Robo-advisors have grown in popularity over the last decade as an easy way to invest your savings for the long term. We'll look at what a robo-advisor is, how it works and the reasons why you should use an automated investment plan for your savings. We'll then dig deeper into the different options for Belgians, looking at the pros and cons of each. Our goal is that you'll be able to choose which robo-advisor is best suited to you.
What's a robo-advisor?
A robo-advisor is a digital platform that provides you with automated investments with little human supervision and interaction. You answer a short questionnaire and the platform creates an investment plan personalised to you, your goals and your tolerance for risk. It will also rebalance your portfolio automatically for you so you can relax whilst your money works for you.
Robo-advisors offer a low-cost alternative to investing through your bank and are highly efficient. You can start investing your money in only a few clicks to a portfolio tailored to you and your goals.
They are also an alternative to investing through a broker. A broker provides access to the stock markets, but nothing more. It's up to you to know what to invest in, when to buy and sell, understand taxation, execute your orders etc... On the other hand, a robo-advisor takes care of it all so you don't have to worry.
Let's dig into the reasons why you should use a robo-advisor.
Why use a robo-advisor
Based on index investing
Robo-advisors are centred around index investing and providing a cost effective way to put your money to work. Portfolios are usually made up of low-cost ETFs. Highly diversified, they're designed to provide a good trade-off between risk and returns over the long-term.
Index investing is a tried and tested method for growing your wealth. It’s based on the observation that rather than picking individual stocks and trying to buy and sell at the right time, it’s usually more profitable to invest in the stock market as a whole. Instead of finding the needle in the haystack, you buy the entire haystack.
When index investing, you invest in a type of fund called an index fund or ETF (which stands for "exchange-traded fund"). These funds track an index, which is a basket of stocks with rules on which stocks are included in the index. The most popular index is the S&P 500, which consists of the largest 500 American companies. An index fund that follows the S&P 500 buys a little bit of each company, according to the size of the company.
And the past shows that index investing works. For example, the graph below shows the evolution of the MSCI World index since 1978. MSCI World is a basket of over 1,500 stocks from 23 countries that are considered "developed": the United States, Germany, Japan, Belgium 🇧🇪…. It contains the largest companies like Apple, Amazon, or Tesla, but also "smaller" ones like Delhaize or KBC. As such, investing in a fund that follows the MSCI World index approximates investing in the world economy as a whole. And a €10,000 investment in 1979 in a fund tracking MSCI World would have grown to €825,000 today! This equates to an average yearly return of 10.6%. And the world economy continues to grow enormously.
For most robo-advisors, index investing is their investment philosophy. You can follow a similar philosophy by setting up a portfolio of ETFs and investing through a broker. A broker is a middleman that gives you access to the stock markets and allows you to buy and sell the thousands of ETFs out there. This way of "do-it-yourself" investing gives you the most flexibility because you're in control of what you buy. But it also means you're fully responsible for the management of your investments, which is why a robo-advisor can provide value.
They help you set up the best portfolio for you
For most, a single ETF is not enough to constitute a balanced portfolio that will bring you success over the long term. You must choose the right mix of indices to build a portfolio that fits you and your goals:
- What's your investment goal?
- How long are you investing for?
- What is your tolerance for risk?
- What is your capacity for taking risks?
Robo-advisors help you answer these questions, and set up the right mix of investments for you.
Benefits of a robo-advisor
Aside from this, robo-advisors offer other benefits compared to investing through your bank or through a broker:
- No expertise needed: they're the easiest way to invest your savings and grow your wealth for the long term. Taxes, allocation, rebalancing... it's all taken care of.
- Don't spend your time managing your investments: since they do the work for you, you can just relax whilst your money is working for you.
- Based on index investing: we think index investing is the best way for most people to accumulate wealth.
- Cost-effective: the funds sold by your bank are typically actively managed. This means they're much more expensive than index funds, which results in lower returns for you.
- They help you stay on course: setting up your investment portfolio is one, ensuring you stay the course is another. A robo-advisor helps you ensure that you stay invested the right way all throughout your investment journey.
Why not use a robo-advisor
There are some cases where a robo-advisor may not be the best way for you:
- You don't mind spending the time and energy managing your investments. If you find it fun to keep yourself busy with your investments, a broker is the way to go!
