setting up accounts for investment purposes

DaMooseDog

First of all, I'm new to boards, been reading the investments forum for a while now, it's a great forum, the insight and debate is very interesting....

I'm 25 and I'm out of debt for the first time ever, and starting a new job with a pay rise so I plan to make put that extra money to work as a long term plan. Currently have very little savings, and I'm paying rent so I feel I should start now...

I'm currently educating myself about different investment options, and as part of that I want to set up a series of bank/trading accounts that will make trading as easy, affordable, and favourable in terms of tax. After trawling through the web a bit, I haven't been able to find a one-stop resource offering advice on this from the Irish investor's perspective, so would appreciate any comments/unput/debate on this....

Here's my plan...........

• Currently have BOI current account paying no interest, plan to change this to the new AIB 4% current account
• Still haven't decided whether I want to go after funds or stocks directly, but while deciding I plan to set up a RaboDirect (or Quinn) savings account.
• If I decide to go down the funds route will just leave money with Rabo or Quinn investment account, but I also want to set up online trading account in
• the likely event i play with stocks.
• Ideally I would like an online broker that charges the lowest commissions, but as much flexibility as possible (i.e that it allows access to US, Irish UK and Euro stocks, and potentially commodities). Other advantages would be interest paid on uninvested cash, cheap cost of wiring from bank current account etc. Based on my (limited) knowledge so far, firsttrade.com looks like the best bet, altho its only US securities - they have a good deal at the moment, if you open an account with $2000 you get 100 free trades, trades are normally 7 euro.
  
• Do you need to setup seperate accounts for all of these, or do any of the online brokers cater for all the different markets in one account?

Then there is the question of taxation on gains...i havent got a clue here....I've just read Phil Town's book on investing ("Rule #1",excellent read for beginners btw), he offers advice on this for US investors, they can set up IRA/ Roth IRA retirement accounts so most of the gains can be put directly
into retirement accounts without paying tax, is there anything similar available for Irish investors? While id like to pay as little tax as possible, would like to stay above board on this one...

Any advice would be much appreciated...

A Random Walk

Good job on getting out of debt at your age. I think you're maybe overcomplicating a bit though

Roths/401ks etc are all US. I presume you're employed by someone, in which case you should be offered a pension scheme which is the closest Irish equivalent. If you're on the higher rate of tax there are significant advantages to socking money into this - I'd recommend you go buy one of the Irish personal finance books and have a good read. Lower tax rate benefits are not so clear.

A broker which allows you trade on multiple markets will allow you to set up only one account with them. Some may offer to hold your cash in different currency accounts (Euro/US$), but unless you're a professional I would ignore.

The personal finance books will tell you about tax. Essentially you will pay capital gains (20%) on any profits you make when you sell, minus a yearly allowance. You pay income tax on dividends, but because there's all sorts of withholding issues it's best to look at this in more detail. You will have to notify the revenue of your profit each year, it's to be honest not a big deal to work out - give them a ring and ask if you want advice (but check it yourself). You could also do what I do and never sell anything (focuses the mind when you buy something)

For investing basics I'd strongly recommend you read Burton Malkiels "random walk down wall street" so as to not get sucked in by the chancers. Read up on what an index fund is and what the benefits are. Read why trading frequently is bad

DaMooseDog

a very belated thanks for your feedback on this one!! I've read the random walk book but have yet to invest in an index fund or the like.....