New to investing [Greece]

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jokerr
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Joined: Fri Feb 08, 2019 6:06 am

New to investing [Greece]

Post by jokerr » Fri Feb 08, 2019 7:47 am

Hi to all,

I'm glad I found you!

I am a 23-year-old tax resident in Greece and I have an account in Switzerland by willfare.

I would like your guidance on how to make a low-risk passive long-term investment. Reducing contributions as much as possible to tax authorities and management fees.

Thank you very much :sharebeer

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LadyGeek
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Re: New to investing [Greece]

Post by LadyGeek » Fri Feb 08, 2019 4:38 pm

Welcome! I have added your home country to the topic title.

I don't have the experience to answer your question, but I can suggest for you to read this wiki article: EU investing
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

ICH
Posts: 220
Joined: Wed Jun 13, 2018 3:08 am

Re: New to investing [Greece]

Post by ICH » Sat Feb 09, 2019 2:32 am

jokerr wrote:
Fri Feb 08, 2019 7:47 am
Hi to all,
I'm glad I found you!
I wish I had found this group when I was 23. It would have saved me a lot of money...

jokerr wrote:
Fri Feb 08, 2019 7:47 am
I am a 23-year-old tax resident in Greece and I have an account in Switzerland by willfare.
I 've not been a Greece tax resident for some time now, but I think I can help.
What is "an account in Switzerland by willfare"? Is this a bank or something?

jokerr wrote:
Fri Feb 08, 2019 7:47 am
I would like your guidance on how to make a low-risk passive long-term investment. Reducing contributions as much as possible to tax authorities and management fees.
1. I will suggest first to have a look at these guys: https://www.ourwallet.gr/pos-forologountai-ependyseis/ . They seem to be the closest thing to a Greece bogleheads chapter. You will see that taxation is not a major issue for UCITS funds. After that have a look at the wiki and particularly here: https://www.bogleheads.org/wiki/EU_investing

2. Arrange an account with one of the low cost, online, international brokers. In your case, that would be either Degiro or Interactive Brokers. Degiro will be cheaper. Whichever you select: do not use a Greek bank or any Greek broker (ΑΕΠΕΥ) - it's a waste of money and unreliable.

3. Establish an asset allocation. How much in bonds - how much in stocks. At 23 y.o. it is reasonable to go for something like 20%-80%. More info in the wiki.

4. Select the ETFs you want to buy. You have to go for ETFs insteaf of Mutual Funds; unfortunately access to index MFs is expensive, if at all possible.
The wiki has some portfolio suggestions, the forum threads have plenty more, I suggest as follows:
- Buy the Vanguard FTSE All-World UCITS ETF for your stock portion. Buy it in euros, either in Euronext Amsterdam (ticker: VWRL) or XETRA (ticker: VGWL)
- Continue buying only this, until you reach to a substantial amount in the account that it makes sense to add the bond ETF.
- Buy the iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc) for your bond portion. Again, buy it in euros, either in London (ticker: AGGH) or XETRA (ticker: EUNA) or Six-swiss (ticker: AGGH)

5. Continue doing that, and that only. Say no to all the marvellous investment opportunities that will come along in your life offering above average returns - most are simply scams and it is not easy to distinguish the ones that are not. Example: now in Greece, people are selling the real estate concept again for high returns with low risk -> that's a scam.

6. I assume you are aware about the capital controls. There is no way out of it so you have to comply. I trust the limit of money you can trasfer out of the country is high enough for a 23-y.o. person not to be affected by it.

Topic Author
jokerr
Posts: 7
Joined: Fri Feb 08, 2019 6:06 am

Re: New to investing [Greece]

Post by jokerr » Mon Feb 11, 2019 6:54 am

Dear ICH,

Thank you so much for your help and guidance! I already feel that some things are clearer than before after your reply.

I 've not been a Greece tax resident for some time now, but I think I can help.
What is "an account in Switzerland by willfare"? Is this a bank or something?
The money are in a Swiss bank and as you understand the fees are very high (custody etc). I am considering transfering them somewhere else. Do you have any suggestion?


1. I will suggest first to have a look at these guys: https://www.ourwallet.gr/pos-forologountai-ependyseis/ . They seem to be the closest thing to a Greece bogleheads chapter. You will see that taxation is not a major issue for UCITS funds. After that have a look at the wiki and particularly here: https://www.bogleheads.org/wiki/EU_investing
Very usefull article. So as far i Understand if i buy a UCITIS etf (example S&P500) today at 100.000 and sell it after 10 years at 160.000 i will not have to pay anything in taxes?

2. Arrange an account with one of the low cost, online, international brokers. In your case, that would be either Degiro or Interactive Brokers. Degiro will be cheaper. Whichever you select: do not use a Greek bank or any Greek broker (ΑΕΠΕΥ) - it's a waste of money and unreliable.
I am in the process of opening an IB account, but it seems to me that the platform is quite complicated. Would you suggest that I work with someone special to guide me in setting up my account and to avoid any "childish mistakes"?

Also as far as i read the best practice is to Invest directly to Vanguard but this is applicable only to US and UK residents. If i transfer the money in a UK bank is there any way to overcome that issue and invest directly with VN?


3. Establish an asset allocation. How much in bonds - how much in stocks. At 23 y.o. it is reasonable to go for something like 20%-80%. More info in the wiki.

20% Stocks and 80% Bonds? Could you kindly argue why do you believe that i must have such an allocation?


4. Select the ETFs you want to buy. You have to go for ETFs insteaf of Mutual Funds; unfortunately access to index MFs is expensive, if at all possible.
The wiki has some portfolio suggestions, the forum threads have plenty more, I suggest as follows:
- Buy the Vanguard FTSE All-World UCITS ETF for your stock portion. Buy it in euros, either in Euronext Amsterdam (ticker: VWRL) or XETRA (ticker: VGWL)
- Continue buying only this, until you reach to a substantial amount in the account that it makes sense to add the bond ETF.
- Buy the iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc) for your bond portion. Again, buy it in euros, either in London (ticker: AGGH) or XETRA (ticker: EUNA) or Six-swiss (ticker: AGGH)

Do you believe is safer to buy in Euro's than in Dollars? Also in the forum i see that almost everybody is suggesting the Vanguard SP500 etf. Do you reccomend? Is it possible to buy it through a UCITIS etf?

