0:02 In this video, I will break apart the
0:04 most popular ETF in Europe so that you
0:06 know exactly how it works. I'll show you
0:09 where and how to buy ETFs as a European
0:11 investor, and I'll highlight the most
0:13 expensive mistakes that beginning ETF
0:15 investors make so that you can avoid
0:17 them. Over my 18 years of experience
0:19 both on Wall Street and here in Europe,
0:21 I've invested hundreds of millions of
0:23 euros in ETFs and their cousins index
0:25 funds. I know it can be confusing for
0:27 beginners because there are thousands of
0:30 ETFs available and they have long
0:32 confusing names. You can buy them on
0:34 dozens of different stock exchanges in
0:36 different currencies. It is easy to feel
0:38 lost and never get started. So, let me
0:40 clear that up for you. The best place to
0:42 find ETFs for European investors is a
0:45 portal called just Eetf.com. It's an
0:47 easily searchable database with over
0:50 3,700 ETFs you can buy pretty much
0:53 anywhere in Europe. So, if I go to this
0:55 database and I sort by size, I see that
0:57 the most popular ETF among European
1:00 investors is the EyesShares Core S&P 500
1:03 USD ETFUSD ACC. Now, in a second, I'll
1:04 explain what all of that means. But
1:07 first, let me mention that I'm not
1:08 making an investment recommendation
1:10 here, okay? This is simply the biggest
1:13 ETF in Europe. It's not necessarily the
1:15 one that is best for you. In fact,
1:17 depending on where you live and the
1:19 local tax rules and your goals in life,
1:21 this could be a bad choice. Later in the
1:23 video, I'll share a resource which
1:25 covers how you choose the best ETFs for
1:28 you. But for now, let's break apart this
1:31 ETF so that you understand how ETFs work
1:32 better. And we're going to start with
1:35 the name. So the eyeshare core S&P 500
1:38 usage ETF USD ACC. The uh most important
1:41 part to understand is of course this ETF
1:44 exchange fund. An exchangeraded fund is
1:47 an investment fund which trades on a
1:49 stock exchange. So first what's an
1:51 investment fund? Well, let's say that
1:53 you want to invest in stocks because
1:54 you've heard that it's a great way to
1:57 make your money grow. And that is true,
1:59 but the problem is there are thousands
2:01 of stocks out there. And unless you're a
2:03 professional, it's hard to choose the
2:05 best ones. So, you pull your money with
2:07 other investors and you give it to a
2:09 professional manager who will choose the
2:11 best stocks for you in exchange for a
2:14 fee. Now, that's an investment fund. But
2:16 why would you put an investment fund on
2:19 a stock exchange? Well, it's for ease of
2:21 access. Here in Europe, traditional
2:24 investment funds are usually sold by
2:26 banks, and this means that you are stuck
2:28 with whatever your local bank wants to
2:30 sell you. Often, these are expensive,
2:33 poorly performing funds. But a stock
2:36 exchange is like eBay for investments.
2:39 It's this huge online marketplace which
2:41 gives you access to thousands of
2:43 different stocks or investment funds
2:45 without being restricted to what your
2:46 bank wants to sell you. So that means
2:48 you can buy some of the best investment
2:51 funds in the world even if you live in a
2:53 small European country like Latvia or
2:56 Croatia or Luxembourg. So that covers
2:58 ETF. But let's go back to the name. So
3:00 first up we've got EyesShares. This is
3:03 simply the brand name used by BlackRock
3:05 which is the biggest fund manager in the
3:08 world. It's kind of like Audi or Skoda
3:10 in the car market. And then up next we
3:13 have core. So this is a product category
3:15 used by Eyesshares. You can basically
3:19 ignore that. And then we have S SNP500.
3:21 Now this of course refers to the most
3:24 famous stock index in the world which
3:26 includes 500 of the biggest American
3:29 companies. Why is a stock index included
3:31 in the name of an ETF? Well, it's
3:34 because the vast majority of ETFs are a
3:37 type of fund called an index fund.
