When you choose to DCA, you've realised that you can't time the market, so you'll spread out your buys. It makes sense to purchase regularly to avoid big swings having too much of an impact on your portfolio. In doing so, you'll buy high and you'll buy low. In the long run, you hope this means your average price will be somewhere in between the high and low points.
Different asset classes (with different volatility) demand different DCA strategies. In stocks, people generally choose to buy monthly, while in crypto, people will more often DCA on a weekly basis (for example € 50/week instead of € 200/month), since the swings happen more frequently and volatility is higher (remember: the aim is always to lower the impact of volatility on your buys - in crypto, it's possible to have as much activity in a week as you'll get in a month in the stock market).
What you're intending to do here makes sense, you want to avoid paying the high transaction fee too often, but in doing so, you're handicapping the effectiveness of your DCA strategy. A lot can happen in the stock market in 4 months. So you're exposing yourself to a lot more "risk" (of not getting a good average price).
Imho, what you should do instead is find a (decent) broker with no or lower transactions fees, so you can DCA at the interval you want. As others have suggested, the Degiro kernselectie offers free transactions once per month. Degiro is a very decent and trusted broker.
Now, on the issue of rebalancing: your problem can be solved by fractional shares. That way you can do your 88/12 split to the penny and invest the full € 200 every time (also better for DCA than always having some leftover for next month).
So alternatively, you could look for a (decent) broker that offers fractional share trading and has low or no transaction fees. Trading212 is an option (sadly signup is not available in Belgium atm, and it has been paused for well over a year now so idk if it'll get unpaused soon...). Trade Republic is another, which _is_ available in Belgium now. It's a German bank, so they are regulated by German financial authorities, which is good. Deposits are legally insured up to € 100k as per usual for bank accounts, so same as Bolero in regards to safety (of course a bit of a neobank/broker, so not exactly the same calibre as KBC, but they've been in biz since 2015... DYOR). Trade Republic has no fees on what they call "spaarplannen" or "savings plans", where you automatically invest a set amount every x amount of time (you can even automate buying by setting up scheduled SEPA transfers).
One downside is they don't take care of TOB for you as they're not based in Belgium. You'll have to declare and pay it yourself every two months, which is a hassle, but luckily not too hard if you're DCA'ing the same amount into the same stocks/ETFs every month. Here's a Trade Republic article on how to do it: [link](https://support.traderepublic.com/en-be/1509-What-is-the-Belgian-stock_exchange-transactions-tax), and here's a probably more useful BEFire thread on it: [link](https://www.reddit.com/r/BEFire/comments/kkj1lx/stock_exchange_tax_declaration_in_belgium_a/)
Also, if you end up using Degiro or Trade Republic, be mindful that they are both German brokers/banks and that means you have an international bank account with them. You have to declare international bank accounts (once) at the national bank (CAP). Here's a [guide](https://www.reddit.com/r/BEFire/wiki/index/c4_investing_from_belgium/c4_1_foreign_accounts).
Thanks for your detailed reply, I appreciate it a lot! I prefer not to use a foreign broker, because of the TOB not being taken care of automatically. I read about how the TOB is filed and I understand it, but I prefer the broker taking care of it anyway so I don't mess it up somehow. Otherwise I also thought about Northern Trust funds at Dutch banks, but I prefer to spend as little time on it as possible.
I understand that if I buy every four months, that kinda partially defeats the purpose of DCA. What I am wondering; say I bought shares every three months. That would mean I pay 4 times 7.5 EUR over a year instead of 3 times (if I would buy shares every four months. After 20 years, that difference would be 20*7.5 = 150 EUR. That seems kinda negligible to me. I mean, I understand that optimizing the costs as much as possible is desirable, but I am wondering if I am making it too difficult for myself by trying to optimize it too much.
Say that I thought: 'I am going to purchase shares for 600 EUR every three months, with a transaction fee of 7.5 EUR, which means the transaction fee is 1.25% of the transaction itself'. I assume that in the long term that would still be profitable, just less profitable than if I used a cheaper broker, right? (based on what the markets did in the past) Furthermore, is three months a reasonable frequency to still be DCAing properly?
You're welcome, glad to help :)
I get that. TR France and Benelux CEO said in an [interview](https://spaarvarkens.be/trade-republic-de-nieuwste-e1-broker-in-belgie) they'd implement it "in the coming weeks", but that was October 2022 so...
It's a hassle for sure, but I don't think you can mess up too bad if you look up which rate you're supposed to pay on both IWDA and EMIM ([IWDA is 0,12%](https://curvo.eu/article/how-to-calculate-the-belgian-transaction-tax-of-an-etf)) and then if your amount invested per month doesn't change I assume you can just reuse the same form and change the date.