5. Continue doing that, and that only. Say no to all the marvellous investment opportunities that will come along in your life offering above average returns - most are simply scams and it is not easy to distinguish the ones that are not. Example: now in Greece, people are selling the real estate concept again for high returns with low risk -> that's a scam.
I couldn't agree more. Everybody is buying small houses in Athens the last year. I believe it is a "bubble"

6. I assume you are aware about the capital controls. There is no way out of it so you have to comply. I trust the limit of money you can trasfer out of the country is high enough for a 23-y.o. person not to be affected by it.

Yes i am aware regarding the limitations but this is not an issue for me. I do not have savings in Greece and my salary almost cover's my monthly expenses. So i will have to invest from the money that they are already in Switzerland.


Thanks again for your help :sharebeer

DJN
Posts: 521
Joined: Mon Nov 20, 2017 12:30 am

Re: New to investing [Greece]

Post by DJN » Mon Feb 11, 2019 7:29 am

Hi,
I think that ICH gave you good advice. I would follow that.
KISS - keep it simple and just invest in AGGH + IWDA + EIMI + WSML or an equivalent distributing folio. After you have checked your tax position with regards to dividend and capital gains taxation in your domicile.
In respect to Switzerland and Swiss banks and other business practices, my real experience there is that I would avoid it at all costs. Costs being the operative word, its a very expensive place to do business and banks will charge fees, (e.g. Swiss banks have to charge non residents a fee for keeping your money in their bank, my last charge was over CHF750 for an account with zero balance! Figure that one out). One other aspect of Switzerland is their paranoia about US tax and they are constantly looking for confirmation of the sources of your money.
i would transfer your money for investment purposes to IB or Internaxx or deGiro or Saxo. I have found them all ok. I don't think that you said how much money you had, if it's not too much then the investment platforms are fine.
good luck.
DJN
Yah shure

ICH
Posts: 220
Joined: Wed Jun 13, 2018 3:08 am

Re: New to investing [Greece]

Post by ICH » Mon Feb 11, 2019 8:46 am

I 've not been a Greece tax resident for some time now, but I think I can help.
What is "an account in Switzerland by willfare"? Is this a bank or something?
The money are in a Swiss bank and as you understand the fees are very high (custody etc). I am considering transfering them somewhere else. Do you have any suggestion?
Depends why you have it there in the first place. If it is cash as an emergency fund, it is not a bad place, although fees are crazy. Depends on the amount also. I have bank accounts in several countries; I would never keep an account in a country that charges custody fees.
1. I will suggest first to have a look at these guys: https://www.ourwallet.gr/pos-forologountai-ependyseis/ . They seem to be the closest thing to a Greece bogleheads chapter. You will see that taxation is not a major issue for UCITS funds. After that have a look at the wiki and particularly here: https://www.bogleheads.org/wiki/EU_investing
Very usefull article. So as far i Understand if i buy a UCITIS etf (example S&P500) today at 100.000 and sell it after 10 years at 160.000 i will not have to pay anything in taxes?
You would pay the contribution above a certain amount (εισφορα αλλυλεγγυης). This is assuming that the tax law remains the same - as we both know, tax law in Greece changes twice per year :oops:
2. Arrange an account with one of the low cost, online, international brokers. In your case, that would be either Degiro or Interactive Brokers. Degiro will be cheaper. Whichever you select: do not use a Greek bank or any Greek broker (ΑΕΠΕΥ) - it's a waste of money and unreliable.
I am in the process of opening an IB account, but it seems to me that the platform is quite complicated. Would you suggest that I work with someone special to guide me in setting up my account and to avoid any "childish mistakes"?

Also as far as i read the best practice is to Invest directly to Vanguard but this is applicable only to US and UK residents. If i transfer the money in a UK bank is there any way to overcome that issue and invest directly with VN?
The IB platform is complicated but you get used to it. Assuming you go the bogleheads way, it does not matter. You will not be using it every day anyway.
If you need help -> ask here.
If you are really uncomfortable with it and need help / support, I suggest using Mark Zoril from Plan Vision for the first year (96USD per year fixed fee). I have not used him but plenty of people I know have and all are happy with the support / price.

Going to Vanguard directly will not work. You have to be a resident there.

3. Establish an asset allocation. How much in bonds - how much in stocks. At 23 y.o. it is reasonable to go for something like 20%-80%. More info in the wiki.

20% Stocks and 80% Bonds? Could you kindly argue why do you believe that i must have such an allocation?
20% bonds and 80% stocks.
You don't have to have this allocation. It simply follows the "your age in bonds" mandra.

4. Select the ETFs you want to buy. You have to go for ETFs insteaf of Mutual Funds; unfortunately access to index MFs is expensive, if at all possible.
The wiki has some portfolio suggestions, the forum threads have plenty more, I suggest as follows:
- Buy the Vanguard FTSE All-World UCITS ETF for your stock portion. Buy it in euros, either in Euronext Amsterdam (ticker: VWRL) or XETRA (ticker: VGWL)
- Continue buying only this, until you reach to a substantial amount in the account that it makes sense to add the bond ETF.
- Buy the iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc) for your bond portion. Again, buy it in euros, either in London (ticker: AGGH) or XETRA (ticker: EUNA) or Six-swiss (ticker: AGGH)

Do you believe is safer to buy in Euro's than in Dollars? Also in the forum i see that almost everybody is suggesting the Vanguard SP500 etf. Do you reccomend? Is it possible to buy it through a UCITIS etf?
It is possible to go for an SP500 etf. I do not recommend it. You see it being recommended for many reasons; mainly because this is a US forum. Go global. If you prefer a fully accummulating portfolio, see the proposal from DJN. You can search for ETFs here: https://www.justetf.com/de-en/
If you have and use euros only, buy in euros.
5. Continue doing that, and that only. Say no to all the marvellous investment opportunities that will come along in your life offering above average returns - most are simply scams and it is not easy to distinguish the ones that are not. Example: now in Greece, people are selling the real estate concept again for high returns with low risk -> that's a scam.
I couldn't agree more. Everybody is buying small houses in Athens the last year. I believe it is a "bubble"
A couple of years ago, they were sending their money to Montenegro and Ukraine to get some extra interest and protect against the failure of Greek banks -> most of them lost their money when the banks in Montenegro failed...

