Beginning to Invest - All questions go here please

HelloYoungBoy

I've seen a few comments on tax related queries here. There is an Irish guy who writes an investing newsletter and was discussing tax in it this week. Might be of use to some

https://wolfofharcourtstreet.substack.com/p/lets-talk-about-tax-part-1

VonLuck

Can anyone tell me what's the best way for a casual investor to get started? I would like to put away some money monthly, but do not have the appetite right now to be watching the markets daily or even weekly and worrying about whether I should buy or sell my shares on a regular basis.

Would a managed fund be the best option? It seems the most convenient, but understand that there are costs associated with it and may not actually outperform anything I invest by myself.

I would be more than happy to set up a DeGiro account myself, but the whole thing seems very daunting. I imagine it's very straight forward once you get over the initial set up, but I can't seem to find a step by step guide for someone investing as casually as I am.

mickger844posts

VonLuck wrote: »

Can anyone tell me what's the best way for a casual investor to get started? I would like to put away some money monthly, but do not have the appetite right now to be watching the markets daily or even weekly and worrying about whether I should buy or sell my shares on a regular basis.

Would a managed fund be the best option? It seems the most convenient, but understand that there are costs associated with it and may not actually outperform anything I invest by myself.

I would be more than happy to set up a DeGiro account myself, but the whole thing seems very daunting. I imagine it's very straight forward once you get over the initial set up, but I can't seem to find a step by step guide for someone investing as casually as I am.

If you follow the steps on any of the well known online trading apps its relatively straight forward. You will need to upload a picture of your passport and also proof of address. Etoro and Trading212 were defintely faster to get up and running than Degiro as it takes them longer to verify details as you have to link it with a bank account.
Adding funds to the account is also faster with Etoro and Trading212 as you can use a Credit/Debit card unlike Degiro where you have to upload funds from a verified bank account. In saying that lately if i transfer money it normally shows up in my Degiro account the following morning.

VonLuck

mickger844posts wrote: »

If you follow the steps on any of the well known online trading apps its relatively straight forward. You will need to upload a picture of your passport and also proof of address. Etoro and Trading212 were defintely faster to get up and running than Degiro as it takes them longer to verify details as you have to link it with a bank account.
Adding funds to the account is also faster with Etoro and Trading212 as you can use a Credit/Debit card unlike Degiro where you have to upload funds from a verified bank account. In saying that lately if i transfer money it normally shows up in my Degiro account the following morning.

Oh I'm sure the setting up of an account and transferring funds is very straight forward, but it's the steps that follow that I'm not clear on.

A key one is selecting shares to invest in, or even index funds. Is there a guide on the best approach to this? I know everyone will have their own views, but a general approach to selecting areas to invest would be really useful, particularly from an Irish perspective.

Investment strategies are lost on me too. If I have a lump sum is it best to invest it all in one go or spread it out over a few months to lower the risk of investing at a peak? If I'm investing monthly should you target the same shares / funds you invested in previously or continue to diversify?

Also the tax implications is one that I'm confused about. I've read that you could be liable for either CGT, DIRT, Exit Tax or even income tax depending on what you invest in. I don't want to throw all my money at something and then suddenly finding out I'm losing out on 55% of my returns.

There's a lot to consider, and I'm sure all these questions have been answered somewhere, but it seems like the information is scattered everywhere and it's hard to piece together!

mickger844posts

VonLuck wrote: »

Oh I'm sure the setting up of an account and transferring funds is very straight forward, but it's the steps that follow that I'm not clear on.

A key one is selecting shares to invest in, or even index funds. Is there a guide on the best approach to this? I know everyone will have their own views, but a general approach to selecting areas to invest would be really useful, particularly from an Irish perspective.

Investment strategies are lost on me too. If I have a lump sum is it best to invest it all in one go or spread it out over a few months to lower the risk of investing at a peak? If I'm investing monthly should you target the same shares / funds you invested in previously or continue to diversify?

Also the tax implications is one that I'm confused about. I've read that you could be liable for either CGT, DIRT, Exit Tax or even income tax depending on what you invest in. I don't want to throw all my money at something and then suddenly finding out I'm losing out on 55% of my returns.

There's a lot to consider, and I'm sure all these questions have been answered somewhere, but it seems like the information is scattered everywhere and it's hard to piece together!

With regards Tax you can profit by 1270 euros a year without paying CGT. Anything above that is liable for CGT at 30 odd percent.
With regards the rest, a lot of questions there but Youtube is a good source of information for begineers.
Basically like with anything if you think a certain stock is worth buying do the research and get a feel for how the company is doing and future growth prospects. LImit the risks by doing this but there is always a risk when buying stocks. Its the nature of the market.

Shedite27

VonLuck wrote: »

Can anyone tell me what's the best way for a casual investor to get started? I would like to put away some money monthly, but do not have the appetite right now to be watching the markets daily or even weekly and worrying about whether I should buy or sell my shares on a regular basis.

Would a managed fund be the best option? It seems the most convenient, but understand that there are costs associated with it and may not actually outperform anything I invest by myself.

I would be more than happy to set up a DeGiro account myself, but the whole thing seems very daunting. I imagine it's very straight forward once you get over the initial set up, but I can't seem to find a step by step guide for someone investing as casually as I am.

Download the Learn app by MyWallSt. Great introduction for how to invest.

Colin B

VonLuck wrote: »

Can anyone tell me what's the best way for a casual investor to get started? I would like to put away some money monthly, but do not have the appetite right now to be watching the markets daily or even weekly and worrying about whether I should buy or sell my shares on a regular basis.

Would a managed fund be the best option? It seems the most convenient, but understand that there are costs associated with it and may not actually outperform anything I invest by myself.

