■ How to DIY invest in world index ETFs, a summary course for petty bourgeoisie

Money: love it or hate it, you need it. If you got lucky with a lump sum, or you generally manage to save some money regularly, you can put it to work for you exponentially (think of compound interest), and with minimum hassle. Out of all investment possibilities, top of the class combining simplicity with "guaranteed" long-term return is the stock market. No, I am not having a laugh, stocks have a historic average 10% return (compare that to your bank account) and you can tap into it using a plain world index tracker (no hassle picking and monitoring individual stocks, or markets). You go with the flow. You can ignore the short-term market dips from coronavirus or what have you, and rest assured that good things come to those who wait (5+ years).

I have been researching ETFs for a long time, and there's a lot to take in, so I summarize the main decision points below. Some parts are conditional to your individual tax requirements — I live in Cyprus which is a stock tax haven, but most of it applies to all noob investors like the writer. The main ideas are minimum risk, costs and effort.

I am not a stock broker. I don't offer financial advice, so don't blame me if you lose all your savings. The list below makes sense to me and my circumstances: optimizes returns and minimizes costs (fees, taxes etc) and hassles. Even 0.5% reduction in costs can go a long way over 10 years.

STEP 1. Get a broker account
To buy index trackers, you need an online broker. No need to pay for an actual person mind, there are DIY investor platforms that are easy to use and save you on fund management fees. Sadly for Cyprus my only option is saxo bank, but Americans and Europeans are spoilt for choice for low cost platforms like DeGiro or Interactive Brokers. Decision factors are:

Fees, charges. Look for them hidden everywhere. How much do they charge for trades in the instrument you are after (ETF) and how does it vary for each stock exchange (NYSE, LSE etc). However as we are long term investors and won't execute many trades, this is the least of our worries. How much do they charge for currency exchange over the base rate? What are the annual custody charges? Do they charge for inactivity? What about for bringing money in and out of the account?

Make sure they allow you to transfer money from all your accounts regardless of country. I am fed up by banks treating me like a money launderer just because I've lived in many EU countries and thus have money spread all over the place
Reliability and customer service. Stock markets have enough risks, so we don't need any extra coming from our broker. Make sure they are long-term established, and their low fees don't come at the expense of dodgy dealing (e.g. lending out your stocks for profit). Check their registration with the relevant financial authority, and test their customer response rate with a few emails.

STEP 2. Pick a world ETF (or 2)
Stock markets are chaotic and unpredictable. Has Buffett really beaten the markets? — I heard he got burned by coronavirus. What are the chances your X lesser broker will do it? The wise thing to do is close your ears to rubbish advice and just buy the whole market. It is a bumpy ride, but if you just ignore seasonal downturns and focus for the long term, you won't regret it. You really only need one world tracker, but I will spread it in these two VWRP and SWDA that follow slightly different world trackers (FTSE and MSCI style). Parameters I have considered:

Simple to understand. Just a simple replication of the market will do thank you very much. No futures, swaps, hedges or other headaches that are just for short term gamblers. If you are in the mood for betting, try bitcoin!
Low fees and good tracking. ETFs have generally very low annual management fees, below 0.5%. The lower the better, but they must also track closely the underlying index.
Established with proven track record. Vanguard and iShares are household names, offering ETFs for many years and you can see annualized long-term returns reported (mind if they are net of tax and fees). The fund size is perhaps the biggest indicator here, go for 200 million plus.
Accumulating or distributing?. Do you prefer ETFs that reinvest dividends or those that pay them out as income? The wisdom says that if you are in saving mood (pre-pension), go for growth, otherwise take the income and enjoy it. Some people go for distributing on account of simpler tax reporting, but this is not something that worries Cyprus residents <g> Most important is the fund's domicile, and Ireland is the european choice because of its low taxes on dividends (0%)

STEP 3. How to buy your index ETF
Chances are that your chosen investment will trade in many stock exchanges and currencies, but these are lesser concerns. For example if you are American, your obvious choice is NYSE/NASDAQ and USD — but europeans may be hit by a 30% dividend tax there. Make sure the stock exchange has an adequate volume of trades for your ETF, you don't want to wait forever to buy and sell it. A narrow bid-offer spread is a good indicator of liquidity. The choice of exchange mainly involves currency convenience and liquidity (Euros for Cypriots, so go for Frankfurt XETRA or Milan) — apparently you can even sell to a different exchange if you so please later. Saxo charge identical fees almost for all Europe.