6. I assume you are aware about the capital controls. There is no way out of it so you have to comply. I trust the limit of money you can trasfer out of the country is high enough for a 23-y.o. person not to be affected by it.

Yes i am aware regarding the limitations but this is not an issue for me. I do not have savings in Greece and my salary almost cover's my monthly expenses. So i will have to invest from the money that they are already in Switzerland.
You need to see this Switzerland story as part of an overall strategy. If you move all the money to IB and close the Swiss account, you will lose the easy, immediate access to cash. And from what you're saying, you will also not have any cash available in home country. There is something wrong in this reasoning if I understand correctly. Always have cash available to cover at least 3-6 months of expenses. Whether the cash is in a Greek bank, under the mattress or Switzerland, is for you to decide...

ICH
Posts: 220
Joined: Wed Jun 13, 2018 3:08 am

Re: New to investing [Greece]

Post by ICH » Mon Feb 11, 2019 8:49 am

DJN wrote:
Mon Feb 11, 2019 7:29 am
my last charge was over CHF750 for an account with zero balance!
:shock: :shock: :shock:

Topic Author
jokerr
Posts: 7
Joined: Fri Feb 08, 2019 6:06 am

Re: New to investing [Greece]

Post by jokerr » Mon Feb 11, 2019 3:34 pm

Guys thank you once again for the great tips!

Topic Author
jokerr
Posts: 7
Joined: Fri Feb 08, 2019 6:06 am

Re: New to investing [Greece]

Post by jokerr » Mon Feb 11, 2019 3:35 pm

ICH wrote:
Mon Feb 11, 2019 8:46 am
I 've not been a Greece tax resident for some time now, but I think I can help.
What is "an account in Switzerland by willfare"? Is this a bank or something?
The money are in a Swiss bank and as you understand the fees are very high (custody etc). I am considering transfering them somewhere else. Do you have any suggestion?
Depends why you have it there in the first place. If it is cash as an emergency fund, it is not a bad place, although fees are crazy. Depends on the amount also. I have bank accounts in several countries; I would never keep an account in a country that charges custody fees.
1. I will suggest first to have a look at these guys: https://www.ourwallet.gr/pos-forologountai-ependyseis/ . They seem to be the closest thing to a Greece bogleheads chapter. You will see that taxation is not a major issue for UCITS funds. After that have a look at the wiki and particularly here: https://www.bogleheads.org/wiki/EU_investing
Very usefull article. So as far i Understand if i buy a UCITIS etf (example S&P500) today at 100.000 and sell it after 10 years at 160.000 i will not have to pay anything in taxes?
You would pay the contribution above a certain amount (εισφορα αλλυλεγγυης). This is assuming that the tax law remains the same - as we both know, tax law in Greece changes twice per year :oops:
2. Arrange an account with one of the low cost, online, international brokers. In your case, that would be either Degiro or Interactive Brokers. Degiro will be cheaper. Whichever you select: do not use a Greek bank or any Greek broker (ΑΕΠΕΥ) - it's a waste of money and unreliable.
I am in the process of opening an IB account, but it seems to me that the platform is quite complicated. Would you suggest that I work with someone special to guide me in setting up my account and to avoid any "childish mistakes"?

Also as far as i read the best practice is to Invest directly to Vanguard but this is applicable only to US and UK residents. If i transfer the money in a UK bank is there any way to overcome that issue and invest directly with VN?
The IB platform is complicated but you get used to it. Assuming you go the bogleheads way, it does not matter. You will not be using it every day anyway.
If you need help -> ask here.
If you are really uncomfortable with it and need help / support, I suggest using Mark Zoril from Plan Vision for the first year (96USD per year fixed fee). I have not used him but plenty of people I know have and all are happy with the support / price.

Going to Vanguard directly will not work. You have to be a resident there.

3. Establish an asset allocation. How much in bonds - how much in stocks. At 23 y.o. it is reasonable to go for something like 20%-80%. More info in the wiki.

20% Stocks and 80% Bonds? Could you kindly argue why do you believe that i must have such an allocation?
20% bonds and 80% stocks.
You don't have to have this allocation. It simply follows the "your age in bonds" mandra.

4. Select the ETFs you want to buy. You have to go for ETFs insteaf of Mutual Funds; unfortunately access to index MFs is expensive, if at all possible.
The wiki has some portfolio suggestions, the forum threads have plenty more, I suggest as follows:
- Buy the Vanguard FTSE All-World UCITS ETF for your stock portion. Buy it in euros, either in Euronext Amsterdam (ticker: VWRL) or XETRA (ticker: VGWL)
- Continue buying only this, until you reach to a substantial amount in the account that it makes sense to add the bond ETF.
- Buy the iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc) for your bond portion. Again, buy it in euros, either in London (ticker: AGGH) or XETRA (ticker: EUNA) or Six-swiss (ticker: AGGH)

Do you believe is safer to buy in Euro's than in Dollars? Also in the forum i see that almost everybody is suggesting the Vanguard SP500 etf. Do you reccomend? Is it possible to buy it through a UCITIS etf?
It is possible to go for an SP500 etf. I do not recommend it. You see it being recommended for many reasons; mainly because this is a US forum. Go global. If you prefer a fully accummulating portfolio, see the proposal from DJN. You can search for ETFs here: https://www.justetf.com/de-en/
If you have and use euros only, buy in euros.
5. Continue doing that, and that only. Say no to all the marvellous investment opportunities that will come along in your life offering above average returns - most are simply scams and it is not easy to distinguish the ones that are not. Example: now in Greece, people are selling the real estate concept again for high returns with low risk -> that's a scam.
I couldn't agree more. Everybody is buying small houses in Athens the last year. I believe it is a "bubble"
A couple of years ago, they were sending their money to Montenegro and Ukraine to get some extra interest and protect against the failure of Greek banks -> most of them lost their money when the banks in Montenegro failed...

