Choosing a broker is an important step when investing. There are many different options available, so picking the right one for you is challenging. We compare investing in ETFs through BUX and DEGIRO, two brokers available to Belgians. We also look at the difficulties of investing through a broker, and see how Curvo solves them. By the end, you'll be able to determine which option suits you best to invest your savings.
Why you shouldn't invest through your bank
For many making their first steps into the world of investing, their bank is the one-stop shop for anything related to finance. Unfortunately, they are likely not your best partner when it comes to investing.
First, they try to sell their expensive actively managed funds to you. In an active fund, the fund managers try to outsmart other investors in search for a higher return. But the European finance regulators found out that the majority of them don't succeed. On top of that, the bank charges hefty fees to invest in the fund. Good for the bank, bad for you. You're better off investing through another means.
Why a broker
Through a broker, you gain access to the financial markets, where you can buy stocks, ETFs, bonds and even some more complex products like derivatives. It's cheaper than investing in an active fund offered by a bank. Alternatively, most banks offer brokerage services. Yet again, it's the most expensive option. Specialised brokers offer a better experience at a cheaper cost.
So let's compare two such brokers available for investors: BUX and DEGIRO. We are going to see how they differ on important criteria like cost, trust, and ease of use.
BUX is a fast growing neo-broker and has been around since 2014. BUX, their trading app, makes commission-free investing easy and lets users invest in the companies they believe in. However, it's not an entirely free app as we'll discover below.
You have to pay a subscription fee to use the app
BUX recently started to charge a subscription fee of €2.99 per month. The fee is automatically deducted from your account balance. It's one of the first brokers to charge a monthly fee to use the app. If you don't have sufficient balance, they will continue charging you for maximum one year for €36. After this, your account can be deleted.
You need to register your account
If you're based in Belgium, as BUX is a foreign broker, you’ll also need to declare your foreign account to the Belgian National Bank. It’s a simple enough process that you only need to do once, and it takes a couple of minutes. You'll also need to mention it every year in your tax declaration.
Learn more about all the taxes applicable to Belgian investors.
BUX is a neo-broker
Considering it's a neo-broker, it has quite a slick and modern app. Searching for an ETF or stock is easy enough and through their "investment plans", they make it easy to set your investments in an automated manner.
BUX pushes you to trade
If trading is your hobby, this could be a good option. BUX makes it easy to buy and sell stocks. Managing your own investment portfolio and doing it well requires considerable time. It can be hard find the motivation unless you're passionate about investing. If you enjoy studying quarterly earning reports of companies and the Financial Times, then BUX is probably for you. Also, they push risky investments such as virtual currencies to their users.
Interest paid in idle cash balances
At the time of writing BUX is offering 2.5% interest on cash for all customers. This is the cash which remains uninvested in your balance on the app. Note that the limit is set to €25,000.
A popular investment strategy is euro-cost averaging, where you invest periodically instead of investing large lump sums in one go. You invest at fixed times, for instance every month, regardless of how the markets are performing. Most people are paid monthly, so it makes sense for their investments to follow the same pattern.
A big benefit of using BUX is that you're able to buy fractions of shares. This means you can buy parts of an expensive ETF or stock. For example, at the time of writing, Microsoft's stock price is $330 meaning you could invest €100 every month into Microsoft stock and build your wealth that way. This is useful if you have lower amounts to invest periodically.
Learn more about BUX in our comprehensive review of the app.
DEGIRO was launched as an online broker in 2013. It is now part of the German flatex bank. It has thousands of ETFs and stocks to choose from and it’s one of the brokers on the market that offers the best value.
DEGIRO is available in a wide range of European countries:
DEGIRO charges some of the lowest fees on the market. They even have a large selection of ETFs as part of their core selection that cost only €1 for each trade. IWDA, a popular ETF offered by iShares, is one of those. Every month, the first transaction of IWDA on the Euronext Amsterdam stock exchange will cost just €1. Subsequent transactions for IWDA that same month will also cost just €1 provided:
- the transaction is in the same direction (i.e. buy/sell) as the first transaction
- the value of the transaction is at least €1,000
For ETFs that are not part of the free selection, DEGIRO charges a €3 fee. Read more about the costs of investing with DEGIRO.
