Glossary

An ETF is an investment fund listed on the stock exchange that automatically replicates the performance of a stock index — for example the 1,400 largest companies in the world. Unlike an actively managed fund, nobody chooses the shares: the fund mechanically follows the index, which drastically reduces costs.

An index is a list of companies selected according to defined criteria (size, country, sector). The MSCI World groups the ~1,400 largest companies in developed countries. The MSCI ACWI IMI covers ~9,000 including emerging markets and small caps. Investing in an ETF that tracks an index means investing in all those companies at once.

Diversification means spreading your capital across many different assets to reduce risk. If one company goes bankrupt in a portfolio of 9,000 companies, the impact is negligible. A global ETF provides instant, maximum diversification in a single purchase.

Volatility measures the magnitude of price fluctuations of an asset over time. A global equity ETF is volatile in the short term — it can lose 30% in a few months during a crisis. But over the long term, this volatility is offset by the structural upward trend of markets. Volatility is not the same as a permanent loss.

A dividend is a portion of profits that a company pays to its shareholders. Some ETFs distribute these dividends as cash (distributing ETFs), others automatically reinvest them in the fund (accumulating ETFs). In Belgium, dividends received are taxed at 30% — which is why accumulating ETFs are generally preferable.

A capital gain is the profit realised on the sale of an asset at a higher price than its purchase price. Since 1 January 2026, capital gains on financial assets are taxed at 10% in Belgium, above an annual exemption of €10,000.

A capital loss is a loss incurred on the sale of an asset at a lower price than its purchase price. Capital losses can be offset against capital gains of the same year, but cannot be carried forward to subsequent years.

The market capitalisation of a company is the total value of its shares in circulation (share price × number of shares). Stock market indices are generally weighted by capitalisation: the more a company is worth, the greater its share in the index.

An accumulating ETF automatically reinvests dividends within the fund, without distributing them as cash. For a Belgian investor, this is tax-advantageous: reinvested dividends do not trigger the 30% précompte mobilier. The ETFs recommended on ClearInvest are almost exclusively accumulating.

An distributing ETF regularly pays dividends as cash to your broker account. In Belgium, these dividends are subject to 30% précompte mobilier, which reduces the compounding effect over the long term. Distributing ETFs may suit investors who want a regular income.

The TER is the annual management cost of an ETF, expressed as a percentage. A TER of 0.17% means that on €10,000 invested, €17 is taken each year by the fund manager. This cost is already reflected in the ETF's performance — it is not a separate invoice. Index ETFs have TERs between 0.07% and 0.30%, compared to 1.20% to 2.50% for actively managed bank funds.

The ISIN (International Securities Identification Number) is the unique identification code of an ETF or share. It consists of 12 characters (e.g. IE00B3YLTY66 for IMIE). Always search for an ETF by its ISIN at your broker to avoid confusion with funds of similar names.

DCA means investing a fixed amount at regular intervals (e.g. €200 each month), regardless of market levels. This strategy automatically smooths the average purchase price: you buy more shares when prices fall, fewer when they rise. This is the strategy adopted by most retail investors who invest their monthly savings.

Lump sum investing means investing a large amount all at once rather than spreading it over time. Studies show that in approximately 60 to 70% of cases, investing immediately outperforms DCA over the long term, because markets rise more often than they fall. Psychologically, DCA often remains more comfortable.

Rebalancing means adjusting the composition of your portfolio to return to the target allocation. For a single-ETF portfolio (e.g. IMIE), rebalancing is automatic — the ETF updates internally. For a multi-ETF portfolio, a light annual rebalance is generally sufficient, by directing new contributions towards the underweight ETF.

An active fund is managed by professionals who select which shares to buy and sell. Costs are high (1.20% to 2.50% per year) to remunerate this management. Between 85% and 92% of active funds underperform their benchmark index over 20 years after fees — making it difficult to justify their additional cost compared to an index ETF.

An index fund mechanically replicates a stock market index without human intervention. ETFs are the most accessible form of index fund. Their very low costs (often below 0.20% per year) constitute their main structural advantage over the long term.

The TOB is a Belgian tax levied on each purchase and sale of ETFs or shares. For almost all ETFs recommended on ClearInvest (IMIE, IWDA, CSPX…), the rate is 0.12% — i.e. €12 on €10,000 invested. For ETFs registered in Belgium (such as VWCE), the rate rises to 1.32%. With a Belgian broker, the TOB is withheld and declared automatically.

The précompte mobilier is a withholding tax of 30% on income from movable assets (dividends, interest). For regulated savings accounts, a preferential rate of 15% applies above the annual exemption of €1,020. Accumulating ETFs avoid the précompte on dividends because these are automatically reinvested without being distributed.

The Reynders tax is a 30% tax on the bond component of the capital gain on the sale of a capitalisation fund containing more than 10% bonds. It does not apply to purely equity ETFs (IMIE, IWDA, CSPX, etc.). It concerns mixed funds and certain bond ETFs.

Since 1 January 2026, capital gains on financial assets are taxed at 10% in Belgium, above an annual exemption of €10,000. The unused exemption can be carried forward: up to €1,000 per year for a maximum of 5 years, giving a cumulative exemption of up to €15,000. This tax applies on the sale of your ETFs.

A broker is a platform that allows you to buy and sell ETFs and shares on the stock market. In Belgium, the recommended brokers for passive ETF investing are MeDirect (0% fees on ETFs) and Saxo Bank (AutoInvest at €2/month). Belgian brokers automatically handle the TOB declaration.

Branch 21 is a savings insurance product with a guaranteed interest rate, subject to a 2% premium tax on each contribution. Interest is exempt from précompte mobilier after 8 years of holding. Structurally disadvantageous compared to an ETF over the long term due to entry fees, the premium tax, and the limited guaranteed return.

Branch 23 is a life insurance product linked to investment funds, with no guaranteed return. Used notably for pension savings (épargne-pension) via bank funds. The anticipatory tax of 8% at age 60 is calculated on a notional capital assuming an annual return of 4.75%.

Belgian pension savings (3rd pillar) allow a 30% tax reduction on contributions up to ~€1,050/year. The capital is locked until age 60 and subject to an exit tax of 8%. Despite the initial tax advantage, an ETF structurally outperforms pension savings from year 11 onwards due to the return differential.