6. I assume you are aware about the capital controls. There is no way out of it so you have to comply. I trust the limit of money you can trasfer out of the country is high enough for a 23-y.o. person not to be affected by it.

Yes i am aware regarding the limitations but this is not an issue for me. I do not have savings in Greece and my salary almost cover's my monthly expenses. So i will have to invest from the money that they are already in Switzerland.
You need to see this Switzerland story as part of an overall strategy. If you move all the money to IB and close the Swiss account, you will lose the easy, immediate access to cash. And from what you're saying, you will also not have any cash available in home country. There is something wrong in this reasoning if I understand correctly. Always have cash available to cover at least 3-6 months of expenses. Whether the cash is in a Greek bank, under the mattress or Switzerland, is for you to decide...
ICH i have sent you a PM! ;)

Mors
Posts: 212
Joined: Wed Aug 16, 2017 10:06 am

Re: New to investing [Greece]

Post by Mors » Sat Mar 16, 2019 7:05 pm

Greek here. ICH got me covered. Just a few remarks.

-IB is relatively expensive for balances lower than $100k. Degiro or alternatively Lynx are better choices for a starting broker.

-While I generally agree that the Vanguard FTSE All-World UCITS ETF is the best all-round etf for your equity exposure, if you go with a Degiro custody account, which is the cheapest solution, you should prefer accumulating etfs. In this case, go with 80-90% iShares MSCI World UCITS ETF + 10-20% iShares MSCI Emerging Markets UCITS ETF. Add a Small cap world etf as you grow your balance, as per the EU investing boglheads wiki.

-For your bonds part you may wish to use a regular saving account. Piraeus bank has one offering 1% before tax, which is higher than what you should probably expect from current diversified euro goverment bond funds, although in order to open it you have to meet them in the bank with the proper documentation. I am sure that the other banks also have something passable, even if it is 0,40% or 0,50% it does compare favorably with the current low yields bonds offer. Bank account balances lower than 100k € are also legally insured. There is something to be said about the case of Grexit and losing money to inflation in case of cash, so there's that.

And finally a comment about real-estate in Greece. It is not worth it because of the hurdles of bureocracy and lack of efficient law-enforcement you will eventually face. However, investing in real-estate that can be rented through Airbnb is indeed very profitable currently. Athens is a relatively sure bet, as are touristic islands. However, there are serious risks involved: 1) Airbnb may be regulated with a yearly maximum days to rent. In that case, either you turn your real-esate in a hotel or you are out of luck. 2) There is a need for active management, from the decision what real-estate to buy to the everyday managerial needs of the rentals.
Just to give an example of profitability of a house rented through airbnb in a touristic island, an average 2 bedrooms 2 bathrooms house of ~100 m2 built 15~20 years ago (I value it at about 200k €) has an annual yield of ~12000 € before taxes. Net profit is calculated after subtracting operational costs (lets say 3000 €), taxes on rental income (1800 € for this amount), property taxes (for example 300-500 €), insurance (another 400 €) and maintainance (you should have 3000 to 4000 € handy). I argue that it is worth it only if you can manage it yourself and get rid of the middleman, so no passive investing after all.

imperia
Posts: 195
Joined: Tue Feb 21, 2017 6:31 am

Re: New to investing [Greece]

Post by imperia » Sat Mar 16, 2019 11:14 pm

For Broker I suggest IB.
There is no need to use IB platform, because you can use IB WebTrader which is very simple.
You can use QuickTrader, and great MobileTrader.

IB Platform is for professionals, but for buy and hold investor IB WebTrader and IB QuickTrader are best oprion.

DeGiro has lower fees if you invest small amount, but IB has much more adventages.

ICH
Posts: 220
Joined: Wed Jun 13, 2018 3:08 am

Re: New to investing [Greece]

Post by ICH » Sun Mar 17, 2019 12:00 pm

Mors wrote:
Sat Mar 16, 2019 7:05 pm
Greek here. ICH got me covered. Just a few remarks.
I agree with the remarks.

Best yielding CD at the moment seems to be with Attica bank.

Careful with the deposit compensation in Greece: if you have accounts in 2 banks, you are covered for 100+100 k euros. If the banks merge (common in Greece), you are covered for 100k total. Assuming that the government can cover anything :shock:

Mors,
Have you found a Greek Bogleheads chapter?

Mors
Posts: 212
Joined: Wed Aug 16, 2017 10:06 am

Re: New to investing [Greece]

Post by Mors » Sun Mar 17, 2019 4:48 pm

ICH wrote:
Sun Mar 17, 2019 12:00 pm
Mors wrote:
Sat Mar 16, 2019 7:05 pm
Greek here. ICH got me covered. Just a few remarks.
I agree with the remarks.

Best yielding CD at the moment seems to be with Attica bank.

Careful with the deposit compensation in Greece: if you have accounts in 2 banks, you are covered for 100+100 k euros. If the banks merge (common in Greece), you are covered for 100k total. Assuming that the government can cover anything :shock:

Mors,
Have you found a Greek Bogleheads chapter?
Attica bank indeed, as it is shown here: https://www.tsig.gr/lang-el/prothesmiakes
The return is also pretty good. The balances that are needed are usually too big for young investors, especially in the greek context of miniscule wages. Attica bank is also less reliable than the 4 systemic banks since it is not private and it is involved in scandals regarding lending to oligarchs without due diligence.

