
Ask HN: How to invest safely in Europe? - register
I have seen many discussions about how to invest but they seem targetted at the USA market. The main assumption is that one can expect to have a 6-7% return by investing in good ETFs. I have researched a little bit and I don&#x27;t see how that can be achieved investing in the European bonds&#x2F;stocks. At the moment the safest bet seems to park money in monetary&#x2F;government bonds that however don&#x27;t return more than 1.5% on average. Can somebody provide some suggestion references about good investment strategies with a low risk profile in an european context?
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sweeneyrod
You're not comparing the same things. The US stock market that returns 6.5% is
much more volatile than European government bonds that return 1.5%. You need
to compare either bonds or stocks for both. It's difficult to compare the
long-term performance of American/European because different starting points
and the world wars confound things but European stocks certainly don't
outperform American ones by as much as you're suggesting.

But in any case, there's no reason why you can only invest in European things
(and in fact that would be stupid). The starting strategy for most people
should be a mixture of index funds covering the whole world (weighted by
market size) and bonds. The proportion of stocks/bonds is determined by your
tolerance for risk. You can fiddle with this (for instance as a European it
might make sense to overweight European markets because of exchange risk, on
the other hand you might prefer to overweight American markets because you
already have exposure to the European economy from living there) but you
almost certainly want to invest somewhat internationally.

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hanoz
You are in Europe yourself I take it? In the Eurozone?

I'd forget bonds personally. With negative real interest rates, bonds are just
the safest way to lose money slowly.

You mention elsewhere you want to avoid currency risk in an ETF. You won't be
able do that completely, but to keep it to a minimum you'd need an ETF
composed of smaller European companies which have less of an international
presence.

I'm unexpectedly in the market for a good European ETF myself as the provider
of the two I currently hold (iShares) have just announced they're both being
delisted, so I'll have to sell those and re-buy something else, with all the
cost and risk that entails, which is pretty annoying. I'm currently
considering the "iShares Core MSCI EMU UCITS ETF", which tracks 252 Eurozone
companies, but again, these are generally big multinational companies so
you're not really protected from currency risk.

~~~
samsonradu
Even with negative interest rates bonds can turn a profit if the rates go even
lower, as one does not need to hold them to maturity.

This happened during the past 3 months with German Bunds fe.

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jacquesm
In Europe the investment climate is substantially different than in the United
States to the point that the same rules do not apply except for the most
generic ones. The stock market isn't nearly as important a factor for the
European economies as it is in the United States, the market is more
fragmented and the typical stock market listed company is much smaller than
its equivalent in the United States.

To some extent this is also why it is much harder to run a successful start-up
in the EU.

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hrydgard
Probably depends on the country. In .se for example with any bank you'll be
able to buy ETFs that are index funds that invest in the US, Europe or Asia
markets with a yearly fee of 0.20% or less. Those will give you pretty much
what you are asking for. Talk to your bank and ask for index funds and don't
accept higher fees than 0.25% or so (depending on country, again).

------
ps101
Without giving specific advice, here are some things to keep in mind:

\- the same principles apply regardless of the market, you can just pick
European equity or bond funds and add them to your portfolio (as long as
they're available on your investing platform)

\- you don't have to limit your portfolio to US and/or Europe, you can invest
internationally

\- historically the European markets have performed worse than the US. That
won't necessarily continue in the future but keep in mind that you're making a
similar assumption (that the future will be similar to the past) when you
expect a 6-7% return from American funds.

\- many of the the big US companies are international anyway - for example
when you buy Apple stock, even though you're investing in an American company,
you're betting on Apple's performance everywhere in the world including in
Europe

\- investing in companies that are traded in a different currency adds another
moving part to the machine; you can be hurt or benefit from the movement of
the exchange rates in addition to the stock/bond price fluctuations

------
mruts
Is there any reason why you want exposure to Europe in the first place? Maybe
you just want American equity exposure without the currency risk? If so, you
might be interested in ETFs that attempt to track the S&P 500 EUR Hedged
Index. One ETF that does this is called theiShares S&P 500 EUR Hedged UCITS
ETF.

I would not recommend European government bonds as most of them have real
negative rates.

Is there any reason why you don't want just pure straight up American equity
exposure? There's no reason you couldn't be buying American listed equities
from Europe.

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indexinvestoreu
> The main assumption is that one can expect to have a 6-7% return by
> investing in good ETFs. I have researched a little bit and I don't see how
> that can be achieved investing in the European bonds/stocks.

A reasonable investment strategy involving ETFs will involve investing in
companies throughout the whole world. Not just European companies or US
companies. Ideally you want to have an investment strategy that maximizes
return for your risk profile. That strategy is independent of where you live.
There are S&P 500 ETFs in the US and there are S&P 500 ETFs in the EU (try
googling for "S&P 500 UCITS ETF").

> At the moment the safest bet seems to park money in monetary/government
> bonds that however don't return more than 1.5% on average. The "good ETFs"
> you mentioned that have a 6-7% return are anything but safe. They aren't as
> "safe" as bonds. the "good ETFs" you mentioned likely invest in companies,
> the stock market has a high degree of risk and volatility. That is fine in
> the sense that with greater risk comes greater reward. You should just keep
> in mind that if you want something safe you shouldn't be looking at anything
> that invests in equities.

> Can somebody provide some suggestion references about good investment
> strategies with a low risk profile in an european context? I've written a
> lot about it on my blog: [https://indexfundinvestor.eu/2019/05/29/the-step-
> by-step-gui...](https://indexfundinvestor.eu/2019/05/29/the-step-by-step-
> guide-to-investing-in-etfs-index-funds-for-european-investors/) I also have
> suggestions to books there.

------
wsc981
I, a Dutch national, invest in the stock market through Meesman [0]. Meesman
offers the following funds for investing in the European stock market:

\- MSCI Europe Custom ESG [1]

\- Barclays Euro Govt. Bond [2]

Please note Meesman offers a very limited selection of funds (5 total). As
such I am quite sure the Meesman company did good research on what funds best
represent certain markets.

If you'd like to invest in the European markets, I suggest you take a look at
both. These funds can be bought elsewhere as well, of course.

\---

[0]: [https://www.meesman.nl](https://www.meesman.nl)

[1]:
[https://www.blackrock.com/lu/intermediaries/products/305363/...](https://www.blackrock.com/lu/intermediaries/products/305363/ishares-
msci-europe-esg-screened-ucits-etf-fund#holdings)

[2]:
[https://www.blackrock.com/lu/intermediaries/products/228477/...](https://www.blackrock.com/lu/intermediaries/products/228477/blackrock-
blk-euro-gov-infl-linked-bd-flex-eur-acc-fund#holdings)

