Invest in ETFs directly or through a pension plan
Learn how Pensionfriend uses automatic hassle-free rebalancing and a tax-shield to lower cost and select the highest returning ETFs
Compare investing in ETFs with an ETF-based Private Pension Plan
As an investor, you nowadays have the advantage of ETFs (Exchange Traded Funds) that allow low-cost access to broad market indices.
However, not all ETFs are created equal—many are actively managed, speculative, and come with high costs. Even among passive ETFs, returns can vary significantly, not only due to the index they track but also because of the tracking difference relative to the index.
Our portfolio selection team, led by Dr. Chris Mulder, applies the most rigorous approach to investment selection. At the World Bank he trained thousands of public sector officials responsible for managing hundreds of billions in investments, to the highest standards.
ETFs through our PPP | ETFs through a Broker |
|---|---|
Tax shield: no capital gains tax until you withdraw. There is also no withdrawal cost or exit fees | Annual withholding tax of currently 0,33 %. You also pay tax in case of rebalancing and withdrawal. |
15 % of gain in stock ETFs are exempted all the time. Of the remaining capital gains, 50 % is tax-exempt if you hold it until after 62 and for over 12 years | 30 % of gains in stock ETFs are exempted all the time |
Free portfolio rebalancing; simple transparent cost structure, annual reporting on the portfolios | You need to rebalance yourself, no reporting on your portfolio vis a vis the market |
Investment advisory included in the fee; including index selection and selection of ETFs that outperform the index by 0,25-0,4%. | Self-investment is less effective. Typically, returns are 3–4 % lower than a standard benchmark. You need to pick your ETFs or pay a broker 0,5–1,5 % for advice and reporting |
You can also pick your own ETFs from our list of 500 ETFs | Thousands of instruments are available, but excessive choice can lead to inaction bias. |
Partner/child benefit: If you pass away, your beneficiary will inherit the portfolio value without paying capital gains tax. Easy reassignment of the beneficiary can help you plan and reduce inheritance taxes. | No exemptions from cap gain tax in case of death. No easy reassignment of the beneficiary. |
Looking for a Private Pension Plan for ETF Investors?
Our Private Pension Plan is ideal for experienced investors and offers many advantages compared to self-investment.
Boost my ETF returnsWhat is better in my case?
A low-cost broker is better if you: | Pensionfriend's PPP is better if you: |
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Invest only small amounts. For amounts up to 10.000€ — 15.000€ the tax-free threshold shields your gains from tax | Invest significant sums, and especially so for the long-term |
If you belong to the 1–3 % of people that can outperform the market through active management ☺️ | Prefer delegating investments to professionals with an unbiased, high-return, low-fee approach |
If you are hands on | If you like hassle free investing, rebalancing and knowing a professional watches over the markets |
Invest in individual stocks or special products like options. | Value a logical approach to portfolio selection that reflects your risk level (such as maximum loss) |
Like the ease of changing a beneficiary and having your survivors pay no capital gains tax |
Bottom line: While a low-cost broker is a great option for small amounts or learning to invest, for serious retirement investments, a Pension Plan that comes with professional, low-cost, and credible advice will yield superior results for nearly all.
Due to the low cost, a well performing larger portfolio held over a longer period through Pensionfriend's PPP will outperform that of the same portfolio held through a zero cost broker--for example a portfolio with 8% return a monthly contribution of 500 €, held from the age 30 to 67 will yield 0,08% more after tax and cost, if you rebalance 10% of the portfolio each year. Wealthy individuals rebalance on average about 16%.
In addition, you get Pensionfriend's porfolio selection, hassle free rebalancing, market scrutiny and identifying ETFs with a superior tracking difference.
This comes with the same flexibility as an ETF portfolio. You can adjust without cost, no withdrawal or exit fees. You can move to many countries and keep your investment without paying local taxes--Pension products are usually exempt. With a zero fee broker you also have to consider that they will levy some fee down the line.
Our core recommendation is to delegate the management of the bulk of your portfolio, even if you are quite a good investor yourself.
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