3:39 Basically, index funds buy all the
3:42 stocks in a particular market index. And
3:44 as it turns out, this is a really smart
3:46 investment strategy. I've got other
3:48 videos on this topic, but basically with
3:50 an index fund, you spread your money
3:52 among hundreds of different companies,
3:54 and you pay a very low cost to do it. As
3:56 Warren Buffett said, by periodically
3:58 investing in an index fund, the no
4:01 nothing investor can actually outperform
4:03 most investment professionals. So, index
4:06 funds are pretty smart, and this ETF is
4:09 an index fund that tracks the S&P 500
4:13 index. Then up next we have USITS. USITS
4:16 refers to a European Union directive. So
4:18 it basically means that this ETF is
4:20 regulated in Europe. If you live in the
4:22 European Union, pretty much all the ETFs
4:25 that you can buy will be USITS ETFs.
4:28 Then we have USD. So this refers to the
4:30 fund currency. Now confusingly, just
4:33 because the fund currency is dollars
4:35 doesn't mean you have to buy this ETF in
4:36 dollars. As I'll show you in a second,
4:38 you can actually buy it in euros. But uh
4:41 the accounting of the fund is done in
4:44 dollars. And then finally we have ACC.
4:47 Now ACC stands for accumulating. That's
4:49 the distribution policy. So what does
4:52 that mean? Well, an ETF invests in
4:55 stocks. And many of those stocks are
4:57 profitable. They pay dividends to the
5:00 ETF. Now the ETF has a choice of what to
5:02 do with this money. It could pay this
5:04 money out to you or it could use this
5:07 money to buy more stocks. A distributing
5:11 ETF pays money out to investors. An
5:14 accumulating ETF keeps the money inside
5:16 the fund to buy more stocks. Now, which
5:18 is better? It depends on a number of
5:20 factors like how old are you? Are you
5:23 just saving for retirement now or are
5:25 you already retired? And also, what are
5:27 the tax rules in your country? In some
5:30 European countries like um Austria or
5:32 Switzerland or the UK, these
5:34 accumulating funds get taxed in a way
5:36 that makes them less attractive. But in
5:38 many European countries, they are
5:39 actually great because all the money
5:41 stays inside the fund, so you don't have
5:43 to pay dividend taxes. And if you decide
5:45 you want a distributing ETF instead of
5:47 an accumulating one, it's usually pretty
5:49 easy to find a different version
5:51 tracking the same index. For example,
5:54 here we have a Vanguard S&P 500 usage
5:57 ETF distributing. So it tracks the same
5:59 index, does the same thing, but it's a
6:01 distributing fund. As you can see, these
6:03 local details can get complicated
6:06 quickly. That's why I put together a
6:08 step-by-step training program for ETF
6:10 investors in Europe. In this training, I
6:12 cover questions like, "How do you pick a
6:14 good ETF given your goals and the
6:17 country where you live? Which investment
6:18 app or brokerage do you choose and how
6:20 do you handle taxes?" If that sounds
6:22 interesting, just follow the first link
6:24 in the description to find out more. But
6:26 going back to our EyesShares fund, on
6:27 the next line, we see something really
6:30 important, which is the international
6:32 securities identification number. This
6:34 is a unique combination of letters and
6:36 digits that identifies the ETF.
6:39 Sometimes it can be difficult to look up
6:41 an ETF on a brokerage website or some
6:43 other database. There can be a lot of
6:45 ETFs which have a very very similar
6:47 name. They might also be an eyesshares
6:50 ETF that invests in the S&P 500 and it's
6:52 hard to figure out which one is the
6:54 right one. In that case, you simply copy
6:57 the IS and you search using the IS. So,
6:58 for example, on Google, you can search
7:01 by is and use that to find the official
7:03 website for this fund, which can be
7:05 helpful. You might ask, why not use this
7:07 website to um do this video instead of
7:09 looking at just ETF.com. Well, the
7:11 problem is different fund managers have
7:13 different website formats and some of
7:15 them are really difficult to use. So I
7:17 prefer to use just ETF because it
7:20 centralizes information in one place and
7:22 then once you have decided that yes this
7:24 particular ETF is something that you
7:25 want to buy of course you want to go to
7:27 the official website as well and verify
7:29 all the information and then moving on
7:33 we have the TER the total expense ratio.