Handling of taxes
DEGIRO will provide you with an annual report to help you file your taxes. It's usually provided by the end of February or early March. They will also withhold tax for you automatically depending on where you are registered with an account.
If you're a Belgian investor, DEGIRO provides some comfort to you as they handle the Belgian transaction tax (also known as the TOB or “beurstaks” or “taxe boursière”). Every time you buy or sell anything, you have to pay this tax which ranges from 0.12% to 1.32%. DEGIRO makes sure the tax is paid and declared for you.
However, they do not handle the following:
- Tax on dividends (“roerende voorheffing” or “précompte mobilier”). A 30% tax on the dividends you perceive through the shares that you hold. You need to make sure that you calculate and declare them in your yearly tax declaration.
- Tax on capital gains on bond funds (also known as the Reynders tax). There’s a 30% tax on the profits you make when you choose to sell the bonds in your portfolio. Again, DEGIRO pushes the responsibility to you for declaring the right amounts in your tax declaration.
You also have to declare your DEGIRO account to the Belgian National Bank as DEGIRO is a foreign broker.
Depending on the makeup of your portfolio, taxes are an important consideration to take in mind when choosing a broker. They're an administrative burden that take time and effort. Failing to pay or declare a tax can also lead to a costly fine. We’ve written extensively about taxes Belgian investors should know if you wish to dig deeper into the topic.
Issues with the Dutch regulator
Throughout its existence, DEGIRO has had numerous run-ins with the AFM, the Dutch regulator for the finance industry. For example, they were fined in 2018 because they did not implement an adequate policy for conducting their business with integrity. As we’re dealing with our long-term savings, safety and trust is vital.
You can only buy whole shares
In comparison to a product like BUX, you can’t buy fractional shares with DEGIRO. This means you need to buy whole units. Following a euro-cost averaging strategy can then become tedious and expensive.
Let’s take the IWDA ETF as an example again. At the time of writing, it’s sold at €71.12. If you contribute €200 towards your savings, you’re only able to buy 2 whole units for €142.24. The rest of the money is sitting on a cash account not working for you. Due to this, many investors have lots of cash sitting around waiting to be invested.
Learn more about the pros and cons of using DEGIRO in our extensive review.
Switching from BUX to DEGIRO
Even though DEGIRO does not charge any incoming transfer fees, you still can't move over your assets from BUX.
When BUX introduced the subscription fee of €2.99/month, they lost a lot of their members and many have been searching online for instructions to switch. Unfortunately BUX does not offer any transfers away from their app. Essentially, what you'll have to do is sell all your assets on BUX and then transfer the money to DEGIRO to buy again. You'll have to pay any taxes when selling on BUX and then buying again on DEGIRO.
Invest the easier way through Curvo
When you choose a broker, you then have to figure out what to buy, when to buy, understand the tax implications of your decisions, rebalance your investments and make sure they stay in line with your goals and risk tolerance.
We realised the difficulties of investing through brokers like BUX and DEGIRO. That's why we created Curvo: the right investment decisions are made for you so you don't have to worry.
Based on index investing
We are convinced index investing through ETFs are the best way for most people to invest and grow their savings. Rather than picking individual stocks such as Amazon or Tesla, index funds are a way to buy the whole market, across all sectors and regions of the world. Essentially, you own a small portion of thousands of companies throughout the world. Instead of betting on a particular company, you are placing a bet on the global economy.
There are many benefits to index investing:
- Low-cost. ETFs and index funds are inexpensive to run and are therefore cheap for investors.
- Diversified. One of the goals of index investing is to diversify as much as possible. By diversifying across many countries and sectors, you eliminate unnecessary risk.
- Rooted in the real economy. Most index funds and ETFs invest either in stocks or bonds. Those are backed by real companies, with real factories, employees, intellectual property, and so on. This is unlike, for example, the crypto industry, where the value of a currency or token is mostly determined by its potential rather than by concrete applications.
