If you want to invest, is it better to have a PPR or an ETF? (Month #10

 If you want to invest, is it better to have a PPR or an ETF?  (Month #10

I’m back with the comparison between my PPR and my ETFs (SP500 and World). It has been several months since I wrote this monthly article and I apologize for that. I was focused on writing the fourth book Savings Accounts (which is already on presale HERE, for example) and this balance lagged a bit. But it was never forgotten.

I’ll even come back to it with even more details and more information that can help you decide whether to pick one or the other, or both (like me).

I also left this comparison for a bit, because the war made them both so “bad” that at some point I gave up myself to see how they were doing so as not to get discouraged. In these moments it is time to let time pass until they are positive again. It’s not worth going around suffering and seeing shame every week. As you will see, at least temporarily, everything is returning to normal. Just know how to wait.

In this monthly article (which I haven’t done since May and which I now add every month afterwards) I compare my ETF and Casa de Investimentos’ ‘Save & Grow’ PPR. I subscribed to these 3 products on the exact same day, so the comparison makes sense.

You must understand that all investments mentioned (ETF SP500 and ETF World) and Casa de Investimentos’ PPR “Save&Grow” must be looked at VERY long term (5.8 years or more) to have an idea of ​​the real trend . I have already explained to you that this data that I forward to you is only temporary portraits, without any technical or formal analysis. My goal is just to share financial knowledge so you know how these tools work.

NEW: Since I find that the Save & Grow PPR is very specific (it only has companies that are considered very safe, stable and with a high growth potential, albeit slow), I decided to add another PPR with other characteristics to compare with the ETFs.

With the clarity with which you know that I enjoy writing these articles, I want to make it clear that the PPR STOIK I have added to the tables and chart is only virtual. That is, while with the other 3 it is my real money (1,000 euros each), in the case of STOIK I went to check the price the same day I subscribed to the other 3 of this comparison and from there I am going to see how much it has grown or depreciated if I had actually subscribed to it. So it’s like it’s real.

In fact it is “real” because STOIK is currently my best PPR (may change). But since I subscribed to it long before ETFs and PPR Save&Grow, there was no point in comparing different time values. The goal is to make the “race” between PPR and ETF in real time, simultaneously and under the exact same conditions. So here’s this information – which doesn’t change the result at all – the PPR STOIK I added this month is “virtual” while the others are “real”. I think that makes the comparison more balanced. I hope you agree.

So far, ETFs still have a huge advantage over PPR.

Of course, the difference has to be calculated later, only after 8 years, because of the difference in the value of the capital gains tax that both will have to pay (8% of PPR vs. 28% of ETF). Since PPRs are still negative (due to the war in Ukraine and global inflation), the situation is not readable yet, but I did a comparative picture, in case they were all positive. It never stops being interesting. I have invested 1,000 euros in each of the products. Everything you find below – except STOIK – are real values ​​(it’s my money, not theoretical values).

I should also warn that I am comparing 4 specific products. That’s why it’s not about “PPR” because I’m only comparing two with a very strong load of stocks (practically 100%), with two ETFs from specific brokers that may have minor differences in management fees and index building policies compared to the same ETFs from other brokers . In any case, I think that you – like me – get a very concrete picture of the real-time comparison of the two types of financial products.

Let’s go to the bills.

If you have no idea what an ETF is, listen to this episode of my podcast: What is an ETF?

What is an ETF and why compare it to a PPR?

ETF, also known as tracker, stands for Exchange Traded Fund (listed index funds). It is a product that tracks an index, commodity, obligation or product composition. It’s essentially a basket of securities that are listed on the exchange, but you don’t have to buy or sell them separately. Instead of buying vegetables one by one, buy a basket for an average price. In the case of vegetables, it is to make soup; in the case of ETFs, it’s to keep them and wait for them to increase in value over time (as if they are collectibles or a wine that increases in value over time).

As for PPRs, I think we’ve all heard of them because of tax breaks or because we were “forced” by the bank to lower the mortgage interest deduction. There are PPR insurances (which yield next to nothing and have a capital guarantee) and PPR funds (which can yield a lot more, but have no guaranteed capital).

PPR funds reflect what happens on the stock exchanges, indices and bonds that make up each PPR. The person who manages these PPRs is paid a management fee, which changes the composition of the PPR fund over time. From 8 years, the profit tax you have at the time of repayment is only 8 percent.

