Young student investing for the future [Belgium]

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Tomrox
Posts: 2
Joined: Fri Oct 06, 2017 12:02 pm

Young student investing for the future [Belgium]

Post by Tomrox » Fri Oct 06, 2017 12:18 pm

Emergency funds: I currently have a low 5 figures capital, nothing is invested

Debt: No debts

Tax Filing Status: Single, living with parents, no real monthly spendings

Tax Rate: That's one thing that I'm not really sure of, I read the boglehead wiki about Investing_from_Belgium and didn't really understand if I'll have to pay taxes on the dividens, so if someone could explain me this for my coutnry it would be great

State of Residence: Belgium

Age: 21

Desired Asset allocation: Don't really know, if I understand well stocks is more risk but more income so I was thinking somehting like 70% stocks / 30% bonds

Desired International allocation: I have no idea what are the advantages to invest in international allocation

So I'm a student with a small capital, I'm working few days a week to get some money, probably earning in average 400€/month and I'm looking forward to invest this money without touching my initial capital at first to keep it as my emergency fund.
Was only reading some artciles here and there trying to understand the principle and was thinking about making a three-fund portfolio, the Blackrock Ishares one for example.

I would like to know if it is possible to get some advices on what should I do and if anybody knows how the taxations works in belgium it would be great

RadAudit
Posts: 2597
Joined: Mon May 26, 2008 10:20 am
Location: Second star on the right and straight on 'til morning

Re: Young student investing for the future [Belgium]

Post by RadAudit » Fri Oct 06, 2017 7:32 pm

Welcome to the forum.

When you say international, what do you mean? Beyond Belgium? Beyond Europe? Since I'm in the USA, international means outside the US to me. I'm guessing it means something else to you.

Having said that, you might want to find a total world mutual fund if you can. That would put 50% of your equities in the US and the other 50% of the equities would be spread over the rest of the world -Europe, Asia and Canada - both developed and emerging markets.

Other folks will be along shortly with answers for your other questions.
"Everything will be all right in the end. If everything is not all right, then it is not the end." - The Best Exotic Marigold Hotel


Mors
Posts: 35
Joined: Wed Aug 16, 2017 10:06 am

Re: Young student investing for the future [Belgium]

Post by Mors » Sat Oct 07, 2017 7:31 am

Greetings.

The most usual lazy portfolio portfolio for european investors consists from the etfs below.

Developed markets: https://www.justetf.com/de-en/etf-profi ... 00B4L5Y983

Emerging markets: https://www.justetf.com/de-en/etf-profi ... 00BKM4GZ66

And finally a european bond etf. Since you would rather have an accumulating etf, here is an example: https://www.justetf.com/de-en/etf-profi ... 0290355717

An alternative to the european bond fund is to put your cash allocation is a high interest saving account, a bank CD or to buy an euro-hedged international bond etf, like this:

https://www.justetf.com/de-en/etf-profi ... 0942970798

The stocks / bond allocation for your age should range from 80/20 to 100/0. 90/10 is what I would choose. For equities, 90/10 is the developed markets / emerging markets market cap allocation, but some prefer to overweight EM because of a bit better expected returns.

The next step is to choose your Broker. I do not know what local brokers you have available. From the european brokers Degiro and Interactive Brokers are the cheapest, but IB has a montly inactivity fee fro balances less than 100k. Many brokers make some discounts to specific etfs. If for example you choose degiro, you can buy without commisions the iShares MSCI Core World I posted above, as well as the em and bond etfs below:

https://www.justetf.com/de-en/etf-profi ... 0010959676

https://www.justetf.com/de-en/etf-profi ... 0010028860

Here is a link with an online broker comparison.

https://brokerchooser.com/

Also check the tax-advantaged investment options in Belgium.

Tomrox
Posts: 2
Joined: Fri Oct 06, 2017 12:02 pm

Re: Young student investing for the future [Belgium]

Post by Tomrox » Sun Oct 08, 2017 3:59 pm

Thank you for the answers
RadAudit wrote:
Fri Oct 06, 2017 7:32 pm
Welcome to the forum.

