Author Topic: Investing in stock index funds in Holland.  (Read 11432 times)

rikkert

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Investing in stock index funds in Holland.
« on: July 23, 2014, 02:20:44 AM »
Dear Mustachians.

As a recently graduated student who is lucky enough to immediately get a job (and a junior Mustachian) I want to make my money work for me.

As all Mustachians know, the easiest way to do this is through Stock index funds.

There is one problem, however. I live in the Netherlands and I can't seem to find an index fund which returns the annual 7% (after inflation) where MMM is talking about. I can't invest in funds like Vanguard because I have to have an address in the USA (moving to the USA is not an option;) ).

The highest return I could find gives me 4% (before inflation, based on previous results). But no dividend (I'm a rookie on this subject so any help with this would be appreciated as well).

With that 4% it will take me ages to get retired early and that's exactly what we don't want here. Does anyone have a tip for me, or know an index fund in which I can invest which gives me a higher annual return?

Greetings,

a junior (soon to be) Mustachian.

DaKini

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Re: Investing in stock index funds in Holland.
« Reply #1 on: July 23, 2014, 02:38:36 AM »
Can you buy ETF shares via an online broker?
That is what i do here in germany. I haven't found good mutual index funds that arent front loaded or have high annual fees here.

SpicyMcHaggus

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Re: Investing in stock index funds in Holland.
« Reply #2 on: July 23, 2014, 11:27:12 AM »
Despite living in the Netherlands, you should be able to trade on NYSE, NASDAQ, and SP500. If you can't, perhaps talk to another broker.

Iconoclast

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Re: Investing in stock index funds in Holland.
« Reply #3 on: July 24, 2014, 12:51:18 AM »
Sign up with Binck, ABN or one of the other online brokers. They offer all the ETFs. I'm not sure how the tax system works with Vanguard, which is based in the US. There are comparable low-cost ETFs in Europe.

Silvie

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Re: Investing in stock index funds in Holland.
« Reply #4 on: July 24, 2014, 12:56:15 AM »
Check out Meesman (www.meesman.nl). They offer Vanguard through a few funds. They also seem to be one of the cheapest, if not the the cheapest. I am planning to invest with them as soon as I can :)

rikkert

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Re: Investing in stock index funds in Holland.
« Reply #5 on: July 24, 2014, 03:12:19 AM »
Thanks for all the advice,

I was able to find the information on the efficiency on Meesman.nl and it seems to be a good indexfund.

I wasn't able to find any information on efficiency for Binck (ETF's). So at the moment I'm thinking: Meesman. But if the efficiency for Binck is higher (but I can't seem to find it anywhere) I'm missing out.

(I know that previous results are no guarantee for the future)

Is an ETF really that much more efficient? Do I just have to 'trust' that Binck will get me better results with ETF's? (the costs per transaction are 6,50!) but no service fee/year and just a 0,10% fee over every transaction. But when I invest 500/month It will cost me 6,50 EVERY TIME! (and then I'm not even talking about the 0,10% fee).

So really what's the best thing to do here ??

jugglingcontinents

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Re: Investing in stock index funds in Holland.
« Reply #6 on: July 24, 2014, 03:26:39 AM »
Hey Rikkert, fellow wannabe-mustachian here. Meesman's a great option - I personally use them. I'm also thinking of using Binck in the future as they offer Vanguard index funds - but the transaction fees and the 'dividend tax leak' of ~15% stop me from taking the plunge yet. Hoping to get a few more options from other Dutch investors on this thread :)

Check out Econowiser's blog (http://econowiser.wordpress.com/) - she talks extensively about index fund investing for Nederlanders.

rikkert

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Re: Investing in stock index funds in Holland.
« Reply #7 on: July 24, 2014, 03:41:14 AM »
Hello jugglincontinets,

Thanks for sharing your experiences with Meesman. I think I will also start using Meesman. With the 25 administration cost/year they're expensive at the beginning, but when have a massive stash after a couple of years the 25/year becomes negligible. The transaction costs and management costs are cheaper than anywhere else.

Starting next month:) (and taking Binck in consideration when the situation improves in the future, maybe invest with Meesman and Binck simultaneously in the future).

By the way: Does anyone have any tips on WHEN to invest?

For example: I like to save 200 euro/month. But sometimes the market is 'on sale' and sometimes it's not. So sometimes it might be better to NOT invest 200 euro (and save it up for later, and then invest 400 euro). Does anyone know how I can know when the market is on sale and when it's not?
« Last Edit: July 24, 2014, 03:48:36 AM by rikkert »

FIREman2036

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Re: Investing in stock index funds in Holland.
« Reply #8 on: July 24, 2014, 03:56:55 AM »
I recently moved to Holland and was asking about this at my bank (ING). You can open a trading account with them and you can trade equity or EFTs for free, unlimited per year, i believe there is a small yearly charge but it is pretty low . They have the options of letting the bank handle all the money, taking advice, or doing it all yourself.