~~~
lawlorino
I'm also in NL but use DeGiro, and I compared the two back when starting out
on my first investments. Maybe I missed something but it seems DeGiro is much
cheaper in terms of fees, and it's straightforward to set up a portfolio
that's similar to any of Meesman's offerings. For something a single ETF
that's globally diversified I buy Vanguard's VWRL monthly, which is also on
DeGiro's list of "free" ETFs. The only drawback I've found is it's not
automated like with Meesman and it's very "Doe Het Zelf".

~~~
swongel
U vraagt, wij draaien: [https://www.consumentenbond.nl/sparen-en-
beleggen/beleggings...](https://www.consumentenbond.nl/sparen-en-
beleggen/beleggingskosten-gratis-bestaat-niet)
[https://www.iex.nl/Column/117156/DeGiro-en-het-
risico.aspx](https://www.iex.nl/Column/117156/DeGiro-en-het-risico.aspx)
[https://www.reddit.com/r/DutchFIRE/comments/95kh7m/degiro_no...](https://www.reddit.com/r/DutchFIRE/comments/95kh7m/degiro_normaal_account_of_custody/)

EN: DeGiro is a dutch broker which is known for it's low costs, however they
can short your stocks unless you're willing to pay an additional fee and they
sometimes trade stocks on their own "internal market".

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BjoernKW
Why do you want to invest in the European stock market specifically in the
first place?

There's nothing that keeps non-US citizens from investing in US market ETFs.

That said, European economies are quite diverse. There are ETFs for the
European market as a whole (Euro Stoxx 50, for instance) but they tend to fare
worse than their national counterparts.

In addition to simply investing in US ETFs you might consider investing in
European ETFs that reflect strong national markets. However, investing in
European markets probably requires more research and market knowledge than the
fire-and-forget approach US-based ETFs are famous for.

National NASDAQ equivalents such as TECDAX might be interesting, too. Keep in
mind, though that these typically are much more volatile than NASDAQ because
these indices don't comprise tech giants such as Amazon or Apple but much
smaller companies which often are unknown to the general public but in many
cases still are market leaders in their respective categories. Therefore the
risk higher is higher - but so is the potential return.

