When you're ready to start investing, ETFs often come up as a recommended option. They're praised for their low costs, diversification, and simplicity. But as a Belgian investor, you might find yourself overwhelmed by the choices and confused by the process. Should you choose accumulating or distributing ETFs? What about the tax implications? And how do you actually buy an ETF?
Don't worry, we've been there too. In this guide, we'll walk you through everything you need to know about investing in ETFs in Belgium, from understanding what they are to making your first purchase.
Why invest in ETFs in Belgium
There are several reasons why ETFs are the best long-term investment for most Belgians:
- Best suited for the long-term: Investing in ETFs compounds to substantial returns over time. For example, a globally diversified ETF like IWDA, which invests in more than 1,400 companies in the MSCI World index, has returned an average 10.2% since 1980.
- Diversified: You're exposed to thousands of companies in one go through a single fund. And diversification is key to good investing.
- Simplicity: Once you’ve selected the ETFs that are right for you and your goals, you can sit back and watch your investments grow. There's no need to waste time analysing individual stocks.
- Cheap: Partly due to the economies of scale and lack of active management costs, ETFs are a cheap way of investing. They usually cost less than 0.5% per year, whereas the traditional active funds offered by banks typically cost 1.5% to 2.5%. And the cheaper cost of ETFs translates into higher returns for you.
For instance, the graph below compares the historical performance of the Equity Fund World fund managed by KBC, and an ETF tracking the fund's benchmark, the MSCI All-Country World index. The KBC fund is supposed to beat the ETF. But the data shows otherwise. Over the last 20 years, the average yearly return of the passive ETF was 8.7%, whereas that of the active fund was 5.3%. And part of the difference can be explained in the cost: the ETF costs 0.45% whereas the fund by KBC costs 1.71%.
Finding the right ETF
There are a few things to look out for when selecting an ETF as a Belgian investor.
Investment style
Most ETFs are passive, meaning they track an index. More and more active ETFs are appearing. But these funds are more expensive so they often yield lower returns than an index-based ETF.
Type of asset
When choosing your ETF, you need to pick the right asset class: stocks, bonds, or other type of investment. Each has a role in a portfolio. Stocks represent ownership in a company. They offer the potential for higher returns over time, but with more volatility and risk. Bonds are different. They are loans to corporations or governments. They provide predictable income through interest, which makes them less risky than stocks.
You will most likely want a portfolio that contains both stocks and bonds. The reason is that you want the risk of the portfolio to match your goals. That includes your appetite for risk and your capacity for risk. Also, as you get older and near your financial goal, you will want to reduce the risk of your portfolio.
Distribution of dividends
Any Belgian that perceives a dividend has to pay a 30% tax on it. Distributing funds distribute their dividends, which means they're taxable. But, accumulating funds reinvest the dividends into the fund before you ever receive them. This means you don't pay the dividend tax.
Furthermore, accumulating ETFs are more in line with a passive approach. By automatically reinvesting the dividends, you leverage compounding.
That's why you should invest only in accumulating funds, unless you have a good reason not to.
Domicile
Luxembourg and Ireland have special tax treaties with the US. These treaties make it attractive to set up funds there. As a Belgian investor, you can benefit from this. You can do so by investing in funds domiciled in one of these two countries. You can tell the country of domicile from the ISIN code of the ETF. The ISINs of funds domiciled in Ireland start with "IE", those from Luxembourg start with "LU".
Further below, we'll show you how you can buy your first shares of the ETF Vanguard FTSE All-World. Its ISIN code is IE00BK5BQT80, meaning that it's domiciled in Ireland (which is what we want).
Currency
If you buy an ETF that is not traded in euro, the broker will convert it to Euro for you. But most brokers charge you for this conversion, as it's an additional source of revenue for them. So it comes at an extra cost for you. For this reason, it's best to invest in ETFs that are trading in euro.