Merging is indeed an issue. Returning to drachma is also another. Diversification outside greek banks is key once again I guess.

Greek bogleheads chapter? No. Are you interested? I have no spare time currently, but I could consider it in some months from now. Till then, the ourwallet.gr blog does a really good job until then. The only bad advice I have found it gives is to invest in unhedged global bond etf.

Finally, I would like to mension the greek broker Solidus. It has a kind of outdated website, but it is around quite a while, it has low fees and uses the Z Trade platform. I would still prefer a low cost foreign broker, but for up to 30k euros that is the legally insured amount in Greece it is worth a look.
Last edited by Mors on Sun Mar 31, 2019 5:27 am, edited 1 time in total.

Topic Author
jokerr
Posts: 7
Joined: Fri Feb 08, 2019 6:06 am

Re: New to investing [Greece]

Post by jokerr » Mon Mar 18, 2019 3:56 pm

Hello Mors,

In my case, I don't think that the CD's of the Greek banks would be the best solution because I already have the money in another country. Bringing them to Greece means that I can't move them out if need (because of cc). And as you said, I would never risk having money in a Greek bank while is not impossible to return to the drachma.
So for the bond part, you suggest something different than iShares Global Aggregate Bd ETF HAcc that is suggested in wiki? What else then?

As for the online brokers, what you would do in terms of diversification somebody has more than 100k? Let's say 500k, would you suggest diversification among several brokers or you are ok having them all in IB?

Regarding the hedged and non-hedged part I must confess that is a little bit complicated for me. If we assume that I have all my money in euro should i convert some of them in dollars as many suggest? What is the risk and is there any way not to have currency risk?

Mors
Posts: 212
Joined: Wed Aug 16, 2017 10:06 am

Re: New to investing [Greece]

Post by Mors » Sun Mar 31, 2019 5:24 am

Hello joker,

You are right, there is no point in bringing money in Greece. iShares Global Aggregate Bd ETF HAcc is a perfectly fine choice by itself. You can also look around for high yielding saving accounts and term deposits in Euro. Even for 0,5% I would prefer them compared to a bond fund currently. In case you go with mainly term deposits, make sure to leave enough fixed income liquid so that you can rebalance from a potential 50% stock decline.

I would prefer to diversify among brokers, all else being equal. You can certainly do worse than going with only IB though. I would still keep the lion's share in IB, but I may also use other cheap brokers in addition as well. Cornertrade is a relatively cheap Swiss broker, you have probably heard of Degiro, Lynx is also another alternative that also works as an introducing broker to IB.

Forex diversification does not have long term benefits. The rationale behind having your fixed income in your local currency is that the currency exchange volatility trumps fixed income returns, so you lose the benefits of slow, steady returns that provide. This is kind of a moot point if you are a cosmopolitan and regularly use different currencies, in this case there is not much you can do to protect yourself from currency risk other than spread your bets among the currencies you use. Assuming this is not the case with you, having your fixed income in your local currency is usually the best you can do to reduce currency risk. If you have a large stock allocation, bigger than 70-80% of your porfolio for example, there is a point to be made about hedging a part of your stock allocation too, but as a Greek and looking at the etfs we Europeans have available, I have not found a convincing option for that yet. There are only a few options, their expense ratio is usually higher and their tracking difference leaves hints that there are additional hidden costs as well that do not worth the hassle to deal with them.

Valuethinker
Posts: 39071
Joined: Fri May 11, 2007 11:07 am

Re: New to investing [Greece]

Post by Valuethinker » Sun Mar 31, 2019 10:07 am

jokerr wrote:
Mon Mar 18, 2019 3:56 pm
Hello Mors,

In my case, I don't think that the CD's of the Greek banks would be the best solution because I already have the money in another country. Bringing them to Greece means that I can't move them out if need (because of cc). And as you said, I would never risk having money in a Greek bank while is not impossible to return to the drachma.
So for the bond part, you suggest something different than iShares Global Aggregate Bd ETF HAcc that is suggested in wiki? What else then?

As for the online brokers, what you would do in terms of diversification somebody has more than 100k? Let's say 500k, would you suggest diversification among several brokers or you are ok having them all in IB?

Regarding the hedged and non-hedged part I must confess that is a little bit complicated for me. If we assume that I have all my money in euro should i convert some of them in dollars as many suggest? What is the risk and is there any way not to have currency risk?
Hedge your fixed income into Euros. That's simple and easy to implement.

Don't hedge your currency exposure to global equities. In the long run the purchasing power should even out.

The above is a simple and widely followed rule and should work well assuming you increase your fixed income as you move towards retirement.

Panos_S
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Re: New to investing [Greece]

Post by Panos_S » Thu Apr 04, 2019 3:58 am

jokerr wrote:
Fri Feb 08, 2019 7:47 am
Hi to all,

I'm glad I found you!

I am a 23-year-old tax resident in Greece and I have an account in Switzerland by willfare.

I would like your guidance on how to make a low-risk passive long-term investment. Reducing contributions as much as possible to tax authorities and management fees.

Thank you very much :sharebeer
Hello, fellow Greek here. Just started reading about investing and would need some help with all that info. Could i pm you for some help?

Topic Author
jokerr
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Re: New to investing [Greece]

Post by jokerr » Fri Apr 05, 2019 6:56 am

Hi Panos,

Yes, of course, no problem, however, i am still new here. There are Greeks that know a lot of things in the forum!