7:35 Jack Bogle the father of index funds had
7:37 a famous saying you get what you don't
7:39 pay for. The more you pay in fees the
7:41 more money goes out the door the less is
7:43 left in your account. One of the best
7:45 things about ETFs and index funds is
7:46 that they have low fees. The typical
7:49 investment funds sold by your bank here
7:51 in Europe, they charge you 1% per year,
7:54 even 2% per year or more. But ETFs and
7:58 index funds tend to charge 0.07%, 0.1%,
8:00 maybe 0.2% per year, which is much much
8:03 less. It leaves more money in your
8:05 account. Okay, we already covered
8:06 distribution policy, but now let's look
8:09 at replication. So for this ETF, the
8:11 replication method is physical. What
8:13 does that mean? Does that mean that
8:15 there's some kind of physical mechanism
8:17 moving gears and levers to invest your
8:19 money? Well, not quite. What it actually
8:22 means is that this ETF will go out into
8:25 the market and buy the 500 stocks
8:28 included in the S&P 500. By contrast,
8:30 there are some ETFs that are called
8:32 synthetic. For example, here is this
8:36 Invesco S&P 500 usage ETF, which is a
8:38 synthetic ETF. This ETF will not buy
8:40 those 500 stocks. Instead, it's going to
8:43 use some financial wizardry involving
8:45 what are called swaps to deliver
8:48 investors pretty much the same result.
8:51 Now, which is better? Well, it depends
8:53 what you are prioritizing. When it comes
8:55 to investing in American stocks, because
8:59 of tax reasons, these synthetic ETFs
9:00 actually tend to get better results.
9:02 Basically, you don't have to pay
9:05 dividend taxes. So, for example, when we
9:07 go down to performance here and look at
9:09 5-year performance, this synthetic fund
9:12 earned 111.8%.
9:14 But this uh physically replicated fund
9:16 earned 109.8%.
9:19 So, a couple percentage points less over
9:21 5 years. So, synthetic funds have some
9:24 tax benefits, but because they are more
9:25 complicated, they are considered a
9:28 little more risky. in really extreme
9:30 market crashes or difficult situations,
9:33 potentially you could have some problems
9:34 with these synthetic ETFs. I say
9:36 potentially because in practice, this
9:38 has never really happened to any
9:40 meaningful extent. That said, a lot of
9:43 people do prefer physically replicated
9:45 ETFs because you know what you're
9:47 getting. The fund will actually use your
9:49 money to buy the underlying shares. Next
9:53 up, we've got fund size. So, this is the
9:56 biggest in Europe. It's actually got 117
9:59 billion euros invested in it right now.
10:01 Is fund size important when choosing
10:04 investments? In some cases, if the fund
10:07 size is over, let's say, €100 million, I
10:09 don't really care about it much. But if
10:13 I see an ETF which has maybe €5 million
10:15 invested in it, I tend to be careful
10:17 because there's a big risk that the fund
10:19 manager might shut it down. Fund
10:22 managers launch ETFs to make money and
10:23 if nobody's buying it, they're not
10:25 making any money. So that means they
10:26 might shut the fund down. Now, it's not
10:28 a huge problem. The money just gets
10:30 returned to you in that case. But in
10:32 many European countries, you have to pay
10:34 taxes if you have a profit at that
10:36 point. So for that reason, I prefer
10:38 funds which do have a larger size, but
10:40 there's certainly no need to have a fund
10:42 which has billions and billions invested
10:44 in it. That is not really a significant
10:46 advantage. And then we have the
10:48 inception date which in this case is
10:51 2010. Sometimes people ask me is it a
10:53 problem if a fund was launched recently
10:56 maybe in the past year. My view is
10:58 always as long as the fund size is
11:00 already significant and as long as the
11:03 fund provider has a good reputation.
