Living in a small country like Belgium definitely has its perks, mostly because you’re well-known for things that don’t matter in the grand scheme of things, such as beer, chocolate and waffles. The open economy of the European Union, of which Belgium is a founding member, furthermore succeeded in removing many of the downsides of small countries by allowing unprecented movement of people, goods and capital. As a result, investors of small European member states now get to enjoy the economic benefits of the big players like France, Germany and the UK.
Earlier this month stock markets worldwide fell about 8-10% on average, with the S&P500 losing almost 200 points from its record high of over 2000 points and the Euro Stoxx 50 dropping below the 3000 points mark for the first time in six months. This unexpected downward move caught almost everyone by surprise. Over the last couple of days, however, most stocks have recovered from their losses.
On Thursday the European Central Bank did what a lot of folks thought unimaginable by cutting its interest rate by another 10 basis points, from almost zero to even closer to zero. “Super Mario” Draghi also announced the ECB would start buying asset-backed securities. Fully-fledged quantitative easing like the United States has put into place now is the only option left to fight the sluggish economic recovery and looming deflation in the Euro area.
Last month I wrote why I believe exchange-traded funds are great for people who want to start investing, but hardly have any experience at all. Over the past half year the rationale behind ETFs has taught me a lot about the ins and outs of the stock market. The experience of buying shares for my ETF portfolio has also been a tremendous practical learning experience.
About a week ago I explained why exchange-traded funds are, in my opinion, great for people starting out in the stock market. Being a brand new investor myself and because I want to put my money where my mouth is – although not really, because money tastes foul – I’ll explain my personal exchange-traded fund strategy and the current set-up of my portfolio. Hopefully this way people looking to become ETF aficionados pick up some useful tips and tricks to build their own portfolio.