Making the most of your money in Europe has never been easier. There are plenty of platforms now you can use to invest with, my favourite one being DeGiro. In this article, I will guide you through DeGiro ETF investing.
What is an ETF?
An ETF is an exchange-traded fund, a type of investment fund that invests your money in underlying securities. These securities can be stocks, bonds, or real estate for example.
ETFs come in all different colours and sizes. I personally like the cheap ones. They tend to invest in broad-based market indexes (such as the S&P 500 or the MSCI World Index) and are passively managed.
Because they are managed passively, these ETFs are very cheap. I always try to invest in funds with lower costs, since every euro I bring to a fund manager is one I can’t keep for myself!
DeGiro Index Funds
Luckily, I found that you can invest ETFs with DeGiro pretty easily. They offer a lot of high-quality ETF options from fund managers such as Vanguard, Blackrock (iShares) and Fidelity.
These ETFs should follow a broad index of stocks, and if they do, you’ll probably be alright. Index funds are not always a better choice, but for most investors I think they are a viable option. I know I only invest in index funds, using ETFs such as VWRL.
The ETFs I invest in are VWRL and IUSN. In this article I explain why I use these two funds.
Who is DeGiro?
I’ve mentioned DeGiro a few times now. Who are they?
DeGiro is an online investment broker originally from The Netherlands. A few guys from another broker formed DeGiro because they wanted to provide cheaper access to investments.
DeGiro offers a lot of cheap ETFs that you can use to build wealth and eventually become financially independent!
Investing in ETFs with DeGiro
In this article, I will guide you through investing in ETFs with DeGiro step by step. It’s not hard, just follow the article and you’ll be fine.
Please always remember I’m not giving financial or investment advice. Always do your own research and/or consult your financial advisor before making financial decisions.
Step 1 – Choose an Investment Strategy
Before you can start buying ETFs with any broker, you have to decide how your investment strategy is going to look like. I have written a lengthy article explaining my investment strategy here.
Although I can’t give investment advice for most people investing in a simple ETF portfolio would be recommended. This is due to low costs and high diversity.
An example could be putting your age as a percentage in bonds, and the rest in a world-wide stock fund such as VWRL or IWDA.
Step 2 – Choose your ETFs to Invest In
After you have decided on your investment strategy, it’s time to pick the ETFs you’ll be buying at DeGiro. There are a few things to consider:
- Asset type (stocks, bonds, others)
- Diversity (worldwide or niche)
- Costs (total expense ratio and DeGiro transaction costs)
I personally chose VWRL and IUSN for my stock portfolio, but your situation might be different.
In my opinion, the best funds for passive investing are VTI and VXUS but unfortunately, the EU government doesn’t allow funds without documentation in a country’s official language anymore. These two funds are only documented in English, so you can’t buy them in The Netherlands.
A website like JustETF.com can also help in choosing the right ETF for you.
Next to that, you can access the DeGiro ETF list with commission-free ETFs here. It is not super easy to navigate, but what I usually do is copying the ISIN code and putting it in Google. From there, go to Morningstar or any other website to read about the ETF you’re investigating.
You will see that VWRL is on this ETF list, but IUSN is not.
Step 3 – Sign-up with DeGiro
Now that you know the funds for your DeGiro ETF investing, the fun starts. You can create your account with DeGiro if you haven’t already.
You will click the button to create an account and then you have to fill in the form.
After this first form, you will have to go through another
Then you have to connect your bank account. This is done easily by putting in 1 cent through iDeal.
Now your account is ready! But I would strongly recommend to fill in form W8-BEN first to be able to claim back some of the dividend tax you paid on any US-based securities.
You can find the form under your account settings > online forms:
Step 4 – Transfer Money to DeGiro
With your brand-new account, you are now able to transfer money to DeGiro. You can see DeGiro as just another account where you put your money in.
With the money you put in, you can then buy investment funds.
To put in money, just log-in to your account and press the button to deposit cash into your account. Depending on your country, there are different ways to do this. In The Netherlands, we can easily deposit cash with iDeal, a payment service by Dutch banks.
Step 5 – Purchase your ETFs with DeGiro
With the money in your account, you can start purchasing your ETFs. This is a very easy task. Just look up the ETF code in the search bar on the top-right side of the screen. From there, you can place your buy order.
I have made my two ETFs favourites in the DeGiro portal. That makes them even easier to find!
Buying ETFs with DeGiro is super easy. You divide the amount you want to invest (i.e. 1,000 euros) by the price of the ETF (i.e. 100 euros) to get the number of shares you’re going to buy. Now if this number isn’t a nice whole number, you have to round down to find the number of shares you can buy.
Then you will just press the green buy icon and put in an order. During market hours I mostly use market orders, but you can also use limit orders (and set the buy limit accordingly) just as well.
It’s really that simple!
Step 6 – Enjoy the Ride!
Okay, let’s recap what we’ve done here. First, you created an investment strategy. Then you decided on which ETFs to buy. The third step was to create an account at DeGiro after which is deposited cash and purchased your first shares.
You’re now ready to enjoy the ride. You will be tempted to watch your portfolio daily. Do not do this. Stock prices fluctuate heavily. There will be days you’re in the green and days you’re in the red. Don’t sweat these red numbers. Just focus on the long term. Market timing is pointless!
And whatever you do, don’t sell during a market correction or crash! Let your ETFs sit in your account and accumulate more and more wealth over time. Enjoy the ride!
More on Selecting Free ETFs
DeGiro offers a list of “free” ETFs. The reason I put free between quotes, is that the ETFs are not free of course. You are just able to buy these “DeGiro free ETFs” without paying a commission.
While that is a big plus, commission-free ETFs are not necessarily better than ETFs that you do pay a commission for.
In my case, I invest in a few of the commission-free ETFs with DeGiro, but I also own funds that I do pay a small fee for.
These fees are one-off, and therefor they won’t make or break your investment returns. The real danger is in expensive management fees on your ETFs, of which I have none.
Conclusion on DeGiro ETF Investing
As you have seen in this article, investing in ETFs using DeGiro is not hard at all. You just have to come up with an investment strategy, and then execute. I hope the article here helps with that.
How are your investments coming along? Do you use DeGiro, what are your experiences? Let me know in the comments below.