- Start investing with low amounts. You don't need a large sum upfront to start investing in ETFs, making it accessible to anyone (for instance for young people).
The challenges of investing through a broker
You can invest in ETFs through a broker. But that comes with challenges:
- The allocation of your portfolio is in your hands: you need to figure out how to build the right allocation that meets your long-term goals.
- You need to do your own homework: figuring out how to start and understanding the intricacies of investing in ETFs takes an effort. Yet it's important, because in investing the devil is often in the details.
- It takes time: send money to your broker monthly and then make the purchases.
- Costly for monthly contributions: if you wish to invest on a monthly basis, you’ll have to pay a lot in broker fees. Also, as you buy units and can’t buy fractions, you’ll always be left with cash on your account.
- Learn how to rebalance: if you have multiple funds in your portfolio, how will you rebalance? Quarterly or yearly? How do you decide?
- Keep track of your portfolio: you may have to set up a spreadsheet to stay on top of things!
- Understand taxes: this can be complicated and they also often change.
- Discipline: it requires self-confidence and discipline to stay the course.
- Brokers want you to trade: the majority of brokers make money on you trading. So as a buy-and-holders, you are not a good customer to them.
Curvo solves all the complexities of good investing
Rather than having to pick the right stocks or ETFs among the thousands available through these brokers, through Curvo you invest in a portfolio that is tailored to you and your goals. These portfolios are composed of globally diversified index funds, meaning you earn a piece of the growth of the global economy, and they're best suited to make the most of your savings long term. And they are managed by NNEK, a Dutch investment firm licensed by the Dutch regulator (AFM).
We believe that investing is an important tool for our generation to improve our financial well-being and to prepare for our future. We are building Curvo to fulfil that vision, by making good investing easy and accessible to all.
👍 Pros of Curvo
- Diversified portfolio set up for you: the best portfolio for you is built based on your time horizon and financial goals. Simply answer a short questionnaire and you’ll get everything set up for you. The point is that you don't need to decide which ETFs to buy. Each portfolio is managed by NNEK, a Dutch investment firm supervised by the Dutch regulator (AFM).
- Automated savings plans: through Curvo’s app you can set up a monthly contribution from €50. That means that money is automatically invested for you in your portfolio. Put everything on autopilot.
- Fractional shares: all the money you send towards your portfolio is fully invested. No need to leave the cash on the side, everything is invested for you.
- Sustainable investments: your investments focus on one guiding principle: 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.
- Withdraw at any time: there’s no long-term contract or exit fees if you wish to stop investing.
- Project yourself into the future: through the Curvo appyou 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”.
- Business model aligned with your goals: brokers want you to trade, yet buy-and-hold works best for most people.
👎 Downsides of Curvo
- Price: It’s more expensive than investing yourself through a broker. As you pay a yearly fee on your assets, it’s more expensive in the long run than managing the investments yourself.
- You can’t choose what to invest in: Each portfolio is tailored to you and invests in over 7,500 companies. But you can’t select the stocks or particular ETFs that you want to invest in.
We have successfully launched the app in Belgium and are now expanding across the EU. Download the app to be added to the waitlist for your country and be notified when we're available.
Comparison between BUX vs DEGIRO vs Curvo
Learn more about all the differences between BUX and Curvo.
In this article we highlighted the key differences between BUX and DEGIRO, two brokers accessible to Europeans. Due to the fact that BUX has a subscription model, you need to ask if it's worth the monthly fee to invest through their app over the long-term. But cost is not the only factor to take in consideration when you’re putting your savings to work. For instance, you should also take into account the ease of use of the app and their help with taxes. The fact that BUX offers fractional shares is a big benefit in comparison to DEGIRO.
We also highlighted the challenges of investing yourself through a broker. We built Curvo to make good investing easy and accessible to all Europeans, and we explained its benefits. Feel free to explore Curvo's app if you wish to learn more.
Questions you may have
What's a good alternative to BUX?
There are many alternative brokers for BUX available across the EU:
- Trade Republic
- Interactive Brokers
We have a resource that specifically looks at alternatives in more detail for ETF investors.