When it comes to actually buying the ETF, use a limit order to avoid momentary market hiccups. If you are cheap, you can try offering less than the current market price, and see if you can get a free beer on the spot savings <g> More seriously I hear that buying near the middle of the trading day (not first or last thing near closing) is more stable. At any rate, even if you buy at the worst possible moment, it won't matter in the long run. Trust the mathematics of compound growth!

STEP 4. Profit! (keep it long term)
Once you make your purchases, just ignore them and do something else. That's the idea, no need to fret daily how's your investment doing. It's in auto-pilot, following the world finances, and if we extrapolate from past long term history, the only way is up, eventually. What's the worst that can happen? Even if your ETF vendor bankrupts, there are real company shares behind it and they are in your name. ETFs are indefinite term and don't "expire". So you can keep them as long as you like — or until you need the money.

If you bought from a liquid exchange, it's easy to sell some of your ETF stock whenever you need a money boost. If you plan ahead, you can choose the perfect spot to sell, when markets are high. But even if they are down, you still have the previous years' gains to back you up. Sell a little to cover your immediate expenses then wait for a brighter day to sell the rest. Selling in small batches will get you a better price too — compared to a quick 1-off sale.

Can you think of any other form of investment that offers such liquidity? Compare it to real estate, how easy is it to sell a house when you need the money?

Investment parameters you needn't worry about

What to do with one's money is a maddeningly complex long-term planning problem with tons of degrees of freedom and uncertainty that makes it impossible to find an optimal policy. You will be glad to hear that there are some parameters that (as I understand them) are secondary or beyond your control, so you can ignore them.

No need to time the market. Imagine if you'd bought during the biggest dip of the markets after the coronavirus scare last March (2020). Right at the bottom! I grant you, that would make me happy too. But it is a short term blip in the scheme of things. Markets recover, sooner or later, so don't think about it, just buy when you have the money. If you want to spread the "risk", instead of investing say 100K in one go, buy 10K a month for 10 months, so you can wipe out any market dips (of course if markets go up, you will be worse off). Getting in and out at the perfect time is just luck — better focus on the average X% (10?) annual growth you are expecting long term.
In a similar vain you can ignore popular myths like "buy in August when stocks are cheap". Unless you are a frequent trader, you don't care
Death and taxes. You cannot escape life's invariants, so don't lose any sleep over tax. Whatever you do that generates profit, you must share it with the taxman. As things go, stocks are quite favorably taxed, paying just the capital gains tax (CGT) when you sell (hopefully) at a profit . (If you live in Cyprus, you pay nothing!). For less lucky citizens there are tax reliefs (eg. UK ISAs).
Dividend tax is also largely controlled by the underlying stocks (50%+ invested in USA companies that represent the biggest chunk of the "world" market). Even Ireland-domiciled funds automatically pay 15% dividend tax to IRS. So it's just money down the drain that cannot be recovered, regardless what you invest on.
Currency fluctuations don't matter. ETFs that sell in various places and various currencies, are all priced exactly the same (you can verify it using the day's exchange rates). The growth of the fund relies exclusively on the underlying company stocks, again a mixed bag of currencies (mostly dollar$). So you don't care which currency you buy your ETF. Buy in your own currency to skip the small currency exchange fees your broker may charge — but see if buying the same stock cheaper (fee-wise) in a foreign stock exchange covers the FX fees, it's simple math. Naturally when you eventually sell the ETF, you're getting your local money, so the exchange rate matters then; you can either win or lose depending on how the dollar exchanges with your local currency. But the same argument applies: you cannot control it and any gain/loss is dwarfed by the long term stock growth.
Buying hedged ETFs supposedly reduces the currency risk, but in the end of the day it's an extra cost that eats in your profits each and every year.

In fact, now that the dollar's relatively weak, it's a perfect opportunity to buy world (mainly US) ETFs with euros. It's a lucky break for us Europeans, which I intend to take advantage of, as soon as the holiday season is over.

Happy holidays and may the stars in heaven align in your favor for lucky investments :)