As for your investments. American shares may have a history of better growth than in Europe (so far) but be very careful of investing in a different currency than you earn in. If the dollar drops against euro you will lose out. Remember inflation in Europe is below 1% at the moment and the biggest fear is deflation, so lower interest on savings isn't a huge issue right now.


Silvie

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Re: Investing in stock index funds in Holland.
« Reply #9 on: July 24, 2014, 05:12:06 AM »
You can't time the market. The good thing about investing every month is that sometimes you get e.g. 10 shares for 200 euros, while the next month you get 20. I think the main thing is just to get started (Note to self: get started!)

4444

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Re: Investing in stock index funds in Holland.
« Reply #10 on: July 24, 2014, 05:27:23 AM »
I recently moved to the Netherlands, and I invest using an Interactive Brokers investment portal, but I want to only invest in Euro denominated ETFs. I have a preference for ishares, and have found their european ETFs to be better than Vanguargs. I currently invest in (with weighting):

IWDA.AS - iShares MSCI World Core UCITS ETFs, 25%
ISPA -  iShares STOXX Global Select Dividend 100 UCITS ETF (DE), 25%
EMIM.AS - Core iShares MSCI Emerging Markets IMI UCITS ETFs, 20%
IWDP.AS - iShares Developed Markets Property Yield UCITS ETFs, 10%
IEAC.AS - Core iShares Euro Corporate Bond UCITS ETF, 20%

would love to know your thoughts - it's like 2 -3 Euro per trade
« Last Edit: July 24, 2014, 05:30:29 AM by 4444 »

rikkert

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Re: Investing in stock index funds in Holland.
« Reply #11 on: July 24, 2014, 06:14:06 AM »
I think I'm gonna go with Meesman. With the indexfund 'Shares Worldwide' and see what happens.

Because I recently graduated I have to save some money that I have to use in a year or so (when I'm going to live on my own). My plan is that all the money that remains after my spending will be invested for 50% and saved 50% (monthly). That way I start with my 'stash' for later and I'm still able to save money that I can use when I need it.

Thanks for the advice (I wanted to invest my money with Robeco first but Meesman is way cheaper).

DaKini

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Re: Investing in stock index funds in Holland.
« Reply #12 on: July 24, 2014, 07:48:33 AM »
Quote
For example: I like to save 200 euro/month. But sometimes the market is 'on sale' and sometimes it's not. So sometimes it might be better to NOT invest 200 euro (and save it up for later, and then invest 400 euro). Does anyone know how I can know when the market is on sale and when it's not?
As already said, dont time the market. Its entirely a luck game, with the odds stacked against you. Also realize that with investing regularly over long times, you will (with a high probability) get a "relatively fair" average price. Also, what looks like  "its on sale" are merely minor fluctuations. "on sale" is what happened 2008. You can make sure to get the "sale" prices with an appropriate asset allocation. Those sales will stay a while around so you will surely get a good entry point when you rebalance your portfolio annualy. Dont worry about the minor fluctuations, it will ruin your sleep.
Be sure too read up on why market timing is a fools game until you feel convinced by the facts.

Be sure to sit down and make an asset allocation reflecting your risk-carry capability. Start with the riskless part: how much money could you possibly need in emergencys? This will define your overall allocation (which is responsible for >80% of all returns!). This is a crucial step.
I for example have a 80/20 goal (80% in worldwide diversified etf shares/20% in safe investments) and check this balance annually. If its out of whack for more than 5% i do a rebalance until it is. During the year i simply throw my money in the most lacking asset, eg. i buy the cheapest one based on my current asset allocation.
That shows again, how important an asset allocation rule is; it answers the question "where to put (or leave) the money".

For the transaction fees: i usually save small ammounts on a Tagesgeldkonto and invest this bigger sum when a treshold is reached (currently this results in a roughly quarterly investment schedule). This way, i can get below 0.5% transaction costs.
This answers your "should i invest now?" question.
« Last Edit: July 24, 2014, 07:50:15 AM by DaKini »

jugglingcontinents

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Re: Investing in stock index funds in Holland.
« Reply #13 on: July 24, 2014, 08:48:47 AM »
Welcome to the Netherlands, 4444 and FIREman2036! I too moved here a few years ago :)

I have a preference for ishares, and have found their european ETFs to be better than Vanguargs.

I'm curious - could you let me know why the ishare ETFs are better than Vanguard's? Is it because of the returns / because of investing euros rather than dollars? Thanks!