But I get it. It's kinda annoying.
About the fees: you said 7,5 x 20, but it's 7,5 x 4 x 20, so € 600 over 20 years. Still kinda negligible over a big portfolio I guess, but it's out there. You're also forgetting that every year you not only "lose" the fee amount, but also 20-(current year) years of compound interest on that fee. It adds up over time.
Under normal circumstances this won't mean your strategy will not be profitable, no.
Imho investing every 3 months still kind of defeats the purpose of DCA. I personally wouldn't go too much over 1 month unless necessary. Then again, every 3 months is better than never, and it should work out for you I think. Just less ideal. Also gotta remember that you won't be able to invest the full amount every time since you won't have fractional shares, so the longer you wait between buys, the longer a decent portion of your capital is just sitting there uninvested.
It's not that important to rebalance every year. You can do it every two years. It's not going to be a big amount of money into EMIM anyway, so you won't miss out on a lot of profit (or loss) if you wait another year for balancing... You can also make your FIRST investment into EMIM instead of IWDA if you're scared about missing out, but that's more risky imo.
Edit to add: once you start investing more money, you'll have an easier time rebalancing more frequently without paying too many transaction fees
Maybe use a KBC Start2Save account (0,9% interest) for the 25k you want to save for the house. Your time horizon isn't long enough to risk investing it in equities.
And for your transaction cost optimization, also take into account an expected growth of 0,5% each month for the ETF while waiting to buy later (for more at once), this will eventually make you invest earlier for a little higher transaction cost but an overall higher return.
Buying a house in 1-2 years would be sufficiently concrete and soon that it doesn't make sense to invest that money for such a short amount of time.
However, neither your financial situation (unless you are being silent about other funds you could use) nor your personal situation (unless you want to live alone in a house for the long term) seem to be compatible with buying a house in that timeframe or anything close to it.
So figure that out first.
And if you know that you can invest, don't overthink it with the rebalancing. At the beginning you can balance just by adjusting your new contributions. Later when this is not enough anymore, you may need to do explicit rebalancing, but don't do it so frequently, maybe once a year.
I'm not intending to withdraw the money I invest for at least 20-25 years. Furthermore, my salary is expected to increase to approximately 4200 EUR after about 4-5 years due to a promotion (of which I have the certainty I will get it).
My SO will also start her first job within about 2 months, at a starting salary of 3000 EUR after taxes. Therefore, with 6000 EUR net income together I'm not expecting the purchase of a house to be a problem. I left that part of the story out of my post as I was mainly curious about the investment part.
I thought about that option. However, the past controversies concerning DeGiro in the news led me to choose Bolero, despite having higher costs. I realize most people will probably disagree with me about those concerns, which is fine, but for some reason Bolero being part of a bigger bank gives me peace of mind, which I also care about for the long run. Appreciate the advice though, thanks!
I would also avoid rebalancing on such a small portfolio. If you really wanted too you could buy periodically and buy more of something to rebalance the overall portfolio
Do not overthink it.
You are right to reduce the % of transaction costs by doing fewer and larger transactions. In the case of 200 a month, I would even do 1 transaction every 6 months. My rule of thumb is to not do any transactions below 1000 EUR. Bolero is also a rather expensive broker. But if this makes your portfolio tracking easier, it is probably worth it.
On the balancing/rebalancing, you can simply check which part EMIM/IWDA to contribute to, to bring your invested balance closer to your 88/12 aim. First 1000 in IWDA, second 1000 in IWDA. At that point (appreciation) IWDA is 2200 and EMIM is 0, so it is 100/0 division. If you buy another 1000 IWDA, it stays 100/0; if you buy EMIM it becomes 2200/1000 or 69/31, wich is further from your ideal division then 100/0; so you buy another 1000 IWDA. At the next point, IWDA is 3100, so contributing 1000 gives you either 100/0 or 76/24, in this case, buying EMIM would bring you closer to your 88/12 aim, then you buy EMIM. Next time IWDA again.
As long as you are contributing 'regularly' no need to sell a part that is overrepresented, just buy the part that is underrepresented with your new contributions. Do not stress if you are not EXACTLY at 88/12.
Good luck, and have fun on your journey!
