How to invest in the S&P 500 in Belgium

What is the S&P 500?

S & P 500 stands for the Standard & Poor ’ s 500 index. As the mention suggests, it seeks to track the performance of an index composed of the 500 largest american companies. Through the S & P 500, you get photograph to a big section of the US economy as it covers 80 % of the full american marketplace capitalization. Its popularity continues to grow as the US economy continues to perform highly good. It ‘s an easy means for index investors around the globe to buy a large chunk of the US standard marketplace in one go .Historical performance of the S&P 500 since 1992 (source: Backtest) As you can tell from the graph above via Backtest, the S & P 500 has returned an average return of 10.8% per year since 1992. That ’ s quite a significant reelect on your investment if you began your investing journey in the early nineties .

How to buy the S&P 500

You ca n’t directly invest in the S & P 500 because it ‘s an exponent, but you can invest in one of the many funds that use it as a benchmark and follow its composition and performance. As a belgian investor, you can buy shares in an ETF ( Exchange Traded Fund ) that tracks the performance of the S & P 500.

Reading: How to invest in the S&P 500 in Belgium

The first step is to explore justETF.com which provides you with a complete summation of different ETFs available to Europeans. One search for S & P 500 brings about tons of results and can be daunting at first :One search yields a lot of results for the S&P 500 on justETF

How do we know which S&P 500 ETF to actually buy?

exchange traded fund can have different tax implications for belgian investors. As there are many options as shown above to buy the S & P 500, we can follow a set of criteria to follow as belgian investors in order to choose the right exchange traded fund :

Accumulating. There is no capital gains tax for stocks in Belgium, but there is a tax on dividends. So it’s preferable to invest in accumulating funds. If you choose a distributive version of the ETF, you are liable to pay a 30% tax on all dividends.
Domiciled in Ireland. It’s important for Belgian investors to choose a fund that is domiciled in Ireland so you won’t be double-taxed.

We dig deeper into the crucial criteria for belgian investors in our article on what to consider when buying an ETF in Belgium .

S&P 500 through iShares CSPX

One of the ETFs that fits our requirements is the iShares Core S & P 500 ( Acc ) ETF ( ISIN : IE00B5BMR087 ). It ‘s offered by iShares, one of the largest fund providers in the world. We ’ ve highlighted in red the criteria that we were after when choosing the ETF on justETF .Once you’ve found your ETF make sure the criteria matches what you’re after

Buying the ETF with Bolero

ETFs are traded on stock exchanges. individual investors have to go through a agent to buy ETFs on the substitution. Bolero is our agent of option for this article. To invest in the S & P 500, a research with the ISIN code ( IE00B5BMR087 ) is the easiest way to proceed. You ’ ll poster that there ’ s only one exchange where this ETF can be purchased from : Euronext Amsterdam, which is the Amsterdam stock commute. Search for the ISIN on Bolero and then click “Buy” once you’re ready You ’ ll have to pay the play along when buying the fund through Bolero :

Broker fee. It costs €7.50 for the transaction, whether you buy one share or several.
The transaction tax. Every single time a transaction takes place, either buying or selling, you need to pay the Belgian state a fee. For this ETF, the transaction tax is 0.12% of the total price of the share. We explained in detail how to calculate the transaction tax of any ETF.

once you ’ re ready, snap “ Buy ” and you will have purchased your ETF. Congrats !

The downsides of an investment in the S&P 500

The S & P 500 is a estimable index to invest in, but it does have some downsides :

concentrated in the US stock amrket
consists of only the largest companies
it’s volatile, meaning its price fluctuates a lot

Concentrated in the US stock market

The US stock market has performed exceptionally well during the last 50 years compared to most early countries in the earth. But the past does not guarantee future returns. The american english economy may continue to do well over the adjacent 50 years, but it besides may not. Betting on one unmarried country like the US, no matter how dominant allele its market is at the moment, increases the likelihood of a bad result .

Consists of only the largest companies

The S & P 500 is made up of entirely the largest american companies. But good investing returns can be achieved in mid-size and smaller companies excessively. Just like it pays off to diversify across multiple countries, it ‘s a good idea to spread across different company sizes a well.

Volatile

last, the lineage grocery store is volatile. So a exclusive investing in the S & P 500 index may not match your risk profile. We ’ ve previously written about the character of bonds in your portfolio and you ideally want a portfolio that helps you sleep easily at night. Putting all your eggs in one basket is probably not ideal, specially if the economy of that country starts to falter .

