Investing in index funds and ETFs is the best way for most people to invest for their future. One of the most popular ETFs for Belgians is IWDA, which is provided by iShares (a brand of BlackRock). IWDA is a broad, diversified ETF that invests in hundreds of companies in the US, Europe and other countries.
We discuss the benefits of investing in IWDA and show two differents ways through which Belgians can do so.
What is IWDA
IWDA is an ETF that tracks the MSCI World index, an index that consists of about 1,500 stocks from 23 countries that economists qualify as "developed": United States, Germany, Japan, United Kingdom, Australia… Investing in IWDA means investing in a wide segment of the global economy.
ETFs that track indexes are a way to passively invest in Belgium. Research by the European financial regulator shows that passive funds consistently outperform most actively managed funds offered by traditional banks and investment firms. The reason ETFs work so well is that they keep costs low and there’s no active management.
The returns of IWDA have been excellent throughout the years. An analysis on Backtest shows that it has returned an average 11% since 1979. If you had invested €10,000 in 1979, you would have had around €900,000 today!
IWDA is offered by iShares, which is a brand of BlackRock. BlackRock is one of the world's largest fund providers with over $2 trillion invested. Their size allows them to achieve economies of scale, which is how they can offer funds with low fees like IWDA.
The benefits of IWDA
Over the years, IWDA has become a popular fund for several good reasons:
- Much diversification in a single fund. As a matter of fact, many people choose to invest only in IWDA as their entire portfolio. To get even more diversification, some people mix it with EMIM to get exposure to emerging markets too.
- It's iShares. As mentioned above, Blackrock has a great reputation for offering high-quality index funds at a low price.
- Accumulating ETF. An accumulating fund does not pay out dividends. Instead, it reinvests the dividends directly in the fund, making your ETF shares more valuable. For Belgians it's especially important to invest in accumulating funds rather than distributing funds, because it avoids the 30% tax on dividends.
- Domiciled in Ireland. Funds domiciled in Ireland are tax-optimised because of special tax treaties between Ireland and the United States.
- Cheap. ETFs are priced on their ongoing charges, also called "total expense ratio" or TER. This is a percentage of your investments that you’ll pay to iShares for managing the fund. IWDA's total expense ratio is 0.20%, making it among the cheapest funds that track the MSCI World index.
Learn more about what to look out for when choosing an ETF.
How Belgians can invest in IWDA
As a Belgian investor, you cannot go to iShares' website directly and buy one of their funds. Instead, you can choose one of two ways:
- Doing it yourself through a broker
- Through an app like Curvo and invest in funds equivalent to IWDA
Option 1: doing it yourself through a broker
There are a few steps involved to invest in IWDA through a broker.
Choosing a broker
ETFs are traded on stock exchanges. Unfortunately, you can't just go yourself to a stock exchange and buy your shares. Instead, you must go through an intermediary called a broker.
Although your bank most likely offers brokerage services, we do not recommend you use them because their fees are very high. Instead, you should opt for a specialised broker. There are many you can choose from. Examples of Belgian brokers are:
There are also foreign brokers which offer their services for Belgians:
Foreign brokers are usually cheaper than their Belgian counterparts. Use our comparison tool to find the cheapest broker to buy IWDA.
We chose Bolero for our example of buying IWDA for a few reasons:
- Been around for a long time. Bolero started in 1999 and was one of the first Belgian brokers.
- Owned by KBC. The backing of a large bank makes it more secure.
- They handle all Belgian taxes. They automatically withhold and declare the transaction tax (TOB) for us. Foreign brokers usually don't offer this service and put the administrative task (and fiscal risk!) on the customer.
Opening an account with Bolero
We managed to open up an account with Bolero in less than ten minutes. The first step is to head to bolero.be, choose your language (French or Dutch, there’s no English) and then click on the button to open an account.
A couple of things before you open an account:
- Make sure you have your phone with itsme ready
- Use the Google Chrome browser
You’ll first be prompted as to what type of account you would like to open:
You’ll then have to go through the usual steps of opening an account with a broker:
- A basic questionnaire that tests your knowledge and experience with investing
- Declare if you pay taxes only in Belgium
- Your marital status and profession
- Linking up your bank account (IBAN) for deposits
- Read through the contract and sign it
Once you’ve completed all the steps, you’ll have to be patient until your account gets approved. This can take a few days.