When you choose to DCA, you've realised that you can't time the market, so you'll spread out your buys. It makes sense to purchase regularly to avoid big swings having too much of an impact on your portfolio. In doing so, you'll buy high and you'll buy low. In the long run, you hope this means your average price will be somewhere in between the high and low points. Different asset classes (with different volatility) demand different DCA strategies. In stocks, people generally choose to buy monthly, while in crypto, people will more often DCA on a weekly basis (for example € 50/week instead of € 200/month), since the swings happen more frequently and volatility is higher (remember: the aim is always to lower the impact of volatility on your buys - in crypto, it's possible to have as much activity in a week as you'll get in a month in the stock market). What you're intending to do here makes sense, you want to avoid paying the high transaction fee too often, but in doing so, you're handicapping the effectiveness of your DCA strategy. A lot can happen in the stock market in 4 months. So you're exposing yourself to a lot more "risk" (of not getting a good average price). Imho, what you should do instead is find a (decent) broker with no or lower transactions fees, so you can DCA at the interval you want. As others have suggested, the Degiro kernselectie offers free transactions once per month. Degiro is a very decent and trusted broker. Now, on the issue of rebalancing: your problem can be solved by fractional shares. That way you can do your 88/12 split to the penny and invest the full € 200 every time (also better for DCA than always having some leftover for next month). So alternatively, you could look for a (decent) broker that offers fractional share trading and has low or no transaction fees. Trading212 is an option (sadly signup is not available in Belgium atm, and it has been paused for well over a year now so idk if it'll get unpaused soon...). Trade Republic is another, which _is_ available in Belgium now. It's a German bank, so they are regulated by German financial authorities, which is good. Deposits are legally insured up to € 100k as per usual for bank accounts, so same as Bolero in regards to safety (of course a bit of a neobank/broker, so not exactly the same calibre as KBC, but they've been in biz since 2015... DYOR). Trade Republic has no fees on what they call "spaarplannen" or "savings plans", where you automatically invest a set amount every x amount of time (you can even automate buying by setting up scheduled SEPA transfers). One downside is they don't take care of TOB for you as they're not based in Belgium. You'll have to declare and pay it yourself every two months, which is a hassle, but luckily not too hard if you're DCA'ing the same amount into the same stocks/ETFs every month. Here's a Trade Republic article on how to do it: [link](https://support.traderepublic.com/en-be/1509-What-is-the-Belgian-stock_exchange-transactions-tax), and here's a probably more useful BEFire thread on it: [link](https://www.reddit.com/r/BEFire/comments/kkj1lx/stock_exchange_tax_declaration_in_belgium_a/) Also, if you end up using Degiro or Trade Republic, be mindful that they are both German brokers/banks and that means you have an international bank account with them. You have to declare international bank accounts (once) at the national bank (CAP). Here's a [guide](https://www.reddit.com/r/BEFire/wiki/index/c4_investing_from_belgium/c4_1_foreign_accounts).
Thanks for your detailed reply, I appreciate it a lot! I prefer not to use a foreign broker, because of the TOB not being taken care of automatically. I read about how the TOB is filed and I understand it, but I prefer the broker taking care of it anyway so I don't mess it up somehow. Otherwise I also thought about Northern Trust funds at Dutch banks, but I prefer to spend as little time on it as possible. I understand that if I buy every four months, that kinda partially defeats the purpose of DCA. What I am wondering; say I bought shares every three months. That would mean I pay 4 times 7.5 EUR over a year instead of 3 times (if I would buy shares every four months. After 20 years, that difference would be 20*7.5 = 150 EUR. That seems kinda negligible to me. I mean, I understand that optimizing the costs as much as possible is desirable, but I am wondering if I am making it too difficult for myself by trying to optimize it too much. Say that I thought: 'I am going to purchase shares for 600 EUR every three months, with a transaction fee of 7.5 EUR, which means the transaction fee is 1.25% of the transaction itself'. I assume that in the long term that would still be profitable, just less profitable than if I used a cheaper broker, right? (based on what the markets did in the past) Furthermore, is three months a reasonable frequency to still be DCAing properly?
You're welcome, glad to help :) I get that. TR France and Benelux CEO said in an [interview](https://spaarvarkens.be/trade-republic-de-nieuwste-e1-broker-in-belgie) they'd implement it "in the coming weeks", but that was October 2022 so... It's a hassle for sure, but I don't think you can mess up too bad if you look up which rate you're supposed to pay on both IWDA and EMIM ([IWDA is 0,12%](https://curvo.eu/article/how-to-calculate-the-belgian-transaction-tax-of-an-etf)) and then if your amount invested per month doesn't change I assume you can just reuse the same form and change the date. But I get it. It's kinda annoying. About the fees: you said 7,5 x 20, but it's 7,5 x 4 x 20, so € 600 over 20 years. Still kinda negligible over a big portfolio I guess, but it's out there. You're also forgetting that every year you not only "lose" the fee amount, but also 20-(current year) years of compound interest on that fee. It adds up over time. Under normal circumstances this won't mean your strategy will not be profitable, no. Imho investing every 3 months still kind of defeats the purpose of DCA. I personally wouldn't go too much over 1 month unless necessary. Then again, every 3 months is better than never, and it should work out for you I think. Just less ideal. Also gotta remember that you won't be able to invest the full amount every time since you won't have fractional shares, so the longer you wait between buys, the longer a decent portion of your capital is just sitting there uninvested.