11:05 It's not some kind of new company then
11:07 I'm fine with new funds. Of course, if
11:10 you have a longer track record, you have
11:11 more data that you can look at in terms
11:14 of historical performance and how the
11:15 fund has tracked the index. We'll talk
11:17 about that in a second. But on the
11:20 whole, having a new fund is perfectly
11:21 fine most of the time. And finally, you
11:23 have the number of holdings. And this is
11:24 something that confuses a lot of people.
11:28 Why do S&P 500 ETFs have 503 holdings,
11:30 not just 500? Well, it's because a few
11:32 companies included in the index like
11:34 Alphabet, the parent company of Google,
11:37 have two share classes in the index. So,
11:39 it's basically the same company with two
11:41 different types of shares. So, that
11:43 covers the foundations. Now, let's move
11:46 on to the section overview. And here we
11:48 have a quote. So, this is the latest
11:51 price of the ETF. So, this ETF currently
11:54 is trading at around €618
11:57 per share. How important is this? If you
12:02 see one ETF that has a price of €100 and
12:04 another ETF which has a price of €600,
12:05 should you prefer the one with the
12:07 biggest price or the smallest price?
12:09 Well, that's kind of a trick question.
12:11 It really doesn't matter that much. The
12:14 price of an ETF is simply a unit of
12:16 measure. You know how you can buy sugar
12:19 that's packed in 1 kilo bags or 5 kilo
12:23 bags? Well, you can buy the S&P 500 in
12:26 100 pieces or 600 euro pieces. it
12:27 doesn't really change the performance.
12:31 That said, these large ETF prices can be
12:33 a disadvantage if you have a brokerage
12:36 which doesn't allow what are called
12:38 fractional shares. So basically, if
12:40 every time that you invest your money,
12:43 you have to buy at least one full share,
12:45 that means you have to invest at least
12:48 600 in this case. So that can make ETFs
12:50 with lower prices a little more
12:52 practical for people. Then on the right
12:53 hand side, you have the description of
12:55 the ETF. That's certainly very useful to
12:57 read to understand how it works. And
12:59 then down here you have some documents.
13:01 The most important document is certainly
13:03 the kid, the key information document.
13:06 I'm a big fan of this document because
13:09 it's a standardized document which all
13:11 fund managers have to make in the same
13:15 way. And for many complex and expensive
13:17 investment products that we get sold in
13:19 the European Union, it's basically the
13:22 only place where you can get an honest
13:24 look at the true costs, the true fees of
13:26 the investment. Now, for ETFs, it's
13:28 usually not so essential because the
13:30 fees are usually low and transparent.
13:32 But um for other investments, you always
13:34 want to open the kid and scroll to the
13:37 third page where you can see this table
13:39 of total costs and the annual cost
13:41 impact. In this case, it's 0.1% per year
13:45 because they rounded up 0.07% to 0.1%
13:47 per year. Um, there's also some other
13:48 useful information in the kid. For
13:51 example, the risk indicator where four
13:53 or five is typical for stock funds and
13:56 maybe two or three or one could be for
13:58 bond funds or money market funds which
13:59 are very low risk. And then you have all
14:01 kinds of structured or leverage products
14:04 which have an indicator of six or seven.
14:06 All right, so next up we've got a chart
14:10 of performance. So how has this ETF done
14:12 over time? Now something that is really
14:14 important to understand about ETF
14:16 performance is that these charts and
14:18 performance numbers they include
14:20 everything. They include the price going
14:23 up or down. They include dividends if
14:24 you have a distributing ETF and they
14:26 also include fees. So these are the
14:28 results after all the fees have been
14:30 subtracted. So this chart shows us that
14:33 between 2010 when the fund started and
14:36 today the increase in value for somebody
14:38 who put money into the fund would have
14:40 been 710%.