ICH
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Re: New to investing [Greece]

Post by ICH » Fri Apr 05, 2019 1:04 pm

Panos_S wrote:
Thu Apr 04, 2019 3:58 am
Hello, fellow Greek here. Just started reading about investing and would need some help with all that info. Could i pm you for some help?
Since we 're becoming a crowd around here, why not post in public?
A p.m. will get you one opinion.
A post will definitely get you more. And can help another fellow Greek.

dkyr
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Re: New to investing [Greece]

Post by dkyr » Tue Apr 09, 2019 12:37 pm

Greek here also.
Mors wrote:
Sat Mar 16, 2019 7:05 pm

-While I generally agree that the Vanguard FTSE All-World UCITS ETF is the best all-round etf for your equity exposure, if you go with a Degiro custody account, which is the cheapest solution, you should prefer accumulating etfs. In this case, go with 80-90% iShares MSCI World UCITS ETF + 10-20% iShares MSCI Emerging Markets UCITS ETF. Add a Small cap world etf as you grow your balance, as per the EU investing boglheads wiki.
Since i'd prefer to buy the ETF's in Euro in order to avoid the currency risk what would be the equivalent proposal of the above mentioned iShares ETF's that are in USD?

ICH
Posts: 220
Joined: Wed Jun 13, 2018 3:08 am

Re: New to investing [Greece]

Post by ICH » Tue Apr 09, 2019 1:42 pm

dkyr wrote:
Tue Apr 09, 2019 12:37 pm
Greek here also.
Mors wrote:
Sat Mar 16, 2019 7:05 pm

-While I generally agree that the Vanguard FTSE All-World UCITS ETF is the best all-round etf for your equity exposure, if you go with a Degiro custody account, which is the cheapest solution, you should prefer accumulating etfs. In this case, go with 80-90% iShares MSCI World UCITS ETF + 10-20% iShares MSCI Emerging Markets UCITS ETF. Add a Small cap world etf as you grow your balance, as per the EU investing boglheads wiki.
Since i'd prefer to buy the ETF's in Euro in order to avoid the currency risk what would be the equivalent proposal of the above mentioned iShares ETF's that are in USD?
You need to grasp the concept of the different types of ETF currencies and mainly the difference between "trading currency" and the currencies of the assets that the ETF holds. There is a nice summary here: https://www.bogleheads.org/wiki/Non-US_ ... currencies.

Basically, you choose the trading currency based on convenience: if you have euros -> buy in euros. If you have usd -> buy in usd.
But whether you buy it in euros or usd, the performance will be the same.

Example:
- I want to buy the iShares Core MSCI World UCITS ETF.
- I go to the website here: https://www.ishares.com/uk/individual/e ... ts/251882/.
- I see that it has 2 versions: USD Accummulating and GBP hedged distributing.
- These two will have completely different performance - they are different funds.
- Go for the USD Accummulating ETF. Go to the "KEY FACTS" and you will see that the identification number of the ETF is ISIN=IE00B4L5Y983
- Go to the "LISTINGS" tab. You will see that this ETF is traded in several exchanges, in EUR, USD, GBP and MXN. The ticker also varies depending on the exchange. All of them are the same ETF (same ISIN).
- If you have euros, you can buy it in:
1. Borsa Italiana -> SWDA
2. Deutsche Boerse Xetra -> EUNL
3. Euronext Amsterdam -> IWDA

Similar steps for the iShares Core MSCI EM IMI UCITS ETF (ISIN=IE00BKM4GZ66)
In euros, you can buy it in:
1. Borsa Italiana -> EIMI
2. Deutsche Boerse Xetra -> IS3N
3. Euronext Amsterdam -> EMIM

dkyr
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Re: New to investing [Greece]

Post by dkyr » Wed Apr 10, 2019 3:11 am

@ICH - thanks. Crystal clear

PraefectusDelegatus
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Re: New to investing [Greece]

Post by PraefectusDelegatus » Wed Apr 17, 2019 1:14 pm

ICH wrote:
Tue Apr 09, 2019 1:42 pm
You need to grasp the concept of the different types of ETF currencies and mainly the difference between "trading currency" and the currencies of the assets that the ETF holds. There is a nice summary here: https://www.bogleheads.org/wiki/Non-US_ ... currencies.

Basically, you choose the trading currency based on convenience: if you have euros -> buy in euros. If you have usd -> buy in usd.
But whether you buy it in euros or usd, the performance will be the same.
I am a beginner myself but I believe these instruments (e.g. funds that track a US index but are traded in EUR) do so via the use of swaps. This is a derivative. I haven't read any prospectus in its entirty, though. Isn't default of the swapping partner a major risk factor? At least relative to what index investors might think: "I have a claim to the physical shares in these US companies." Anyways, you are never to avoid the currency risk -- you're buying a thing that's supposedly sitting in the US, after all. Am I mistaken?

http://www.morningstar.nl/nl/etf/snapsh ... Format=PDF

The next one mentions derivatives:

http://www.morningstar.nl/nl/etf/snapsh ... Format=PDF

Are these also swaps, or does this fund actually first trade euros for dollars to then buy S&p 500 shares?

Valuethinker
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Re: New to investing [Greece]

Post by Valuethinker » Thu Apr 18, 2019 2:58 am

PraefectusDelegatus wrote:
Wed Apr 17, 2019 1:14 pm
ICH wrote:
Tue Apr 09, 2019 1:42 pm
You need to grasp the concept of the different types of ETF currencies and mainly the difference between "trading currency" and the currencies of the assets that the ETF holds. There is a nice summary here: https://www.bogleheads.org/wiki/Non-US_ ... currencies.

Basically, you choose the trading currency based on convenience: if you have euros -> buy in euros. If you have usd -> buy in usd.
But whether you buy it in euros or usd, the performance will be the same.
I am a beginner myself but I believe these instruments (e.g. funds that track a US index but are traded in EUR) do so via the use of swaps. This is a derivative. I haven't read any prospectus in its entirty, though. Isn't default of the swapping partner a major risk factor? At least relative to what index investors might think: "I have a claim to the physical shares in these US companies." Anyways, you are never to avoid the currency risk -- you're buying a thing that's supposedly sitting in the US, after all. Am I mistaken?

http://www.morningstar.nl/nl/etf/snapsh ... Format=PDF

The next one mentions derivatives:

http://www.morningstar.nl/nl/etf/snapsh ... Format=PDF

Are these also swaps, or does this fund actually first trade euros for dollars to then buy S&p 500 shares?
Check the benchmark in the fund description. If it says "currency hedged" then the fund hedge back into its currency of reporting/ denomination/ accounting. So if it is a US bond fund but Euro-hedged, your risk exposure is in Euros not US dollars.