- You want to invest in individual stocks. Most robo-advisors invest in broadly diversified funds, because they offer better returns than individual stocks in most cases. But if you like to be in the driver's seat, trading stocks with a broker is better for you. Beware, the odds of outperforming an index fund are against you!
- You value cost over time. Depending on the broker and type of investment, a broker can be cheaper than a robo-advisor. Since robo-advisors do the work for you, they let you trade cost for free time.
Best robo-advisor in Belgium: Curvo
Worried about his financial future, our founder Yoran wanted to invest his savings. He spent hours researching and figuring out how to build an optimal portfolio to prepare for his financial future. He read books, scoured the web and got lost online. Finding the right resources was challenging. The majority of books and articles about investing are written for US audiences and aren't applicable to Belgian investors. Furthermore, most tell you only the theory. But resources that teach you how to bring it into practice, for instance how to deal with Belgian taxes, are scarce.
From this experience, he realised why none of his friends were investing: it's too complicated.
He also wasn't happy with the offering of robo-advisors in Belgium at the time. For instance, he wanted a way to invest part of his monthly income in an automated fashion, which none could do. He was also taken aback by the high minimum starting amount required by these robo-advisors.
So it made sense to build a product to solve these problems. Curvo was born. Let's see how Curvo takes away all the complexities of investing while still providing a human touch.
Portfolio of index funds tailored to you
We ask you a few questions at the start to learn about you and your goals. Based on your answers, we match you with the best portfolio of index funds for you. No need to choose which ETFs to buy.
Proven investment strategies
Curvo’s portfolios are built to stand the test of time. Each portfolio invests only in assets that are widely understood and that, through decades of research and usage, are predicted to earn significant returns over the decades to come. Concretely, this means index funds of stocks and bonds!
Built for monthly investing
We think investing regularly, for instance every month, is the best way to grow your wealth over time. Market timing rarely works, and having a system in place ensures you will actually put savings aside. As such, we built automated monthly investing into the app, where an amount you choose is debited from your bank account every month and invested for you. Over two thirds of Curvo members set up an automated savings plan. Saving becomes easy when it's automated!
Diversification at the core
We firmly believe in the power of diversification to lower risk and seek investment returns. Each Curvo portfolio consists of over 7,500 companies, diversified across many sectors and countries.
Curvo focuses on one guiding principle: we don’t invest in companies that are considered destructive to the planet. This means that sectors like non-renewable energy, vice products, weapons and controversial companies are all excluded.
But that's not all. Benefits of investing through Curvo include:
- We take care of the taxes. We make sure all taxes and administration are handled properly. Plus, the funds in the Curvo portfolios aren’t liable for the Belgian transaction tax (also known as the "TOB"). This saves you between 0.12% and 1.32% every time you buy or sell.
- Rebalancing done for you. No need to worry about keeping your portfolio in balance, Curvo handles this for you.
- Fractional shares. All your money is invested, there’s no cash left sitting on the side that's not working for you.
- Best for automated monthly invested. You can set up a savings plan where an amount you choose is automatically debited from your bank account every month and invested for you. Saving becomes easy when it's automated!
- Start from €50. No need for a large amount to start.
- Partnership with itsme. Security is vital, which is why we work with itsme to keep your data secure.
- Project your savings into the future. Through Curvo you can see how much your portfolio is expected to be worth in the future. You can answer questions like “how will increasing my monthly contribution by €50, €100 or €200 affect my long-term savings?” to give a concrete idea for the “future you”.
- Withdraw anytime. There’s no long-term contract or exit fees if you wish to stop investing with Curvo.
- Overseen by the financial regulators. Your investments are safe as they're regulated by the Dutch (AFM) and Belgian (FSMA) regulators.
Downsides of Curvo
Of course, there are some downsides to Curvo (some of which we are working on!):
- App is only in English: although it will be translated into Dutch and French in the near future.
- You can't choose what to invest in: the asset allocation is set by Curvo's investment philosophy.
- Only one portfolio: you can only save for one goal. However multiple portfolios are being added to the app soon.
Want to know more? Discover how Curvo works in more detail.