14:43 So that's a pretty crazy amount of
14:44 profit you could have earned by
14:47 investing in this fund between 2010 and
14:51 2025. Now what is a critical mistake
14:52 that a lot of beginning investors make
14:55 is to pick ETFs based on these
14:57 historical results. For example, people
14:59 will play with this tool to add other
15:02 ETFs for comparison, maybe a popular
15:05 MSEI World ETF, which invests in global
15:06 stocks and developed world stocks, and
15:08 they will say, "Well, the S&P 500 did
15:10 much, much better, so I'm going to buy
15:13 this one instead of the more diversified
15:15 global ETF." But the problem is past
15:17 results don't guarantee the same
15:19 performance in the future. In fact,
15:21 historically, it has often been the case
15:24 that one region performs really well for
15:25 a decade or two and then it
15:28 underperforms. So, looking at historical
15:30 data is a really, really bad way to pick
15:33 funds. In fact, if you always pick the
15:35 most profitable funds based on history,
15:37 you will probably not get the best
15:39 results because that means you are
15:41 buying funds which are right now kind of
15:44 hyped up and expensive as opposed to
15:46 funds which are maybe a little less
15:48 popular where you could jump in at lower
15:50 prices. So do look at the history to
15:53 understand how the fund works, but don't
15:55 choose ETFs based on which performed the
15:57 best over the past x years. So let's
15:59 keep going down. We have a few more
16:02 basics here. Um, so we've covered most
16:04 of this data, but what is important here
16:07 is the strategy risk. So here it says
16:10 long only. That means this ETF simply
16:12 puts your money into stocks. You will
16:15 also see some ETFs which are leveraged.
16:16 So that means they borrow money to
16:19 invest in stocks or which are inverse.
16:22 So if the index goes up, the ETF goes
16:24 down. You should stay away from those
16:25 unless you really know what you're
16:27 doing. Those are really, really risky.
16:29 Then under sustainability, this says no.
16:32 There are many ETFs these days which pay
16:34 attention to issues around social
16:37 responsibility or climate or corporate
16:39 governance. Those ETFs usually have the
16:42 acronyms SRRI or ESG in the name. This
16:44 fund doesn't. This fund invests in the
16:46 whole market. Then we have the fund
16:48 currency. We already addressed that. And
16:50 then we have currency risk which says
16:53 currency unhedged. What that means is if
16:55 you are an investor based in the Euro
16:58 zone or based in the UK where the local
17:00 currency is the euro or the pound then
17:02 you will have currency risk between the
17:06 euro or the pound and the dollar because
17:09 this fund invests in dollars. It invests
17:11 in American stocks. There are some ETFs
17:14 which are hedged. So they remove this
17:17 currency risk. But that is not quite as
17:19 wonderful as it sounds. There are
17:20 significant drawbacks and costs
17:22 associated with that. Most experts don't
17:25 really recommend hedging long-term stock
17:27 investments, but if you are concerned
17:29 about currency risk, it is available. It
17:31 is possible. Next up here, we have
17:33 volatility. Volatility is a fancy word
17:36 for risk, specifically short-term risk.
17:39 How much does the fund go up and down?
17:42 19% is quite a lot. For stocks, maybe 15
17:44 to 20% is kind of a typical range. As a
17:46 stock investor, you should expect that
17:48 your profits will change dramatically
17:50 from year to year. Maybe one year you
17:52 make 9% per year, the next year maybe
17:54 you make 30% per year, the next year
17:57 maybe you lose 15%. That is completely
18:00 normal. Stock ETFs go up and down quite
18:01 a lot. And then we have one technical
18:03 piece of information which is actually
18:05 quite important is the fund doicile in
18:08 this case Ireland. So as investors based
18:11 in Europe, we cannot buy ETFs which are
18:13 legally established in America like the
18:16 big popular ones like SPY or QQQ that
18:17 American YouTubers talk about. We need
18:19 to buy ETFs which are legally
18:21 established somewhere in Europe. Most
18:23 ETFs available are based either in
18:26 Ireland or Luxembourg. Both can be fine,
18:29 but when investing in American stocks
18:31 specifically, Ireland has some tax
18:33 benefits. So, usually people go for
18:35 Ireland based ETFs when investing in
18:38 America, unless it's a synthetic ETF, in
18:39 which case it doesn't matter. And now
18:41 you see why investing from Europe can
18:43 get a bit tricky. There's all of these
18:45 little details that you don't really
18:48 realize until you get deep into the
18:50 weeds. All right. And now we get to a
18:51 really interesting section, which is
18:54 holdings. What is included inside of
18:56 this ETF? On the left hand side, we have
18:58 the individual holdings, the companies
19:00 that the ETF invests in. We see that the
19:02 biggest investment right now is Nvidia,
19:05 which is 7.7%. Then we have Microsoft at
19:08 6.9%. We have Apple at 6.3%. And
19:09 basically the top 10 holdings actually
19:13 make up 38% of the whole ETF. For a lot
19:16 of investors, this is quite stressful.