Many or most bond funds hedge back into their reporting currency.

Most equity funds do not. Volatility of currency affects you as does volatility of stock markets.

It's an extreme case where a swap fails, because they massively hedge these things (the banks that are counterparties). It could happen - a "Black Swan" in Taleb's terminology. It's one reason I tend to hold ishares, because they use physical replication, not synthetic (swaps based).

However I think it's a very low risk and if you have other reasons for using an ETF which works that way, then I would not get too worried.

If the derivatives (swaps, options, futures, forwards) are used for currency hedging then we really are in the financial world meltdown scenario if those contracts are not fulfilled.
Last edited by Valuethinker on Thu Apr 18, 2019 5:10 am, edited 1 time in total.

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BeBH65
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Re: New to investing [Greece]

Post by BeBH65 » Thu Apr 18, 2019 4:21 am

An etf can trade in many currencies, and is sometimes hedged to a currency.

Without hedging there is a currency risk between the ccy used by the investor and the ccy of the asset. There are no swaps or derivatives involved in this.

With hedging, the currency risk is hedged through the use of derivatives/futures/swaps/... . In fact by using hedged funds the investor is effectively exchanging risks and this at a small cost.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles

Valuethinker
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Re: New to investing [Greece]

Post by Valuethinker » Thu Apr 18, 2019 5:07 am

PraefectusDelegatus wrote:
Wed Apr 17, 2019 1:14 pm
ICH wrote:
Tue Apr 09, 2019 1:42 pm
You need to grasp the concept of the different types of ETF currencies and mainly the difference between "trading currency" and the currencies of the assets that the ETF holds. There is a nice summary here: https://www.bogleheads.org/wiki/Non-US_ ... currencies.

Basically, you choose the trading currency based on convenience: if you have euros -> buy in euros. If you have usd -> buy in usd.
But whether you buy it in euros or usd, the performance will be the same.
I am a beginner myself but I believe these instruments (e.g. funds that track a US index but are traded in EUR) do so via the use of swaps. This is a derivative. I haven't read any prospectus in its entirty, though. Isn't default of the swapping partner a major risk factor? At least relative to what index investors might think: "I have a claim to the physical shares in these US companies." Anyways, you are never to avoid the currency risk -- you're buying a thing that's supposedly sitting in the US, after all. Am I mistaken?

http://www.morningstar.nl/nl/etf/snapsh ... Format=PDF

The next one mentions derivatives:

http://www.morningstar.nl/nl/etf/snapsh ... Format=PDF

Are these also swaps, or does this fund actually first trade euros for dollars to then buy S&p 500 shares?
Just a note, if one clicks through those links they are in Dutch. Is there an equivalent description in English?

PraefectusDelegatus
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Re: New to investing [Greece]

Post by PraefectusDelegatus » Thu Apr 18, 2019 8:05 am

I can't get the XAMS (Euronex Amsterdam) version of the ETFs (in EUR) if I look them up on morningstar.com. So I think Dutch is the only option. Though don't have a lot of experience with this.

PraefectusDelegatus
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Re: New to investing [Greece]

Post by PraefectusDelegatus » Thu Apr 18, 2019 8:14 am

CSPX has tripled since January 2011, while the S&P 500 has increased by less than 150%. Does that mean CSPX is not hedged against currency volatility? I assume the difference in performance is because EUR is so cheap compared to USD?

Valuethinker
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Joined: Fri May 11, 2007 11:07 am

Re: New to investing [Greece]

Post by Valuethinker » Thu Apr 18, 2019 8:18 am

PraefectusDelegatus wrote:
Thu Apr 18, 2019 8:14 am
CSPX has tripled since January 2011, while the S&P 500 has increased by less than 150%. Does that mean CSPX is not hedged against currency volatility? I assume the difference in performance is because EUR is so cheap compared to USD?
I don't know the tickers or what funds they mean. Generally, here, that's a problem with posters - for whatever reason, they just post fund tickers.

I doubt the EUR has deteriorated by 50% against the USD in that time (which it would need to on the numbers you present). Say from 1 Euro per USD to 2 Euro per USD?

If you asked me, I'd say the dollar appreciated by about 25% against the Euro in that time.

So 150% of returns becomes (1+150%)(1+25%) -1

ICH
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Re: New to investing [Greece]

Post by ICH » Thu Apr 18, 2019 9:45 am

PraefectusDelegatus wrote:
Wed Apr 17, 2019 1:14 pm
ICH wrote:
Tue Apr 09, 2019 1:42 pm
You need to grasp the concept of the different types of ETF currencies and mainly the difference between "trading currency" and the currencies of the assets that the ETF holds. There is a nice summary here: https://www.bogleheads.org/wiki/Non-US_ ... currencies.

Basically, you choose the trading currency based on convenience: if you have euros -> buy in euros. If you have usd -> buy in usd.
But whether you buy it in euros or usd, the performance will be the same.
I am a beginner myself but I believe these instruments (e.g. funds that track a US index but are traded in EUR) do so via the use of swaps. This is a derivative. I haven't read any prospectus in its entirty, though. Isn't default of the swapping partner a major risk factor? At least relative to what index investors might think: "I have a claim to the physical shares in these US companies." Anyways, you are never to avoid the currency risk -- you're buying a thing that's supposedly sitting in the US, after all. Am I mistaken?

http://www.morningstar.nl/nl/etf/snapsh ... Format=PDF

The next one mentions derivatives:

http://www.morningstar.nl/nl/etf/snapsh ... Format=PDF

Are these also swaps, or does this fund actually first trade euros for dollars to then buy S&p 500 shares?
PraefectusDelegatus,

Just to understand each other, my post above was for:
1. iShares Core MSCI World UCITS ETF
2. iShares Core MSCI EM IMI UCITS ETF
The first is having stocks of developed markets, the second stocks of emerging markets. With these 2 ETFs, you basically own the global stock market. They are having any derivatives. They are simply traded in many currencies.


