Index Funds for Europeans

Investing
#1

Hi everyone, I’d like to get some more opinions on this, especially Jeremy’s.

So here in Europe, Portugal in my case, we don’t have the “wrappers” available in the US for tax breaks and employer matching and so on, you kind of just choose a broker and start investing.

Anyway, I decided to keep it simple and star investing as often as I can, into a worldwide stocks ETF. I have no debt and an emergency fund.

This is the ETF I chose and that is often mentioned in European PF literature:
https://live.euronext.com/en/product/etfs/IE00B4L5Y983-XAMS

More information here:
https://www.justetf.com/servlet/download?isin=IE00B4L5Y983&documentType=MR&country=DE&lang=en

I don’t usually see this mentioned in US PF content but it seems to follow the usual rules:

  • well diversified with worldwide stocks (about 60% US stocks)
  • in my own currency
  • accumulating rather than distributing
  • low-ish TER

What do you think ? Good alternative to the usual Vanguard S&P500 frequently mentioned in America?

Also, I opened an account with a local bank that charged 5€ per order.

I went for it instead of what most people here use, DeGiro, that has no fees on this particular ETF.

I decided I preferred the local bank because I had a place to go to if I had any issues and they would make it much easier to process my taxes eventually. Also it just felt safer so I decided to invest less often and pay the 5€ fee every time I bought some units.

However, they recently announced they are increasing the cost per order to 10€. This obviously doesn’t matter when you’re investing 100k a year but when you’re investing less than 10k over a couple of orders a year it starts to be a heavy percentage.

Would you stick with the pricier bank and just invest maybe twice a year so you only pay 20€ or use DeGiro and invest much less but every month for free ?

Thanks in advance

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#2

Welcome @David_Dinis!

So, I’m not an expert in Portugal investing, but I think you’re thinking about this perfectly. You found a broad market, low fee ETF. You weighed the pros and cons of your bank with the transaction fee vs the online brokerage. I think you’re absolutely killing it, and it’s likely exactly what I would do if I were in your position. The 20€ or 40€/year or whatever in transaction fees isn’t great, but honestly it might even encourage the best practice “buy and hold” behavior, so you’re not tempted to constantly switch funds.

Great work!

#3

Hi Jeremy!

Thank you for confirming my belief that I’m not messing it up too badly !

I have no interest/temptation to switch funds but even so I think I’ll carry on with the free brokerage account. Since I can only invest 100/200 a month right now it’s hard to justify the 10€ movement fee even if only twice a year. Hopefully once I get the monthly contributions up it won’t matter as much.

Thanks again Jeremy!

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