19:18 It used to be that if you buy an S&P 500
19:20 ETF, you get a lot of diversification.
19:22 Your money gets split among many
19:23 different companies, just a few percent
19:26 in each company. But uh today with these
19:29 giant US tech companies, you have a huge
19:31 amount of exposure to a couple of major
19:33 major companies. And if those companies
19:35 get into trouble, the whole portfolio
19:38 can get affected. So, this is one reason
19:40 why a lot of investors are interested in
19:43 alternative strategies instead of just
19:45 buying the S&P 500, whether it's
19:48 geographical diversification or maybe
19:50 looking also at small cap stocks which
19:51 are smaller stocks and don't have the
19:53 same problem. And we see the same kind
19:56 of concentration issue over here where
19:57 almost all the money is invested in the
20:00 US. In fact, I think there's 96% data
20:02 from just ETF is not correct. it's
20:04 pretty much going to be 100% in the case
20:07 of this ETF. And that means that all of
20:08 your money is invested in companies that
20:11 are listed on American stock exchanges.
20:13 Now, these are in many ways global
20:15 companies that have customers and income
20:17 from all over the world. That said, you
20:19 are very exposed to companies which are
20:21 based in America and a lot of investors
20:23 these days do prefer to take a more
20:25 diversified approach where maybe you
20:28 invest in developed world stocks or also
20:29 some emerging market stocks and and
20:31 we'll talk about how you can choose that
20:33 kind of strategy a bit later in the
20:35 video but okay so this covers the um
20:38 holdings. Now up next we have some
20:40 information about different savings
20:41 plans offers from different brokerages
20:44 but this is mostly marketing stuff by
20:46 just ETF. I would not pay much attention
20:47 to that. Then you have a section on
20:50 performance. So this is again like the
20:52 chart about historical performance. You
20:55 can see how the fund has done over a
20:57 period of several years. Now this is not
21:01 annualized. So this is not like 9% per
21:04 year, 11% per year. This is cumulative.
21:07 So for example, this ETF has gone up 58%
21:11 over 3 years or 710% since inception. As
21:12 I mentioned before, this can be
21:14 interesting to look at, but don't go
21:17 choosing ETFs just uh based on the
21:19 historical performance. Okay. And the
21:20 final section I wanted to bring your
21:23 attention to is the stock exchange
21:26 listings. This is a very important
21:28 practical aspect of buying ETFs.
21:31 Basically, you can buy the same ETF on
21:33 different stock exchanges, different
21:35 online marketplaces for investments.
21:38 It's kind of like you can buy the same
21:41 book on Amazon.com or other online
21:43 bookstores. You can choose where is more
21:46 convenient for you. And the same ETF can
21:48 be available in different currencies on
21:49 different stock exchanges. So for
21:51 example, I'm based in the Euro zone. I
21:53 would like to buy this ETF in euros, but
21:55 maybe you are based in the UK and you
21:57 want to buy it in pounds. So you can
22:00 find where it's available in this table.
22:02 For example, if you want it in pounds,
22:03 you would probably buy it on the London
22:06 Stock Exchange. GBX as the trade
22:07 currency means that it's listed in
22:09 pennies. So, that would make sense. You
22:12 would use this ticker, the symbol CSP1
22:14 to buy it. I want to buy it in euros.
22:17 And with euros, I have more choices.
