How to dollar-cost average (DCA) in Belgium - YouTube

Hi everyone! It's Thomas from Curvo. Managing your emotions is tough when you actually invest  

buying a stock and seeing its price drop is  super frustrating or you've sold a stock but  

it continues rising for months thereafter so  investing at fixed intervals irrespective of  

what prices are is a strategy called "dollar cost averaging". It's an escape from that emotional  

rollercoaster unfortunately dollar cost averaging is particularly difficult to accomplish in Belgium  

due to the high broker fees and taxes so we  experienced it firsthand when we actually  

started investing and in this video we've split it up into three parts the first part will actually  

first explain why dollar cost averaging is most likely a good strategy for your own investments  

in the second part we're gonna get really into it we'll use an example to calculate the cost of  

dollar cost averaging with different brokers in Belgium and then thirdly finally we'll show you  

how Curvo actually solves the difficulties of  investing monthly for Belgians so dollar cost  

averaging also known as DCA or euro cost averaging in Europe it's actually an investment strategy  

where you invest periodically rather than save up a large lump sum that you invest in one go  

so you invest at fixed times for instance every month regardless of what the markets are doing  

so here are some reasons why you should actually DCA. You likely earn a monthly income so most  

people get paid on a monthly basis this means that your finances progress at a monthly risk  

so investing at the same frequency makes a lot of sense because it simplifies saving and also  

just budgeting the second reason is you don't miss out on returns when you DCA so there's a  

famous quote that says the best time to invest was actually yesterday the second best time is today  

and so the financial markets have periods of high growth as well as crashes but the overall trend is  

usually up so in most cases you're actually  better off investing as early as possible  

rather than saving up and investing a larger  amount in one go because you miss out on all  

of those potential returns while you're waiting to invest your money so by investing part of your  

monthly salary as soon as you receive it you  force yourself to invest as early as you can  

and there's no temptation to time the market so timing the market is incredibly difficult the  

global economy is very complex and the financial markets are impacted by loads of factors that  

are completely out of our hands and control for instance no one can predict the exact timing of  

the COVID pandemic so when timing the markets the odds are usually stacked up against you you  

may get lucky but in most cases you're actually going to be worse off by diligently investing  

every month no matter what the markets are doing you kind of remove that temptation to time the  

markets entirely and one big thing with DCA is that it's best suited for long-term investing so  

consistent monthly investments are still the  best way to save for the long term as your career  

progresses you're likely going to increase your monthly income and through DCA you can actually  

easily increase your monthly contribution  to adapt to your new financial situation  

one last thing with DCA is that it avoids  regret. Timing the market can be exciting  

but it's also stressful you don't know whether you're buying or selling at the right time you'll  

probably make a wrong decision at some  point which is often going to lead to regret  

and so DCA kind of removes all those negative emotions from the process of investing  

and it really does bring peace of mind because you're not thinking about that stock price  

so you can actually do dollar cost averaging  through a broker in Belgium where you buy the  

shares of the funds in your portfolio every single month there are quite a few drawbacks to this way  

of investing though first one it's really costly  for small investment amounts so there are two  

costs associated with DCA for a broker the first one is a broker fee so the broker charges a fee  

for every investment that you make and the second one is the transaction tax so the Belgian tax  

Belgian state imposes the tax on every transaction called the beurstaks or taxe boursière or TOB

depending on how the broker interprets the  law the tax actually varies from 0.12 to 1.32  

of the transaction so we actually calculated  the fees and taxes when you're doing dollar  

cost averaging for several brokers in Belgium as an example we're investing 200 euros every single  

month into VWCE, a popular fund for Belgian passive investors you can actually run the simulations  

yourself in the spreadsheet that I've linked below in the show notes so as you can see in the results  

there are like wide differences in the cost of  a DCA strategy in Belgium. Degiro is by far the  

cheapest broker for VWCE with a total cost of just 2 euros and 82 cents the second cheapest broker  

in our comparison is Lynx which is over 28 times more expensive at 80 euros for the other brokers  

as you can see from the table Bolero, Medirect and Keytrade you will spend at least 208 euros or 8.7  

of your total contributions there are a couple  more drawbacks with going through a broker though  

one there's always cash that's left that's  actually not invested so no broker in Belgium  

supports fractional shares which means  you have to buy whole units of shares  

so for a fund like VWCE in our example who shares trade around 100 euros at the time of filming this  

you'll be left with actually a significant amount of cash when investing monthly this is money that  

is not invested and therefore it actually isn't  working for you the second issue is that it's a  

tedious manual task every month so when you first start investing it's fun to calculate the shares  

it's quite fun to make those investments every month but after a few times it becomes pretty dull  

and certainly quite annoying it's something you have to do though when you're investing monthly  

through a broker these kind of drawbacks show that dollar cost averaging through a broker in Belgium  

is quite difficult. As a Curvo founder I actually experienced this myself when i was managing my own  

investments through one of those brokers listed and that's why we actually built Curvo to fix  

dollar cost averaging for Belgian passive  investors so instead of a fee per transaction  

Curvo charges a one percent yearly all-in fee on your total investments this means that you are not  

penalized for investing more frequently through monthly contributions also the funds in Curvo's

portfolios are not liable for the TOB tax you are saving between 0.12 and 1.32 for every purchase  

and sale so in the spreadsheet we actually ran the simulation for Curvo Growth which is one of  

our portfolios which is very close to VWCE over the course of the year your Curvo fee is going  

to amount to 9 euros and 42 cents this means that only Degiro is cheaper other brokers  

such as Bolero or Keytrade are actually many times more expensive and so i just want to talk  

about a couple more advantages to know if you go with Curvo so one all your money is invested so  

investments with Curvo are done with fractional shares no matter the price of the shares and the  

amount that you actually wish to invest all of  your savings are invested and they're put to work  

there is no cash left sitting on an account  it's all being invested secondly the savings  

you can really put them on autopilot from 50 euros per month so through Curvo's app you set up a  

direct debit and so your savings are actually put on autopilot  

and they're invested for you every single month through the app you can actually change the amount  

at any time and you can even stop or cancel the automatic debits you can just sit back and you  

can see your savings actually work for you and you can actually spend your time on other things that  

actually important to you in your life so to  conclude for most people dollar cost averaging  

is actually a great investment strategy it really forces you to contribute a set amount of money  

every single month while ignoring the price  of each individual purchase by sticking to  

the strategy you actually eliminate the risk that you will make counterproductive decisions based on  

your emotions and if you get paid monthly it makes so much more sense but you know as we've shown  

dollar cost averaging is actually difficult when you're going for a broker due to the high fees  

and also the Belgian transaction tax so our  simulation of investing the 200 euros every month  

showed that it is particularly expensive when you're using any broker but the jira and manually  

calculating and making your investments every month becomes a pretty tedious task over time  

and that's really why we built Curvo to improve the dollar cost averaging strategy for Belgium  

passive investors by putting your savings  on autopilot through automated monthly  

contributions you pretty much set up yourself for success all right that was the video thanks for  

watching please hit that subscribe button for more videos like this and also don't hesitate  

to leave a comment with how you dollar cost average in Belgium! Alright see you next time!