Buying your shares of IWDA on Bolero
You’ll now be able to buy shares of IWDA once you’ve deposited money to your Bolero account. The easiest way to find IWDA is to search for it through its ISIN code, IE00B4L5Y983.
On Bolero, IWDA is only available on the Euronext Amsterdam exchange. Make sure you buy in Euro, not in US dollars. You'll see the screen below from which you can buy shares of IWDA:
First, you have to calculate how many shares you can buy. Imagine we're investing €1,000. At the time that the screenshot was taken, IWDA was trading at a price of €75.615. This means that we can buy 13 shares, which is €1,000 divided by €75.615 and rounding down. We're then left with €17.005 in cash on our account, minus the transaction tax and the transaction fee.
Can I invest all my money?
Unfortunately no. As most brokers in Belgium, Bolero does not offer fractional shares, meaning that you must buy whole units of a share.
The transaction fee
We have to pay a transaction fee to Bolero to buy our IWDA shares on the Euronext Amsterdam exchange. The fee is €5.00 to buy the 13 shares.
The transaction tax (TOB)
Everytime you buy or sell a financial asset, you need to pay the Belgian transaction tax ("beurstaks" or "taxe sur les opérations de bourse" or TOB).
The transaction tax for IWDA is 1.32% of the transaction amount. So when we purchased our 13 shares of IWDA at €75.615 each, Bolero automatically withheld an additional €13.14 for the Belgian tax authorities. The rules around the transaction tax are complex, so we wrote a step-by-step guide for calculating the Belgian transaction tax for any ETF.
Repeat every month
Alright, you've made your first purchase of IWDA. Congrats! The superpower is to turn these investments into a habit. Through the power of compounding, your savings will continue to grow and you will benefit from the growth of the global economy.
Diversifying beyond IWDA
Choosing the makeup of your portfolio can be a difficult task and figuring out how to build the correct allocation that meets your needs isn’t easy. Many choose to have more diversification and combine their IWDA ETF with another fund from iShares such as EMIM (ISIN: IE00BKM4GZ66). The EMIM ETF has a focus on stocks from emerging markets and if you combine it with IWDA, you would be investing in 4,789 companies.
By selecting a second ETF, you’ll have to repeat the steps above for the second fund as well as pay the transaction fees and taxes. Is there an alternative way of investing hassle free in ETFs from iShares?
Option 2: using an investment app
We understand the complexities of investing through a broker. We've been through it ourselves. So we built Curvo to simplify investing in Belgium in index funds like IWDA.
Once you download the Curvo app and answer a few questions, you’ll receive a portfolio of index funds that matches your goals. The portfolios, managed by the Dutch investment firm NNEK (who are licensed by the Dutch regulator AFM), are more diversified than investing in IWDA alone. For instance, they also contain stocks of companies from emerging markets such as China or Brasil. All the funds in the portfolios are provided by iShares, Vanguard or Amundi.
Curvo has the following benefits over doing it yourself:
- No expertise needed. No figuring out how to start and understand the intricacies of passive investing, fees and taxes. It's taken care of for you.
- No manual labour. You can set up automatic monthly contributions from €50 and truly put your investments on auto-pilot. No repeating all the steps above when doing it solo.
- All your money is invested. Your investments support fractional shares so you don’t have to spend time calculating units and keeping cash on your brokerage account.
- Peace of mind. Sit back and watch your investments grow as they follow the world economy. Your portfolio will be rebalanced and taken care of by NNEK.
Learn further how it compares to investing yourself through a broker.
Other benefits of using Curvo:
- Security is vital. Your investments are secure and managed by NNEK, a Dutch investment firm supervised by the Dutch regulator (AFM).
- Withdraw anytime. There are no long-term contracts or exit fees.
Learn how Curvo works if you're interested in how to invest in iShares funds through Curvo.
We saw why IWDA is a great ETF for Belgians to invest in. We then showed you two ways to invest in IWDA and iShares funds in Belgium:
- Buying the IWDA ETF through a broker like Bolero
- Using an app like Curvo, and invest in a portfolio of index funds that is more diversified than IWDA alone
An investment app can help you navigate the complexities of starting to invest and you can get your money working for you in no time. If you decide to go solo with your investments, make sure to follow the step by step process listed above and be confident in your choices when you click that “buy” button.