This doesn't mean the currency of the fund itself must be euro. For example, the fund currency of IWDA is USD. But it trades in euro on several exchanges like Euronext Amsterdam or XETRA, which means you don't pay a conversion fee to the broker.
Size
You want an investment that is viable for the long run. So, you want to avoid an ETF shutting down soon after your investment. As ETFs must reach a certain size to become viable, a larger fund is less likely to shut down. Also, larger funds are easier to buy and sell because there are more players in the market. The spread between the buy and sale price is smaller. A good rule is to only consider ETFs with at least €100 million.
If an ETF is liquidated, you do not lose your money, which is an important thing to note. In fact, the ETF's assets are still worth their market value. So, you’ll receive that value when they sell them.
Replication
Invest in funds that physically replicate their index. Some ETFs are cheaper through a technique called synthetic replication. The fund provider does not buy the index's companies' shares. Instead, they use financial engineering to replicate the index's returns. They do this by making a deal with a third-party, most often a large bank. It sounds a bit dodgy, and we think so too. The main issue with synthetic replication is that it adds risk coming from the counterparty. And when investing our life savings, we want to limit the risks that are avoidable. Avoid!
This is why all the portfolios offered through the Curvo app use only physically replicated funds.
Cost
Fund managers charge a fee for managing their funds. The total expense ratio (TER) indicates the total cost of a fund. They deduct it from the fund's performance. So, when you look at a fund's performance, it is usually net of fees.
As we saw above, ETFs are generally much cheaper than the active funds sold by your bank. Most ETFs are cheaper than 0.5% per year, with many below 0.2%. In contrast, an average active fund costs 2.0% per year and also often comes with entry fees.
Transaction tax (TOB)
In Belgium, there’s a tax on transactions ("beurstaks" or "taxe sur les opérations de bourse" or TOB). You pay it every time you buy or sell a security. For ETFs, the tax rate varies between 0.12% and 1.32% of the transaction amount. We prefer ETFs with a 0.12% tax rate that are registered in the EU but not in Belgium. ETFs registered in Belgium have a higher 1.32% tax rate (we know, it's weird).
Finding ETFs with justETF
justETF.com is the best resource that we know to compare ETFs. It shows the ETF characteristics we mentioned for thousands of ETFs available to Europeans. Below is what it shows for VWCE (the red highlights are by us):
Best ETFs for Belgians
There are 1,000s of ETFs available. Below we selected some of which we think are the best for Belgians:
Step-by-step plan: Your first ETF investment in 5 steps
Ready to get started? Here is our step-by-step plan for your first ETF investment.
Step 1: Build up your emergency fund
Before you start investing, make sure you have a buffer of 6 to 9 months' worth of expenses in your savings account. This will prevent you from having to sell your investments in an emergency.
Step 2: Determine your goal and time horizon
Ask yourself:
- What are you investing for? (retirement, a house, other goals)
- When will you need the money?
- How much risk are you willing to accept?
You can take more risk for retirement. Investing is less suitable for goals within 5 years.
Step 3: Choose your platform
For Belgians, there are two ways of investing in ETFs.
1. Through a broker
A broker is an intermediary that gives you access to the financial markets. You are responsible for managing your portfolio of ETFs.
There are plenty of brokers to choose from. You can go for either a Belgian broker that are generally a bit more expensive, but handle all the taxes and administration for you. Foreign brokers are a bit cheaper but put more of the administrative burden on you.
2. Through an app like Curvo
While it's accessible, there are several steps to take when ETF investing through a broker. In fact, Yoran wrote a whole book about it!
When we told our friends about ETFs, they saw the power of it and wanted to start. But they didn't have the time to learn all the intricacies of managing their own investments through a broker. That's why we built Curvo: to solve all the complexities of ETF investing.
Step 4: Select your ETFs
Buying a single ETF is probably not the end. It's a small part of building a portfolio that will bring you long-term success. Defining the right portfolio is the most important task for every investor. But, it is also the most difficult. The composition of your portfolio depends on your goals, risk appetite, age, and income.
Step 5: Start small and build up
Start with a small amount to learn the process. Once you are comfortable, increase the monthly amount.
Making it concrete: buying your first ETF with DEGIRO
To show you how it works, we'll show how to buy the VWCE ETF with DEGIRO. We selected DEGIRO for its low fees and wide range of free ETFs.
The DEGIRO broker
The first step is to open an account with DEGIRO. Unfortunately, degiro.be does not exist. So, you'll have to open an account with either degiro.nl (Dutch) or degiro.fr (French). This is confusing! Once you open the account, you can deposit cash. This can take a couple of days to arrive, depending on your bank.
The VWCE ETF
To show you how to buy an ETF, we are going to assume that we wish to buy the VWCE ETF. VWCE is the ticker symbol for "Vanguard FTSE All-World Accumulation" (ISIN: IE00BK5BQT80). It is one of the most popular ETFs for Belgians. It's accumulating, domiciled in Ireland, trades in euro, and is physically replicated.
VWCE tracks the FTSE All-World index. One main benefit is that it's very diversified. It invests in over 4,000 companies from more than 40 countries. These are big and mid-sized companies in "developed" markets like the US, Germany, UK, and Japan. They are also from emerging markets like Brazil, China, and Chile. So VWCE is an investment in a big chunk of the world economy.
The ETF's average return per year has been 8.7% since 2005. This is based on the historical performance of the FTSE All-World index.
Buying VWCE on DEGIRO
Once the deposit has arrived, you can buy the ETF. Search for VWCE by typing its ISIN code "IE00BK5BQT80" in the search bar. The second confusion is that you'll see several results. They all correspond to the same ETF, but on different exchanges. For instance, Vanguard trades on XETRA, Tradegate Exchange, Borsa Italiana... To pay the lowest fees, it's important with DEGIRO to buy VWCE on XETRA ("XET").
Now we can buy VWCE. Select the number of shares you wish to buy. Note that you can only buy whole units of shares. So you'll need to calculate how many shares you can buy. This depends on how much you want to invest and the amount you deposited in your DEGIRO account.
You also need to choose the type of order. The most common types are market orders and limit orders. A market order is an order to buy immediately at the best available current price. It prioritizes speed over price. It fills if there are enough sellers. After all, remember that you're buying the ETF off of someone who wishes to sell his. Market prices change. So, the final price may differ from the order price.
A limit order is an order to buy at a specific price or better. You can set a price for the transaction. It gives you more control. Unlike market orders, limit orders may not execute immediately or at all. They depend on the share price reaching the specified price.
Once you’re ready, click “Place order”. Congrats, you just bought your first ETF!
Considerations when investing through DEGIRO
First of all, the interface of their app is intimidating to use if you're new to investing. As you can tell, there's a lot going on on each screen. DEGIRO offers many types of securities: turbos, warrants, stocks, ETFs. When you place an order, you also have to choose a market order, a limit order, a stop-loss order, and others. All this technical terminology means that you need to know what you're doing.
Also, DEGIRO has had a few problems with the Dutch financial authorities (AFM) over the years. This doesn't inspire confidence. Lastly, they're a foreign broker. This means you have to declare your DEGIRO account to the Belgian National Bank as well as on your yearly tax form.
Fortunately, there are many different brokers available in Belgium. We put together a resource that highlights the best brokers.
The Belgian taxes for ETFs
You face a few taxes when investing in ETFs:
Transaction tax (TOB)
Each time you buy or sell an ETF, you pay a transaction tax called the TOB. The percentage depends on the type of ETF, and it ranges from 0.12% to 1.32%. Belgian brokers handle this for you. If you use a foreign broker, you may need to declare and pay it yourself.
Dividend tax
If your ETF pays out dividends, those dividends are taxed at 30%. That is why many Belgians prefer accumulating ETFs. They reinvest dividends inside the fund so you don’t trigger this tax.
Capital gains tax
From 2026, a 10% tax will apply on capital gains when you sell many types of investments, including ETFs. There is a yearly exemption of €10,000 that you can carry forward for a few years if you don’t use it. Belgian brokers will withhold this tax but you may need to correct it through your tax return. With foreign brokers, you declare the gains yourself.
Reynders tax
There is also the Reynders tax. This tax is 30% on the profits from the bond portion of accumulating ETFs. If you sell a purely bond fund, you pay 30% on the full gain. If the fund mixes stocks and bonds, only the bond part is taxed, although in practice many foreign funds are treated as fully taxable because they don’t publish the breakdown that Belgium requires.
Tax on investment accounts
Finally, Belgium applies a separate 0.15% tax on securities accounts worth more than €1 million. If your account is at a Belgian institution it is withheld automatically. Accounts abroad must be declared manually.
ETFs vs other investments
There are various ways to invest your money. Let's take a look at how ETFs compare to the other options.
Individual stocks
With individual shares, you buy a piece of one company. This means that your return depends entirely on how that one company performs. We have tried this ourselves, and it is time-consuming to do proper research. Moreover, you concentrate all your risk on a few companies.
ETFs offer automatic diversification. With a single purchase, you invest in hundreds of companies at once. This significantly reduces your risk.
Traditional funds
These are actively managed funds in which a fund manager tries to beat the market. They come with higher costs, often 1.5% to 2.5% per year, and, as we saw earlier, they rarely succeed in actually beating the market.
ETFs simply track the market and are much cheaper. This translates into higher returns for you.
Savings account
Savings accounts are safe but usually offer returns that don't even keep pace with inflation. In the long term, you lose purchasing power. ETFs involve risk, but that risk is rewarded with higher returns. For long-term goals, they are much more effective than savings.
Common beginner mistakes
Try to avoid the following mistakes.
Forget your emergency fund
Before you start investing, make sure you have a buffer of 6 to 9 months' worth of expenses in your savings account. This will prevent you from having to sell your investments in an emergency.
Forget your goal
Ask yourself:
- What are you investing for? (retirement, a house, other goals)
- When will you need the money?
- How much risk are you willing to accept?
You can take more risk for retirement. Investing is less suitable for goals within 5 years.
Investing in too many different ETFs
A complex portfolio with many ETFs is more costly in broker fees, harder to rebalance, and more difficult to analyse. A single ETF is already very diversified. Think very carefully before you include an ETF in your portfolio.
Selling at the first market dip
Investment gains are made over the long-term. When markets go down (which they inevitably will), it's important to stay invested and not panic sell. Investing is a marathon, not a sprint.
Trying to find the perfect entry point
Many new investors delay making their first investment because they think the stock market is at an all-time high and will surely crash soon. That the stock market is at an all-time high is very possible. After all, it has been going up on average for the last 120 years. But we don't know when the crash will happen, and it can cost you a lot in missed returns if you decide to wait.
Even back in 2018, I was reading comments online that a correction was imminent, that it was the end of a 10-year bull run. Someone who decided to wait for a crash to invest:
- Has missed out on a 120% return if they had invested in an MSCI World ETF.
- Must now hope for a 55% decline for the market to be lower than in 2018. That is a ‘once in a century’ decline à la 2008, so it is unlikely to happen in the near future.
As they say, the best time to invest was yesterday, and the second best time is today.
How Curvo makes ETF investing easy
Buying a single ETF is probably not the end. It's a small part of building a portfolio that will bring you long-term success. Defining the right portfolio is the most important task for every investor. But, it is also the most difficult. The composition of your portfolio depends on your goals, risk appetite, age, and income.
We understand this challenge. It's one of many subtleties investors must navigate to succeed long term. We built Curvo to take away all the complexities of good index investing.
When you sign up, you are asked questions to learn about your goals and appetite for risk. You are then matched with the best portfolio for you. No need to search through thousands of ETFs or scour wikis to understand how to select a fund.
You can then start investing, from €50. Or you can choose to set up a savings plan, where you invest an amount of your choice every month. Saving becomes easy when it's automated!
Learn more about how Curvo helps you invest the right way.
Are ETFs risky?
ETFs are not riskier than other investments. First of all, fund providers are bound by strict regulations, enforced by both the European regulator ESMA as well as national regulators. A strong guarantee is the separation of assets. When you invest in an ETF, the shares are held in your name and safeguarded by a separate entity, a custodian. So even if the fund manager would go down, you still hold all your assets. In fact, this is much safer than with a savings account. If you deposit €1,000 on your savings account today, it will be gone tomorrow. It will have been lent out to someone who needs a mortgage, or a company getting a loan. So if the bank goes bankrupt, you lost your money (that's why there's the bank deposit guarantee). This can't happen with an ETF.
But the reason why people perceive ETFs as risky is the market risk. Because they invest in the financial markets, their value fluctuates with the market. Whereas the value of a savings account will never go down (at least without taking into account inflation), the return of an ETF can be negative.
This is an advantage though. Because risk and return are always linked. An ETF carries a higher market risk, but it means we get a higher expected return. A savings account has no market risk, at the cost of a very low return and a high probability you will not meet your financial goals. The higher expected return of an ETF offers a better chance of attaining your goal, for instance, retirement.
The chart below compares a savings account with the MSCI ACWI ETF from above. The value of the savings account does not move much, but also does not grow much. The ETF is more volatile, but its value multiplied by almost 5 times.
Why not invest in ETFs
Of course, ETFs aren't for everyone. There are cases where another type of investment may suit your goals better:
- You invest for the short term. The compounding effect of investing in stocks and bonds through ETFs really becomes apparent over the long term. Furthermore, your investment horizon must be sufficiently long to cover the volatility of the financial markets. If you plan on investing only for a year or so, a savings account or state bond is likely a better option.
- You don't have an emergency fund. Before you start investing, it's important to build an emergency fund that you can easily tap into without having to sell your investments. An amount between 6 and 9 months of expenses should be a sufficient buffer.
- You have very strong ethical preferences for investing. There are many sustainable ETFs that track ESG versions of indexes. I's a growing market. But those might not be enough for your principles. In that case, you're better off hand-picking the stocks that match your views.
- You think you can consistently beat the market. There aren't many, but there are investors like Warren Buffett or funds like Renaissance Technologies that can beat the market on the long term. If you're in that category, you can earn a higher return with other instruments than ETFs. Beware not to confound luck with skill though. Beating the market once or twice can be luck. But it takes true skill to do it consistently for several decades.
What you should do now
The first step is to decide if you want to manage your portfolio of ETFs yourself, or invest through an app like Curvo. There are pros and cons to each option. Our comparison can help you choose.
Want to use a broker?
We have you covered! In that case, we recommend you use these resources to learn about investing in ETFs:
- Build the portfolio that's right for you.
- Choose the best ETFs to set up the portfolio.
- Select the best broker for you.
- Set up monthly investing, which is one of the best financial habits you can adopt.
- Learn about Belgian taxes when investing.
- Read "De hangmatbelegger", the book on "hangmatbeleggen" that Curvo co-founder Yoran wrote alongside Tim Nijsmans
Or interested in Curvo?
Learn how it works and how it can help you grow your long-term wealth through good investing.
Conclusion
As we've explored, ETFs are an excellent foundation for long-term investing. They give you instant diversification across thousands of companies worldwide. While picking ETFs yourself through a broker offers flexibility, it also comes with challenges. You need to research funds, understand taxes, and avoid common pitfalls that could hurt your returns.
That's why we created Curvo: to remove these complexities and help you focus on what matters: consistently investing for your future. But whether you choose to invest through Curvo or manage your own portfolio, the key is to start early and stay invested for the long term!