~~~
scribu
> There's nothing that keeps non-US citizens from investing in US market ETFs.

Actually, there is. Unless an ETF provider publishes key investor information
documents in the format required by the EU, EU citizens are not allowed to buy
those ETFs.

Since 2018, I have a number of US ETFs that I can no longer buy. I have to
search for alternative UCITS funds instead, which are neither as diverse nor
as large.

~~~
chvid
It is outrageous that the eu is effectively blocking its citizens access to
products like spyder snp500 etf which is a far cheaper and more liquid etf
than what is offered on the European markets.

~~~
seppel
I'm an EU citizen and I can buy, e.g, the iShares Core S&P 500 UCITS ETF (ISIN
IE0031442068) which gives me access to the S&P 500 and is as cheap as it can
get.

~~~
chvid
The spy etf has better liquidity and (probably) lower costs.

~~~
seppel
The iShares one is actually cheaper (TER of 0.07% vs. 0.09%) but it seems its
tracking difference is worse (for the last years), so it seems the SPDR
performs better. However, you can also buy the Vanguard S&P 500 UCITS ETF in
Europe, which has also has a TER of 0.07% but an even better tracking
difference than SPDR.

I don't think liqudity is a problem for such huge funds.

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anonu
If you are a US-based investor and want exposure to Europe, you can get some
ideas by navigating the ETF groupings on
[https://pages.etflogic.io](https://pages.etflogic.io). (I built the page).
You'll find all US-listed ETFs (2000+ of them) - many of which can easily and
cheaply provide you exposure to the European markets.

VEA gives you exposure to European Developed Markets (equity). FEZ is the
Euro-Stoxx 50 (equity)...

------
buboard
Only high risk (i.e. bonds of dangerous countries) have high yields. European
economy is doing significantly worse than US. You can always invest in US
equities ...

------
dawhizkid
Curious, why would you want to invest in Europe at all? For awhile now I've
seen Europe as the past, and Asia as the future.

~~~
ginko
Yeah, why would you want to support your own economy rather than someone
else's?

~~~
dawhizkid
I don’t think buying some stock from Euro-based companies constitutes as
“supporting your own economy.”

If that’s your goal, then I’d argue buying Euro bonds would be closer to that,
though many have negative interest rates at the moment.

------
user5994461
You can have a look at ETF from Amundi, Lyxor, Legal and General (UK),
Vanguard EU/UK.

There are three problems broadly speaking. First is the currency, American
index funds are in dollars while you don't have dollars. There are a couple of
index funds that are quoted in EUR/GBP, above.

Second you need to find a bank that offers trading accounts and allow to buy
these. It is god awful to find one. European banks are simply disconnected
from the stocks market, they don't run brokerage and might not even know what
it is when you ask for it. The only thing they sell and know about is their
shitty in-house investment plan that's losing money every year.

Third is taxation. American have lax taxation because it's local and they
depend on it for their retirement. On the other hand Europe can have high
taxation which really kills your profit and some classes of assets have dual
taxation (US export + EU taxes) that makes even the best investment worthless.

~~~
seppel
In general, you can ignore the currency that an index fund uses internally for
reporting. You can buy A1JX52 using USD in the US or using EUR in the EU; the
same as you can buy JPY using USD or EUR, whatever is more convenient for you.

I don't know how the situation in general with Banks in Europe. But in Germany
you will find many Banks which are convenient and offer cheap access to the
stock market. Yes, they will try to sell you shit, but if you select an online
bank and know what you are doing, you will never have to talk to anyone and
get really good products.

Taxation varies across Europe. Some countries take less than the US, some take
more. But pretty much all countries of the western world have double-taxation
agreements, so there is no double taxation. A German citizen, e.g., pays not
more than 15% tax on the dividend of a US stock. It looks that this is even
less than US citizens, but I'm not sure. That is of course and bit annoying
when filling out tax forms, but if you invest in an fund, the issuer of the
fund does it for you.

