Investing from Belgium

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You can apply the Bogleheads investment philosophy if you live in Belgium, but you must be aware of a few things. The general guidance given in EU investing is applicable. The pages Investing from the Netherlands and UK investing also have good information, and are used here as a inspiration (or even plainly copied).

General approach
In Belgium, an investor is currently able to buy index funds in the form of exchange-traded funds (ETFs) through a bank or broker and there are companies offering index mutual funds.

The stock market in Belgium is very small, dominated by a few companies and not very diversified. As Belgium is very integrated in the EU, it is advised to consider the EU as the home-market.

Retirement investing in Belgium
In Belgium, retirement savings are often formulated according to a "four pillar" funding system.


 * The first pillar consists of a state pension (rustpensioen) that provides a basic income, the level of which is linked to the statutory minimum wage and the amount of years that a person has contributed.
 * The second pillar consists of the collective pension schemes (groepsverzekering) linked to the employer. A majority of the Belgian employees employed in the private work space have some level of collective pension. Previously these pensions were often 'defined benefit', now they are mostly 'defined contribution' by the employer. These have a guaranteed (accumulating) return (3.75% until the end of 2015; from 2016 onwards this is 1.75% with a possible participation in the gains). Some pension schemes allow a personal contribution.
 * The third pillar includes the personal pension saving and the long term saving. This is tax advantaged savings that provide 30% tax credit when investing; with an eight or ten percent 'liberating' taxation at age 60. (TBC if the same for lange termijn sparen). One has the choice to save in an insurance (pensioenspaarverzekering) or to save in mutual funds (pensioenspaarfunds), this can be either stocks or bonds. The insurance, tak21 savings insurance (tak21-spaarverzekering) guarantees a fixed return with possibly some bonus, the return of the funds depends on the market return of the underlying stocks. The tax on the insurance premium (2%), the  total expense ratio (TER) (up to 1.3%), and entry (typically 3%, even going up to 6%) and exit fees for these funds are very high compared to what is typically considered acceptable for Bogleheads. The tax advantages still make this advantageous for Bogleheads (TBC). There are two kinds of plans:
 * The individual pension products to which everyone can contribute voluntarily. Currently 940 euro per year.
 * "Long-term" tax advantaged investing (Lange termijn sparen) for people who do not have a mortgage. Contribution and income limits are shown in the accompanying table.


 * The fourth pillar consists of free personal investments:
 * Many people own their house in Belgium. This is considered a very good investment. The mortgage payments provide some tax benefit.
 * Investments backed by government protection until 100,000 Euro (Saving accounts and some other investments)
 * tak-21 savings (tak21-spaarverzekering) and tak-23 investment-linked (tak-23 beleggingsverzekeringen) insurances.
 * Anything else.

Rebalancing
Rebalancing is possible inside the third pillar but one needs to remain within the same "type" to avoid taxation. One switch per year is often allowed without costs.

In the fourth pillar there are no capital gains tax for positions held longer then 6 months. Hence rebalancing a portfolio faces few constraints.

Taxation of investments

 * 25% taxation on income (interest, dividends, etcetera).
 * except for the first 1,880 euro interest on gereglementeerde savings accounts
 * No taxation on capital gains.
 * Except for 33% taxation on speculative short term gains if the position was held less then 6 months.
 * No taxation on net-wealth.

Which funds to invest in from Belgium
The EU investing wiki page mentions useful aspects of funds to consider, such as; whether the fund distributes dividends, if it is synthetically or physically replicating and the distinction between base currency and trading currency.

Type of ETF
For Belgian investors it seems best to invest through accumulating ETFs domiciled in Ireland:
 * Accumulating funds: because Belgium taxes dividends at 25% (but does not tax capital gains if the fund is held longer than six months).
 * Domiciled in Ireland : For the reasons mentioned in this wiki page, which also shows calculations for how ETFs domiciled in Ireland are more cost effective than holding US domiciled funds (although Belgians would qualify for a 15% withholding tax rate on dividends and on top of that 25% tax from the Belgian government).
 * Some of the reasons why international investors are often not advised to buy US domiciled assets is because of US estate taxes, FATCA (Foreign Account Tax Compliance Act) and because their country does not have a withholding tax treaty (see also Nonresident alien taxation).
 * Dutch domiciled funds need to be avoided because the Dutch government taxes dividends at 15%, which you cannot reclaim as a Belgian investor.
 * French domiciled funds need to be avoided because the French government taxes dividends at 30%.
 * German domiciled funds need to be avoided because the German government taxes dividends at 26.375%.
 * UK domiciled funds need to be avoided because XXX.
 * Luxembourg domiciled funds need to be avoided because they often cannot access tax treaties to reduce dividend withholding tax.
 * Belgian domiciled funds need to be avoided because XXX.

Equity
Like many international investors, people investing from Belgium could consider to approximate the global equity market;.

Example funds (using the following selection criteria: all-cap, low costs, fund size is decent, full replication or a high amount of stocks relative to the index when using optimised sampling, accumulating):

The following funds can be used to focus on Europe:

For investing in the Eurozone:

Protection/Bonds
Investing for protection can be done through multiple instruments: saving accounts (government insured or not), term accounts, government bonds (staatsleningen or Obligations Linéaires -Lineaire Obligaties; abbreviated OLO, in one of these nice Belgian bilingual abbreviations), and of course bond index funds.

Bonds index funds (ETFs)
Belgian investors have access to many options for bond ETFs through one of the ETF exchanges: government bond funds (government bonds reduce credit risk); corporate, investment grade and high yield bond funds; inflation-linked funds; funds that are euro-denominated or funds in other currencies (generally bonds in your own currency are advised if bonds are used for protection. This avoids currency volatility which is a big part of short term volatility with bonds). Funds are available across the duration spectrum (lower duration means lower interest risk). Typically each risk reduction also reduces the expected return.

Some examples from the Amsterdam stock exchange; courtesy of iShares' product overview:

For broad market, euro denominated bonds:

For specific maturity euro denominated bonds:

Note: that investment grade corporate funds are also available: