Do you already know these 5 hidden facts about ETFs?

In Part 1 we already told you last week why the average 7% return on ETFs can hardly be relied upon. Did you already know? Then here are more facts for you:

1. accumulators buy more shares

Your accumulating ETF does not distribute dividends - so what does it do with the money? Fact is: You don't just get more ETF shares, but the ETF simply buys more shares from the dividends. Of course, only those that are already in your ETF. This increases the value of your ETF shares, i.e. the price of your ETF. However, you do not have more shares - but they are more valuable than with a distributing ETF.

2. the price of an ETF share says nothing

Let's say one ETF on the MSCI World has a price of 72€ and another has a price of 9.50€. That says nothing at all about whether one is better than the other. It is rather like in the bakery: Ten rolls cost ten times more than one. So the "cheaper" ETF simply has fewer of all the ingredients.

The initial price of an ETF share is set quite arbitrarily when it goes public. The only important thing is how this price changes - i.e. whether it rises or falls. And what is much more decisive in the selection is in which index the ETF invests, how the shares are distributed (is it invested in many shares or in a few?) and whether it accumulates or distributes.

3. US Dollar or Euro in the name of the ETF? Doesn't matter!

This shows in which currency the index is traded. You only need to be interested in how many euros are debited when you buy or sell something and in which currency the shares are traded. For global ETFs this will often be the US dollar.

4. your money does not go to Microsoft, Apple & Co.

This is because an ETF buys the shares itself - and usually not from the companies directly, but from another shareholder. So your money doesn't go to the companies. Does that mean it doesn't benefit the companies at all? Well, it does. Because by buying the shares, the share price increases minimally and is strengthened accordingly, which is of course good for the company.

5. at the beginning of 2024 you automatically pay taxes on ETFs

Namely on the so-called Advance lump sum - This is a kind of fictitious income. You have to pay tax on it if your reinvesting ETF has made a profit within one year. And how is this notional return calculated? With the base interest rate. This was negative in the last few years - which is why there was no upfront lump sum.. But in 2023 he is on 2,55% increased.