22:20 There's Getex, there's the Stoutgart
22:22 Stock Exchange, Bors Italana, Euronext
22:25 Amsterdam, and we also have Zitra. Now,
22:28 Zitra is the biggest stock exchange for
22:31 buying ETFs in Europe. So if I have a
22:32 choice that is what I usually prefer. In
22:35 fact, let me now move on and show you
22:39 how to buy this ETF on Zitra. We cannot
22:41 directly go to the Zitra website and
22:44 click buy. So for example, if I look up
22:46 the um German stock exchange, which is
22:49 the home of Zitra. I put in the IS of
22:52 this ETF, and I look it up, I can get
22:53 all kinds of interesting information.
22:55 And there's even this beautiful button,
22:57 buy or sell. But when I click that, it's
22:59 going to tell me to use some kind of
23:01 brokerage or bank to do it. You cannot
23:03 do it directly through the stock
23:05 exchange. So the question is which
23:08 brokerage or investment app is best for
23:10 buying ETFs. This is actually quite an
23:11 important question because your
23:14 brokerage, it's not just a supermarket
23:16 that allows you to buy investments. Your
23:18 brokerage will also hold on to your
23:19 investments. So it's really important
23:23 that this needs to be a safe, reputable,
23:25 licensed company. Now some of the
23:27 biggest names in Europe that a lot of
23:30 investors use are Interactive Brokers or
23:33 Saxo or Dejiro or Trade Republic or
23:35 Trading 212. But the thing is there is
23:37 no single brokerage that is best for
23:38 everybody. A number of factors that you
23:41 need to consider are of course safety
23:43 and license. You want a company that is
23:44 financially strong and that it's
23:46 licensed in a country with a good
23:48 financial regulator. Product access.
23:50 Make sure that the brokerage offers the
23:52 ETFs that you want. This can be a
23:53 problem especially if you live in
23:55 Eastern Europe because many Western
23:58 European brokers don't offer a lot of
24:00 ETFs to Eastern European clients for
24:02 various regulatory reasons. You have to
24:04 look at costs, make sure the fees are
24:05 low and then you have to think about
24:07 taxes because in many European countries
24:10 it is better to use a local brokerage
24:12 that simplifies taxes. In particular,
24:14 this is the case in countries like
24:17 Germany and Austria and Denmark. For um
24:19 doing a quick demonstration, I will use
24:21 Trading 212. It's not my main brokerage,
24:23 but it is very simple, so I like using
24:25 it for demonstrations. Okay, so let me
24:27 open up Trading 212. Like any brokerage,
24:29 when you log in, it gives you a lot of
24:31 different information. I see information
24:34 about top winning stocks, top losing
24:37 stocks, all this other stuff. It doesn't
24:39 really matter to me. That's like noise.
24:41 It's mostly for traders. As a long-term
24:43 investor, I just want to buy my ETF. So,
24:45 I'm going to hit search and I will paste
24:47 in the ISIN. And immediately, I see
24:49 several places where I can buy this ETF.
24:53 Now because I put in the IS this unique
24:55 identifier I know that I have the right
24:58 ETF but the same ETF can be available in
25:00 different currencies right so here I
25:02 have it available in dollars in pounds
25:06 or specifically in pennies or in euros
25:07 because I'm in the euro zone I'm going
25:10 to buy it in euros so I'm going to go
25:13 here and hit buy. Now I don't actually
25:16 want to put € 600 into this ETF today.
25:18 And the good news is that trading 212
25:20 offers fractional shares. So that means
25:22 I don't have to buy one whole share. I
25:24 can buy part of a share. So I'm going to
25:26 tell trading 212 to give me.1 share
25:29 which is around €62.
25:30 And I will use what is called a market
25:33 order. Now normally when I teach my full
25:35 investment training classes, I recommend
25:37 limit orders. That is how you can make
25:39 sure you get the best possible price.
25:41 But for simplicity right now I'm going
25:43 to use a market order. So I put in 0.1.