ETFs are an “average” of what happens on an exchange, exchanges, sectors of activity, countries, regions, etc. No one controls anything and it is the almost exact “mirror” of what happens on the exchanges. Imagine a chart showing the average price of potatoes in Portugal. Today the chart says that the average price of potato is 1 euro. You buy 500 euros of the average potato price index, at 1 euros per unit of this index. If over 3 years the average price of potatoes has increased to €1.50, your €500 has become €750 (€500 X €1.5). If the average potato price has dropped to 80 cents, and you cash it in that day, you only get 400 euros. Have you seen the example?

Subscribe to brokers or banks. Nobody buys or sells anything and the commissions on these indices are very small or non-existent. On the day you repay, you pay 28% on capital gains, as with term deposits, and pay it to the IRS the following year (either you receive less or pay more).

Read more: How I chose ETFs and PPR

Some think that even if they earn less over time, PPR will eventually pay off because they pay much less in taxes.

Others believe that historically ETFs are more compensated because since no one buys and sells, fewer management mistakes are made and since the commissions are very low, which ultimately grows, compensates for the more beneficial taxation of PPRs.

My “cotton test”

The challenge I set myself was to try to find the answer with real cases (my own). That is, if you choose a different PPR than mine or choose different ETFs than mine, on different dates, your results will obviously be different too. But at least you have an idea.

I chose a PPR with a huge percentage of stocks (95%) and the two best-known ETFs worldwide. The 3 were enrolled on the same day, so that the analysis is as accurate as possible. The ETF and the PPR were simultaneously subscribed in the last week of July 2021. Later I added the PPR STOIK, in a virtual way, but with the same day data from the others.

The following data refers to the end of August 2022.

In either case, to lose all the money invested, ALL of the top 500 companies in the US would have to go out of business, or any of the largest companies in the world. Of course, what you invest will go up and down and you may have a (much) lower balance than the amount you invested. In these circumstances, it’s just a matter of patiently waiting for it to recover. There are no more “tricks”.

For those who ask, I subscribe to my ETFs on Degiro’s digital platform. I say this for the sake of transparency (this is of no use to me).

PODCAST | #107 – I am losing money on my investments. What shall I do?

For those who ask, I subscribe to my ETFs on Degiro’s digital platform. I say this for the sake of transparency (this is of no use to me). Here is also their identification (with the “citizen card” of each of them, the so-called ISIN).

  • iShares Core S&P 500 UCITS ETF USD (Acc)


(About 400 euros each)

Graph of what has grown since the “bottom” of Covid-19.

  • Vanguard FTSE All-World UCITS ETF USD Acc


(About 100 euros each)

Graph of what has grown since the “bottom” of Covid-19.

Keep in mind these articles on investment advice. You should do your own research and calmly analyze each of the products that interest you. There are tens or hundreds of good PPRs and ETFs. These were the ones that gave me the “way” to invest when I did. My goal is purely pedagogical and that is of no use to me. I also don’t want to take the responsibility for anyone to say I said these were good or bad. You have to think for your own head.

And the PPR?

Casa de Investimentos’ “Save & Grow” PPR consists of 95% shares of the largest and most “safe” companies mainly in the United States.

They follow the strategy of “investing in value”, that is, they only invest in companies that are stable and with a “guarantee” of growth and that strengthen the PPR if they are at a good price. On their page you will find all this strategy they have followed over the years well described. I subscribed 1,000 euros, for a short period I had a very small increase in value of 14 euros, but it has been negative for several months. It will devalue 13% in August 2022.

After 14 months, there is a difference of at least 26% between the returns of my two ETFs and the PPR Save and Grow.

It’s too early to make comparisons, of course, but I want you to follow this “race”. They are completely different strategies. PPR specifically picks the stocks it buys and sells at any given time, and ETFs do nothing but replicate the US and global averages. Therefore, Save & Grow will have many moments of higher declines than the ETFs over the years and also higher growth. Let’s wait. Let’s wait until the war is over and see what happens.

In this Excel chart (Google Spreadsheets) you have the evolution of the interest everyone earns and further down the value corresponding to the gross value which is proportional to the interest of each in a 1,000 dollar portfolio.

For now, looking at the numbers, after 14 months, ETFs are gaining by far above PPRs (I have others growing more or losing less).

Where to start investing without guaranteed capital (and the chance of a higher return)?

  1. create one good PPR Fund (see earnings and commissions and set your profile – defensive, moderate or aggressive)
  2. subscribe to ETF
  3. Subscribe Mutual funds