When you say international, what do you mean? Beyond Belgium? Beyond Europe? Since I'm in the USA, international means outside the US to me. I'm guessing it means something else to you.

Having said that, you might want to find a total world mutual fund if you can. That would put 50% of your equities in the US and the other 50% of the equities would be spread over the rest of the world -Europe, Asia and Canada - both developed and emerging markets.

Other folks will be along shortly with answers for your other questions.
For international I mean outside of my own country so you were right when guessing that is not the same as for you, I'll look for some funds/etfs like you said and will keep learning about the subject
Mors wrote:
Sat Oct 07, 2017 7:31 am
Greetings.

The most usual lazy portfolio portfolio for european investors consists from the etfs below.

Developed markets: https://www.justetf.com/de-en/etf-profi ... 00B4L5Y983

Emerging markets: https://www.justetf.com/de-en/etf-profi ... 00BKM4GZ66

And finally a european bond etf. Since you would rather have an accumulating etf, here is an example: https://www.justetf.com/de-en/etf-profi ... 0290355717

An alternative to the european bond fund is to put your cash allocation is a high interest saving account, a bank CD or to buy an euro-hedged international bond etf, like this:

https://www.justetf.com/de-en/etf-profi ... 0942970798

The stocks / bond allocation for your age should range from 80/20 to 100/0. 90/10 is what I would choose. For equities, 90/10 is the developed markets / emerging markets market cap allocation, but some prefer to overweight EM because of a bit better expected returns.

The next step is to choose your Broker. I do not know what local brokers you have available. From the european brokers Degiro and Interactive Brokers are the cheapest, but IB has a montly inactivity fee fro balances less than 100k. Many brokers make some discounts to specific etfs. If for example you choose degiro, you can buy without commisions the iShares MSCI Core World I posted above, as well as the em and bond etfs below:

https://www.justetf.com/de-en/etf-profi ... 0010959676

https://www.justetf.com/de-en/etf-profi ... 0010028860

Here is a link with an online broker comparison.

https://brokerchooser.com/

Also check the tax-advantaged investment options in Belgium.
Thanks for you answer it's really helpful, considering the broker my bank is offering this service don't really know if it's a good idea or not, there is some fees but I don't know if they are really high but haven't read anything about no fees when buying particulars etf


I tried to get more informations about taxation in my country and if I understand what is taxed is the dividens, so if I invest in capitalization etfs I shouldn't get taxed on my dividens, knowing also that when selling etfs or shares none professional traders aren't taxed except the transactions fees

So is capitalisation etfs the move ? I also need to understand all those different etfs what all those names means where should I start ?

Mors
Posts: 35
Joined: Wed Aug 16, 2017 10:06 am

Re: Young student investing for the future [Belgium]

Post by Mors » Tue Oct 10, 2017 11:25 am

You are welcome. For Belgium, accumulating etfs are the ones to look for.

Justetf.com has useful knowledge to start with. Other than that, the Bogleheads wiki page is an ideal place to start reading, and Vanguard has also a wealth of knowledge for passive investing.

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BeBH65
Posts: 840
Joined: Sat Jul 04, 2015 7:28 am

Re: Young student investing for the future [Belgium]

Post by BeBH65 » Wed Oct 11, 2017 10:58 am

Hello TomRox,

Indeed it is good the build good habits early in your financial life: saving a good amount of your income, living below your means, keeping an emergency fund, not trying to chase performance in the stock market by trying to time it.

On this forum we like maximally diversified low cost investments: iShares core MSCI world UCITS ETF is a fund that gives you access to the 1600 largest stocks of the developped markets. This might be a good fund to regurarly invest in. Given your savings rate, maybe 1/quarter?

Where do you safe your emergency funds? pls consider miving it gradually to a savings account which still gives "some" intrest. I think there is still one bank with >1%/yr for a fixed monthly deposit.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

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