25:46 I hit review order. I look everything
25:50 over and I hit send buy order
25:52 and pretty much instantly trading 212
26:01 So basically I invested my humble60s
26:04 something euros in 500 of the biggest
26:06 American companies with just a few
26:08 clicks in just a few seconds which is
26:09 kind of crazy when you think about it. I
26:11 mean a 100 years ago the richest person
26:13 in the world couldn't do it but today
26:15 that's possible for any of us. Okay, so
26:17 that's how you buy an ETF. But please do
26:19 remember depending on your goals and
26:22 especially your local tax situation, the
26:24 ETF that I showed you may not be a good
26:27 choice. In some cases, it could be a bad
26:28 choice. This brings me to the most
26:31 expensive mistakes that beginning ETF
26:32 investors tend to make. Mistake number
26:35 one is not customizing your portfolio
26:37 for your local tax rules. The most
26:40 famous example of course is accumulating
26:42 versus distributing funds where in many
26:44 countries accumulating funds are best
26:46 because you don't pay dividend taxes but
26:48 then you have these complications in
26:50 Switzerland or Austria or the UK. Then
26:53 you have things like Spain where there
26:55 are special tax advantages to
26:57 traditional index mutual funds that you
27:00 don't get if you invest in ETFs. Then
27:02 you have something like Denmark where
27:05 there's a really complex tax code for
27:07 different kind of ETFs like distributing
27:09 versus accumulating. You get very
27:10 different treatment. If you want the
27:12 best possible results, you really have
27:13 to adjust for the local rules in your
27:15 country. Then the mistake number two
27:17 would be not adjusting your portfolio
27:19 for your age and your goals. If you're
27:20 just 20 years old and you're starting
27:22 out, you have a long time horizon ahead
27:24 of you. You're okay with taking risk.
27:26 Well, maybe it makes sense to put 100%
27:28 of your money into stock ETFs. But you
27:30 have to be aware that if there is a
27:34 crisis, stocks can fall by half. They
27:36 can stay down for years. And that's fine
27:37 when you're young and you have a lot of
27:39 time, but it's not okay when you are
27:42 closer to retirement. So older investors
27:44 might want some lower risk investments.
27:46 For example, a mix of stock and bond
27:48 ETFs. And of course, mistake number
27:52 three is just buying the S&P 500. Now,
27:54 it's not always a mistake. If you decide
27:56 that this is the correct strategy for
28:00 you, go for it. But today with the
28:03 rather crazy politics that we're seeing
28:05 in the US and with the huge
28:08 concentration of the market in big US
28:10 tech stocks, many European investors are
28:13 asking, "Do I really want to expose all
28:16 of my portfolio to just this one country
28:18 and this one political system?" Yes,
28:21 over the past 10 or 20 years, the S&P
28:23 500 has been a fantastic investment, but
28:25 that doesn't mean that going forward
28:26 betting everything on America is
28:28 necessarily the smartest approach. You
28:31 can invest globally, including America.
28:33 You can invest in countries excluding
28:35 America. You can focus on Europe. You
28:36 can focus on emerging markets. You have
28:38 to consider your personal philosophy,
28:40 what risks you would like to avoid and
28:43 then design a diversified lowcost
28:45 portfolio that you can live with long
28:49 term. So, as we've seen, buying an ETF
28:51 is pretty easy, but choosing a smart
28:54 strategy for investing your life savings
28:55 can be a little bit tricky. Beginning
28:58 investors face a lot of questions like
29:00 which broker or investment app should
29:01 you trust with your money and when is
29:03 the right moment to start? Should you
29:06 invest all your savings at once or split
29:08 them up and invest over time? And how do
29:10 you handle taxes? Because of all this,
29:12 many new investors either never start at
29:14 all or they jump in and make expensive
29:16 mistakes. Now, on this YouTube channel,
29:19 I help European investors figure all of
29:21 this out, one video at a time. But if
29:23 you'd like a faster step-by-step
29:25 solution that takes you from A to Z and
29:27 also includes some one- on-one support
29:29 from me, you might be interested in my
29:31 training program for European investors,
29:33 the Index Masterass. So, if you'd like
29:36 to find out more, just follow the first