Alternatives to the S&P 500

As mentioned above, the S & P 500 index international relations and security network ’ deoxythymidine monophosphate adenine diversified as we would like. It ‘s possible that the following autocratic country wo n’t be the US, so an investment in the S & P 500 means you ‘ll pass up on a great opportunity for eminent returns. Let ‘s expect at some alternatives to the S & P 500 index .

1) IWDA (MSCI World index)

The MSCI World exponent tracks over 1,500 large-capitalization companies from 23 “ developed ” countries. This includes the US, but besides Japan, Germany, Australia, etc… Compared to the S & P 500, the MSCI World is more diversify geographically and exposes you to other countries besides the US. But it does invest only in the largest companies .

2) VWCE (FTSE All-World index)

The “ Vanguard FTSE All-World Accumulation ” ETF, most normally known by its heart VWCE, is one of the most popular exchange traded fund with Belgians and tracks the FTSE All-World index. As its name suggests, this index is global : it consists of over 4,000 companies from more than 40 countries. furthermore, it contains both large and mid-size companies, from both “ break ” markets ( US, Germany, UK, Japan… ) and “ emerging ” markets ( Brazil, China, Chile… ). VWCE offers great diversification in a single fund. There are n’t many ETFs that are more diversify than VWCE. We ’ ve written about the options to buy VWCE as a belgian investor if you want to learn more on the subject .

3) Curvo Growth

An choice for belgian passive investors is to invest through Curvo. In especial, the Curvo Growth portfolio is a good alternative to the S & P 500 index. It ‘s composed of two funds, both offered by Vanguard, with the combination being similar to the FTSE All-World, the index that VWCE tracks :

FTSE Developed All Cap Choice index (ISIN: IE00B5456744)
FTSE Emerging All Cap Choice index (ISIN: IE00BKV0W243)

Walkthrough of Curvo’s app and the benefits

Curvo Growth is more diversified than the S&P 500

First of wholly, the indexes in Curvo Growth are globally diversified. They include smaller companies excessively. As a consequence, Curvo Growth invests in over 7,500 companies diffuse across 40 countries, compared to the 500 companies in an S & P 500 ETF. This allows you to broaden your investments and not make a single stake on one nation or company size .

Sustainable

sustainable invest is challenging because everyone has unlike beliefs and values. The funds chosen in Curvo Growth focus on one guiding principle : they don’t invest in companies that are considered destructive to the planet. This means the pursuit sectors are excluded :

non-renewable energy (nuclear power, fossil fuels)
vice products (adult entertainment, alcohol, gambling, tobacco)
weapons (civilian firearms, military weapons)
controversial companies that do not meet the labour, human rights, environmental and anti-corruption standards defined by the United Nations Global Compact

This is in contrast to the S & P 500, which doesn ’ metric ton set any sustainability standards and invests in even the “ worst ” companies .

No transaction tax

One bonus is that the belgian transaction tax is not applicable to the funds in Curvo ’ s portfolios. This means you ’ re saving between 0.12 % and 1.32 % per transaction depending on the ETF you choose .

All your money is invested

Curvo works with fractional shares meaning that all your money is invested. When buying your own ETFs, you ‘re required to buy whole units of shares. For example, if you buy the S & P 500 ETF, you ’ ll notice that the price hovers around €400 price per share. This means that if you invest €150 per month, you wo n’t be able to buy S & P 500 for the inaugural two months. alternatively, you ‘ll have to wait until the third base month to buy your first share. And then you ‘ll be left with some cash on your brokerage house account.

Buying ETFs is cheaper

The price of using Curvo is normally more expensive than buying ETFs through a agent. It costs 1 % “ all-in ” for the overhaul, on your entire investments. This provides you with peace of mind as rebalancing is taken care of and your portfolio is kept in line with your goals and fiscal situation .

Conclusion

The S & P 500 index is distillery a great way to invest and has historically provided meaning returns to investors. The main downside is that you ’ re basically betting on the US. No matter how dominant its marketplace is at the moment, investing in a single state increases the likelihood of a bad consequence. When investing your savings for the long term, it ‘s a better mentality to maximise diversification when putting together your portfolio. Through IWDA, VWCE and the Curvo Growth portfolio, we ’ ve shown three different ways to invest that are alike to the S & P 500 index, but have a global exposure .

source : https://www.peterswar.net
Category : Finance