4444

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Re: Investing in stock index funds in Holland.
« Reply #14 on: July 24, 2014, 09:49:19 AM »
better Euro denominated products.

i looked at both, and the ishares were the better choice when considering cost, different products, and liquidity.

the US is THE place to be if you're a self directed investor, no question, I've been an investing adult in canada (not bad) and now europe... Europe sucks for ETF products in Euro currency.

I appreciate I could totally buy US etf, but I don't want to play with currencies - I have sufficient net worth in US $ already (real estate).

If i have time tomorrow, i'll do a quick analysis for you all of ishares vs vanguard in Euros

I'm surprised more europeans haven't suggested Interactive Brokers, took minutes to set up, is easy to fund from my online banking, and easy to execute for VERY low cost (as said, 2-3 Euro per trade, so 10-15 a month in costs, as a percentage of what i'm investing, that is VERY VERY low)

jugglingcontinents

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Re: Investing in stock index funds in Holland.
« Reply #15 on: July 24, 2014, 10:28:20 AM »
4444 - Yes, please do! Would love to see what criteria you use and how you arrived at your conclusion!

Re: brokers, I'll have to take a look at Interactive. So far, I've only had Think, Binckbank and Meesman on my radar. I suppose that since you're only looking at euro-denominated products, the dividend tax leak is not an issue?

4444

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Re: Investing in stock index funds in Holland.
« Reply #16 on: July 25, 2014, 02:03:14 AM »
with respects to tax leak, these are european based funds holding international securities (Euro, Pound, Dollar, Yen, and other denominated and geographically based). so, of course there will be some level of tax leak, but what can you do - also, you have to pay the piper, i genuinely don't mind paying taxes when they're fair and the money is put to good use (the latter is a discussion for another day). as long as I am going along with the market in a diversified manner, i should be fine (LT goal is an avg of 7% real return).

personally, i pay no tax on income from capital (special tax rule for expat employees in NL for 8 years, the 30% rule as it's known), so i shouldn't have any euoprean based taxes to pay.

Here's the ishares vs. vanguard comparison

Investment Type   ETF Name   Symbol   Yield   MER

iShares
World Exposure   iShares MSCI World Core UCITS ETFs   IWDA.AS   reinvested   0.20%
World Dividend   iShares STOXX Global Select Dividend 100 UCITS ETF (DE)   ISPA   4.42%   0.46%
Emerging Markets   Core iShares MSCI Emerging Markets IMI UCITS ETFs   EMIM.AS   reinvested   0.25%
Real Estate   iShares Developed Markets Property Yield UCITS ETFs   IWDP.AS   2.67%   0.59%
Fixed Income   Core iShares Euro Corporate Bond UCITS ETF   IEAC.AS   2.47%   0.20%

Vangaurd
World Exposure   FTSE All-World UCITS ETF   VWRL   2.40%   0.25%
World Dividend   Vanguard FTSE Al-World High Dividend Yield UCITS ETF   VHYL   3.70%   0.29%
Emerging Markets   FTSE Emerging Markets UCITS ETF   VFEM   2.80%   0.29%
Real Estate            
Fixed Income            

Sorry it's a bit ugly, but here you have it. So things to note, ishares automatically reinvests the dividends from the MSCI World Core and MSCI Emerging markets funds, their share price performance is accordingly much better than the vanguard equivalent over time. The MERs are about the same for these two (slightly better for ishares)

The Dividend blue chips one is interesting - i prefer the ishares as it is a bit more selective in it's indexing, accordingly I get a much higher dividend at the cost of a slightly higher MER, I can live with this.

Vanguard has no Euro denominated real estate or bond fund, which is a major turn off for me - come on vanguard!!! give me more selection!!

I will continue to assess the comparable performance of the funds, but so far I'm happy with this selection. Certainly is easy to just buy these five every month on pay day and forget about it.

As said, I'm paying next to nothing for my IB account, and the money transfers are so seamless (unlike the Questrade account I was using in Canada - that was a real pain) - money is available next day, and the platform is easy to pick up and use. The fact that i'm paying a couple of Euros per trade makes me very happy. Further, the fact that I can later on move some US $ into this account and trade US$ denominated ETFs in the US makes it even better! IB is really good.

jugglingcontinents

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Re: Investing in stock index funds in Holland.
« Reply #17 on: July 25, 2014, 07:35:00 AM »
Thanks for the detailed reply, 4444! You've made a good argument for iShares - I understand your reasoning behind choosing these particular funds. Your asset allocation makes sense and seems well diversified.

As for me, I'll have to think about IB vs. Binck as a broker. I'm not really looking to do monthly investing (using Meesman for that) so the transaction cost is slightly less important than overall annual fees.

Rikkert, didn't mean to hijack your thread. Hope you found the investing suggestions useful! And all the best with your first investment!