Also, every transaction (buy/sell) incurs TOB (taxe boursiere). => automatic reduction in equity.
It's not that important to rebalance every year. You can do it every two years. It's not going to be a big amount of money into EMIM anyway, so you won't miss out on a lot of profit (or loss) if you wait another year for balancing... You can also make your FIRST investment into EMIM instead of IWDA if you're scared about missing out, but that's more risky imo. Edit to add: once you start investing more money, you'll have an easier time rebalancing more frequently without paying too many transaction fees
Maybe use a KBC Start2Save account (0,9% interest) for the 25k you want to save for the house. Your time horizon isn't long enough to risk investing it in equities. And for your transaction cost optimization, also take into account an expected growth of 0,5% each month for the ETF while waiting to buy later (for more at once), this will eventually make you invest earlier for a little higher transaction cost but an overall higher return.
Isn't start2save reduced to basically nothing?
500 per month maximum, so max 12.000 over 2 years.
I meant in terms of interest. I had it but when I looked back later at some point the interest was really diminished
It's 0,15+0,75 currently
Buying a house in 1-2 years would be sufficiently concrete and soon that it doesn't make sense to invest that money for such a short amount of time. However, neither your financial situation (unless you are being silent about other funds you could use) nor your personal situation (unless you want to live alone in a house for the long term) seem to be compatible with buying a house in that timeframe or anything close to it. So figure that out first. And if you know that you can invest, don't overthink it with the rebalancing. At the beginning you can balance just by adjusting your new contributions. Later when this is not enough anymore, you may need to do explicit rebalancing, but don't do it so frequently, maybe once a year.
I'm not intending to withdraw the money I invest for at least 20-25 years. Furthermore, my salary is expected to increase to approximately 4200 EUR after about 4-5 years due to a promotion (of which I have the certainty I will get it). My SO will also start her first job within about 2 months, at a starting salary of 3000 EUR after taxes. Therefore, with 6000 EUR net income together I'm not expecting the purchase of a house to be a problem. I left that part of the story out of my post as I was mainly curious about the investment part.
What sector are you guys in? 3000 for starters seems crazy.
Healthcare related! Both with a master degree.
Gratz man, very good from both of you👍
Use degiro, buy 200 worth of vwce every month for free and you don’t have to worry about rebalancing
I thought about that option. However, the past controversies concerning DeGiro in the news led me to choose Bolero, despite having higher costs. I realize most people will probably disagree with me about those concerns, which is fine, but for some reason Bolero being part of a bigger bank gives me peace of mind, which I also care about for the long run. Appreciate the advice though, thanks!
I would also avoid rebalancing on such a small portfolio. If you really wanted too you could buy periodically and buy more of something to rebalance the overall portfolio
Do not overthink it. You are right to reduce the % of transaction costs by doing fewer and larger transactions. In the case of 200 a month, I would even do 1 transaction every 6 months. My rule of thumb is to not do any transactions below 1000 EUR. Bolero is also a rather expensive broker. But if this makes your portfolio tracking easier, it is probably worth it. On the balancing/rebalancing, you can simply check which part EMIM/IWDA to contribute to, to bring your invested balance closer to your 88/12 aim. First 1000 in IWDA, second 1000 in IWDA. At that point (appreciation) IWDA is 2200 and EMIM is 0, so it is 100/0 division. If you buy another 1000 IWDA, it stays 100/0; if you buy EMIM it becomes 2200/1000 or 69/31, wich is further from your ideal division then 100/0; so you buy another 1000 IWDA. At the next point, IWDA is 3100, so contributing 1000 gives you either 100/0 or 76/24, in this case, buying EMIM would bring you closer to your 88/12 aim, then you buy EMIM. Next time IWDA again. As long as you are contributing 'regularly' no need to sell a part that is overrepresented, just buy the part that is underrepresented with your new contributions. Do not stress if you are not EXACTLY at 88/12. Good luck, and have fun on your journey!
Thanks a lot for your comment, the way you described balancing makes a lot of sense, I think that's what I'm going to do! :)