~~~
user5994461
US applies 15% dividend taxes then France applies income tax 0 to 30%
depending on your personal situation, a part of the double taxation can be had
back through tax credits in the following year. It's yet another thing for
capital gains.

It's quite complicated and it's up in recent years with the government going
against capital gains (i.e. rent seeking). If you invest in some European
stocks instead, it can be eligible to 0% taxation on all gains.

[https://www.abcbourse.com/apprendre/5_fiscalite_us.html](https://www.abcbourse.com/apprendre/5_fiscalite_us.html)

------
emerongi
Why do you want to invest in Europe specifically? There are European ETFs that
track US indexes if that's what you're interested in.

Europe is a harder market for sure. There are less internationally recognized
names, so you have to do more research.

~~~
register
Because I don't want to deal with exchange rates risks as Jacquesm already
pointed out.

~~~
barry-cotter
Deviations from purchasing power parity in currencies have a half life of
seven years. Unless you’re investing for the short term the effects of
currency fluctuations on returns to your portfolio will be swamped by
differences in growth across national economies and their stock exchanges’
growth rates. In the long run currency risk washes out in differences in
economic growth. You’re better off investing in the stock market indices you
think will grow more. Population growth in the US compared to the EU alone
would suggest investing in the US over Europe. If you think we’ll continue to
have a more or less peaceful 21st century you’re better off investing in
economies you think will grow more, which would suggest investing in the
Indian subcontinent and Africa. If you don’t think that’s the way to bet you
should invest in places likely to have political stability above most anything
else so you should invest in places with strong states unlikely to have
massive political unrest that will maintain good relations with your home
country. For security you’d invest in property in someplace like Switzerland
through real estate investment trusts, or the US if you think the West will
endure as a political reality and the US will avoid civil unrest in the coming
decades.

~~~
lrem
On a particular point: the number of vacant properties in Switzerland has
exceeded the population of the capital. The safe property investment idea got
too popular to stay effective.

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Dansvidania
I am not sure if you are looking for suggestions on specific investment
opportunities but check

[https://www.mintos.com](https://www.mintos.com)

~~~
vaggdan
Do you have any experience with it? If yes, you mind sharing some words?

~~~
Dansvidania
I do (www.mintos.com/en/l/ref/B3H9ZN referral link) and I find it a very good
option. You pretty much buy shares in loans that are listed on the platform.
Mintos screens the loan providers and evaluates them regularly.

I have used it for about two years for medium risk investments (~12%) and have
had no losses so far.

It helps that many providers have a "buyback guarantee" that automatically
repays you for investments if the payment is late for more than 60 days.

I just transfer an amount of money there every month, and the auto-invest
feature just picks investments across providers.

I hope it helps, but feel free to ask specific questions if you like :)

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akmarinov
Look into etfmatic.com it’s London based and you can specify where you’d like
to invest

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eaenki
Sign up on Interactive Brokers.

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whb07
Sign up for one of those bonds where you can invest $1000 and get back $990,
it’s so hot right now in Europe!

------
sprash
How about don't.

Europe is in huge decline right now. Asset prices are artificially inflated,
bond yields are negative and the export surplus can only be maintained because
the Central Bank is devaluing the currency by printing money like there is no
tomorrow. The house of cards will fall as soon as some major trade partner
introduces tariffs.

The demand for credit is especially weak which shows you that nobody really
wants to invest, because the future outcome is presumed to be worse than
paying negative interest to the ECB.

Bedsides that there are major societal turmoils on the horizon. Crime is
rampant, the quality of life for the middle class quickly decreasing and there
is a huge demographic decline going on for some time now. Large youth
unemployment in the periphery and a real estate bubble with stagnating wages
in the center which boils away the middle class only shows you what the future
will bring.

In the best case this will be like another Japan. In the worst case there will
be civil war.

~~~
tandem_bike
It's predictable that you would get downvotes, but your points are generally
true. The Monetary Union of Europe is failing just like the socialism of some
of its member states. Europe's economies are strangled by taxation and
regulation.

In a thread on investing in Europe these are important perspective to bring
up.

~~~
jimclegg
When a bank robber has no more banks to rob, his standard of living tends to
go down.

Most economic surpluses in Europe over the last 2 centuries have been thanks
to importing stolen goods/criminality, only change is, some of the biggest
victims of this type of "economic growth" now have nukes.