Other robo-advisors in Belgium
There are three other robo-advisors in Belgium offering their services which are similar in nature to Curvo. Most follow a similar investment thesis, but there are some differences between the different options. We discuss each below and put together a summary at the end of the article to help you decide.
Birdee was originally created by Gambit, but is now owned by BNP Paribas Asset Management. They are supervised by the Luxembourg financial authorities, the CSSF.
👍 of Birdee
- Sustainable investments: they offer "sustainable and responsible" portfolios.
- Low starting amount: you can invest from €50.
- Multiple portfolios: you can set up as many portfolios as you like, where each can have a different financial goal.
👎 of Birdee
- No way to automate your investments: you have to manually send money towards your portfolio every month.
- Always cash on your account: Birdee always leaves some cash on your account to cover their fee. But any cash that's not invested is money that's not working for you!
- No fractional shares: you can only buy whole units of an ETF.
Matti by Bolero
Matti was created by KBC's Bolero as an easy option for Belgian investors to put their money to work. It's a 100% "intelligent investment assistant". It's owned and run by Belgium's biggest bank and you can see it in their product and marketing. For instance, there's no app and you have to use the web version.
👍 of Matti
- Owned by KBC: KBC is one of the largest banks in Belgium, which gives Matti a sense of safety to some people.
- Sign up with itsme: just like Curvo, you can open a Matti account using your itsme account.
- Sustainable investments: they offer ESG investments.
👎 of Matti
- Expensive: the total fee including VAT is 1.21% per year.
- No way to automate your investments: you have to manually send money every month.
- "Algorithmic investments": their product lacks a human touch and they play on buzzwords like "AI" for their investment decisions. We're not fans.
- Not pure index investing: because of their algorithmic investing, they make changes to the portfolios by attempting to time the markets. The results are debatable because most active strategies underperform index investing.
- Minimum investment is €1,000: quite a barrier to entry!
- Always cash on your account: they always leave cash on your account to cover the fee. Any cash that's not invested is money that's not working for you!
- No mobile app: only a website to manage your investments.
Unlike Birdee or Matti, Easyvest is not owned by a big bank. They were the first to launch a robo-advisor for the Belgian market. They are more targeted for wealthy families and high net worth individuals.
👍 of Easyvest
- Reduced pricing for large investments: it becomes quite an attractive pricing proposition when you're investing over €250,000.
- Many different products for your pension: for example, they offer dedicated products for business owners.
- Good for families: you can open joint accounts easily.
👎 of Easyvest
- Minimum investment is €5,000: it's a large amount of money for many people to get started.
- No way to automate your investments through their app: there's no option in their app to set up a savings plan through SEPA Direct Debit.
- No sustainable investing: no option for investors who wish to invest according to their ethical views.
- Non-invested cash on your account: they always leave cash on your account to cover the fee. But any cash that's not invested is money that's not working for you.
Index investing is a tried and tested method to grow your wealth on the long term. We think it's the best way for most people to invest their savings. So we're fortunate that we have a couple of robo-advisors in Belgium that make it easy to start index investing.
However, we started Curvo because we weren't happy with the offering. For instance, we wanted to make it much easier to adopt good savings habits through automated monthly investing. And we wanted to make index investing available to young Belgians too, by lowering the minimum investment amount to €50.
So with Curvo, we built the robo-advisor that we wish existed when we started investing. And we know we're not alone. If you adhere to our thinking, and you too wish to grow your wealth smartly for your future, check out Curvo!
Questions you may have
Is investing with a robo-advisor worth it?
The most common alternative is to manage your own investments through a broker. But that involves a steep learning curve to learn the intricacies of good investing, manual labour to execute your transactions every month, having the self-confidence in your decisions, and also the discipline to stay the course. As a robo-advisor takes care of all these complexities, we think a robo-advisor is worth it!
We go deeper into the differences of investing through a broker or through a robo-advisor.
Which bank has the best robo-advisor?
Two banks in Belgium have a robo-advisor: BNP Parisbas with Birdee and KBC's Matti by Bolero. However, as we have shown above, we think both options are inferior to Curvo. So we don't recommend them for Belgian investors wishing to invest for the long term.