reading
Compound Interest Calculator
How your wealth grows over time
Savings Rate Calculator
How much per month for your goal?
FIRE Calculator
Plan your financial independence
3a Tax Calculator
Your annual tax savings
Fee Calculator
What fees really cost you
Child Portfolio Guide
A savings plan for your child from birth
You've read this article all the way through. You now understand why the savings plan works. You know every day of waiting costs you. You know the amount matters less than the consistency.
There's only one thing left to do.
This article was written by Thierry Borgeat, co-founder of arvy, and reviewed by Patrick Rissi, CFA and Florian Jauch, CFA. Last updated April 2026.
Disclaimer: This article is for general information purposes and does not constitute personal investment advice. All projected returns are based on an assumed 6% annual return (monthly compounding) and are not guaranteed. Past performance is not a reliable indicator of future results. Actual returns will vary. Investments involve risk, including the loss of principal. arvy is a FINMA-regulated asset manager. Legal notices & disclaimer