The 2 ETFs that you mention are:
a. Invesco S&P 500 UCITS ETF (EUR) | SPXS, which tracks the S&P 500 index with swaps. https://etf.invesco.com/gb/private/en/p ... nformation
b. iShares Core S&P 500 UCITS ETF, CSPX, which tracks the S&P 500 index physically, without swaps. https://www.ishares.com/uk/individual/e ... rough=true

I am not a US person, so if you ask me which S&P 500 index ETF to choose, I would go for neither. I prefer global, all in one ETFs.

ICH
Posts: 220
Joined: Wed Jun 13, 2018 3:08 am

Re: New to investing [Greece]

Post by ICH » Thu Apr 18, 2019 9:48 am

PraefectusDelegatus wrote:
Thu Apr 18, 2019 8:14 am
CSPX has tripled since January 2011, while the S&P 500 has increased by less than 150%. Does that mean CSPX is not hedged against currency volatility? I assume the difference in performance is because EUR is so cheap compared to USD?
Note: CSPX is accumulating; i.e. the dividends are not distributed to the shareholders, but are increasing the value of the fund. The S&P 500 index "distributes" the dividends. Maybe that's why you see a big difference.

PraefectusDelegatus
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Joined: Wed Apr 17, 2019 1:00 pm

Re: New to investing [Greece]

Post by PraefectusDelegatus » Thu Apr 18, 2019 10:33 am

ICH wrote:
Thu Apr 18, 2019 9:45 am
Just to understand each other, my post above was for:
1. iShares Core MSCI World UCITS ETF
2. iShares Core MSCI EM IMI UCITS ETF
The first is having stocks of developed markets, the second stocks of emerging markets. With these 2 ETFs, you basically own the global stock market. They are having any derivatives. They are simply traded in many currencies.


The 2 ETFs that you mention are:
a. Invesco S&P 500 UCITS ETF (EUR) | SPXS, which tracks the S&P 500 index with swaps. https://etf.invesco.com/gb/private/en/p ... nformation
b. iShares Core S&P 500 UCITS ETF, CSPX, which tracks the S&P 500 index physically, without swaps. https://www.ishares.com/uk/individual/e ... rough=true

I am not a US person, so if you ask me which S&P 500 index ETF to choose, I would go for neither. I prefer global, all in one ETFs.
Sorry I may have highjacked your post but I was indeed using different examples (funds I know) to discuss the segue about currencies.
Valuethinker wrote:
Thu Apr 18, 2019 8:18 am
I don't know the tickers or what funds they mean. Generally, here, that's a problem with posters - for whatever reason, they just post fund tickers.
Tickers are short and easy. Full fund names sometimes differ in a single word; easy to read over it. Just search for the ticker in e.g. morningstar?

By the way, a 150% increase is a factor 2.5, I hope? Tripling is not twice a 150% increase.
ICH wrote:
Thu Apr 18, 2019 9:48 am
PraefectusDelegatus wrote:
Thu Apr 18, 2019 8:14 am
CSPX has tripled since January 2011, while the S&P 500 has increased by less than 150%. Does that mean CSPX is not hedged against currency volatility? I assume the difference in performance is because EUR is so cheap compared to USD?
Note: CSPX is accumulating; i.e. the dividends are not distributed to the shareholders, but are increasing the value of the fund. The S&P 500 index "distributes" the dividends. Maybe that's why you see a big difference.
Sorry, I forgot to mention. I used this tool which says +165% dividends reinvested.

ICH
Posts: 220
Joined: Wed Jun 13, 2018 3:08 am

Re: New to investing [Greece]

Post by ICH » Thu Apr 18, 2019 10:49 am

PraefectusDelegatus wrote:
Thu Apr 18, 2019 10:33 am
Sorry, I forgot to mention. I used this tool which says +165% dividends reinvested.
PraefectusDelegatus:
Try justetf: https://www.justetf.com/de-en/etf-profi ... &tab=chart

you can see the effect of different currencies and if you choose distributing funds, you can choose to run the calcs with dividends reinvested or not.

From 19-05-2010 to date, I see CSPX in EUR gaining 230%. In USD 200%. In GBP 230%. In CHF 165%. That is one of the effects of currency variations.

Using the tool you posted, I see that from May 2010 to April 2019, the S&P 500 has risen 157% and with dividends reinvested 205%. I assume this does not include the costs of a fund. Dates are slightly different but you would expect the fund costs to reduce the return of the index.

I am not certain what is your question about currencies.

PraefectusDelegatus
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Re: New to investing [Greece]

Post by PraefectusDelegatus » Thu Apr 18, 2019 11:46 am

ICH wrote:
Thu Apr 18, 2019 10:49 am
PraefectusDelegatus wrote:
Thu Apr 18, 2019 10:33 am
Sorry, I forgot to mention. I used this tool which says +165% dividends reinvested.
PraefectusDelegatus:
Try justetf: https://www.justetf.com/de-en/etf-profi ... &tab=chart

you can see the effect of different currencies and if you choose distributing funds, you can choose to run the calcs with dividends reinvested or not.

From 19-05-2010 to date, I see CSPX in EUR gaining 230%. In USD 200%. In GBP 230%. In CHF 165%. That is one of the effects of currency variations.

Using the tool you posted, I see that from May 2010 to April 2019, the S&P 500 has risen 157% and with dividends reinvested 205%. I assume this does not include the costs of a fund. Dates are slightly different but you would expect the fund costs to reduce the return of the index.

I am not certain what is your question about currencies.
That's an answer to my question :)
For future reference: indeed the tool I used does not include any costs.

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