I would be more than happy to set up a DeGiro account myself, but the whole thing seems very daunting. I imagine it's very straight forward once you get over the initial set up, but I can't seem to find a step by step guide for someone investing as casually as I am.

im on a similar learning curve . few tips -stay away from etfs,we irish cannot invest in american etfs directly as far as i know plus if you do invest in one dirt tax @41% has to be paid at least every 8yrs plus income tax rates on any dividends,maybe more!would recommend my wall street and a you tuber "learn to invest" for general knowledge starting out

crystalbrite

Is it true?:
"Irish investors have been restricted from purchasing US-domiciled ETFs since January 3rd 2019"

Does that mean no one here is invested in the S&P500 for example?

https://www.moneyguideireland.com/buying-exchange-traded-funds-etfs-in-ireland.html

crystalbrite

crystalbrite wrote: »

Is it true?:
"Irish investors have been restricted from purchasing US-domiciled ETFs since January 3rd 2019"

Does that mean no one here is invested in the S&P500 for example?

https://www.moneyguideireland.com/buying-exchange-traded-funds-etfs-in-ireland.html

Is there no option on Degiro for example to buy an S&P500 ETF for Irish people?

a_squirrelman

crystalbrite wrote: »

Is there no option on Degiro for example to buy an S&P500 ETF for Irish people?

There are loads there domiciled in Ireland.

Shedite27

crystalbrite wrote: »

Is there no option on Degiro for example to buy an S&P500 ETF for Irish people?

Search for Vanguard S&P 500 on degiro. It's domiciled in UK (London Stock Exchange) so no problem for Irish people

Bob24

crystalbrite wrote: »

Is there no option on Degiro for example to buy an S&P500 ETF for Irish people?

See here a list of S&P500 ETFs which are all available in Europe/Ireland: https://www.justetf.com/en/find-etf.html?groupField=index&index=S%2526P%2B500%25C2%25AE

Bus Wanker

Hey, just looking to set up an account and do some small time investing. Just picking up a few shares here and there. I went back a few pages but didn't see the question asked recently.
Which broker would ye recommend signing up to. I always thought Degiro but now hearing xtb mentioned a bit. Thanks.

crystalbrite

Bob24 wrote: »

See here a list of S&P500 ETFs which are all available in Europe/Ireland: https://www.justetf.com/en/find-etf.html?groupField=index&index=S%2526P%2B500%25C2%25AE

Thanks!
Why is there so many options for the same ETF?
Is there any reason to pick one over the other?

Bob24

crystalbrite wrote: »

Thanks!
Why is there so many options for the same ETF?
Is there any reason to pick one over the other?

They are following the same index but are issued by competing institutions and can have multiple differences:
- implemented differently (physical v.s. synthetic replication)
- quoted in different currencies
- currency-hedged or not
- accumulating or distributing (I.e. are dividends distributed to you or reinvested)
- etc

I would suggested to pick one with physical replication, either listed in USD or EUR, not hedged, and accumulating (assuming you want to reinvest the dividends and defer tax on them).

Then pick one with a large fund size (for better liquidity) and with the lowest fees.

I’d suggest to spend a bit of time understanding what those things are, but for exemple this one fits my boxes: https://www.justetf.com/en/etf-profile.html?isin=IE00B5BMR087

Also, I wouldn’t put any large amount into an ETF next week due to the all the short squeezing going on at the moment in the US which caused a small pullback last Friday. Not for sure, but this could cause a liquidity event and a flash crash. Better wait another week to let things settle.

mickger844posts

Another CGT question i'm afraid. Trying to get my wife registered to pay CGT. I sent a request to do so to revenue and after many phones calls and different information they sent me two forms Payslip A and B.
Do these forms have to be filed out before they will register her for CGT?
She still doesn't have the option to pay CGT in her revenue online account. How long do they normally take to register people to enable payment?
Advice would be greatly appreciated.

Shedite27

mickger844posts wrote: »

Another CGT question i'm afraid. Trying to get my wife registered to pay CGT. I sent a request to do so to revenue and after many phones calls and different information they sent me two forms Payslip A and B.
Do these forms have to be filed out before they will register her for CGT?
She still doesn't have the option to pay CGT in her revenue online account. How long do they normally take to register people to enable payment?
Advice would be greatly appreciated.

I sent the message via the messenger when you log into REvenue. Does she have a REvenue login? Should onle be a day or two

mickger844posts

Shedite27 wrote: »

I sent the message via the messenger when you log into REvenue. Does she have a REvenue login? Should onle be a day or two

I sent the message to request her to be registered last Tuesday and only after a call today did i get a reply. As i said they just sent me the Payslip forms and no mention if she was registered or what we needed to do with the forms.

VonLuck

Can anyone give me clear guidance on mutual funds (index funds and ETF's) for an Irish Investor? Is it best to avoid them all together due to the tax implications?

Timmaay

VonLuck wrote: »

Can anyone give me clear guidance on mutual funds (index funds and ETF's) for an Irish Investor? Is it best to avoid them all together due to the tax implications?

SMT, on trading 212. Do a search on it, was talked about afew days ago.

Bigbooty

Any decent books to recommend before I begin investing in stock?

VonLuck

Timmaay wrote: »

SMT, on trading 212. Do a search on it, was talked about afew days ago.

I assume you're suggesting to look into SMT's as an alternative. Thanks, but that doesn't really answer my question unfortunately.

crystalbrite

Bigbooty wrote: »

Any decent books to recommend before I begin investing in stock?

I started reading "A random walk down Wallstreet".

I thought it was quite good and got me familiar with a lot of terms. I think I got maybe 70% through. Kind of gave up on a part discussing tax implications but it was all US based. That's the issue with most of these books and other sites (e.g. Reddit), they are mainly US based. Would like more Irish based advice.

The main takeaway from the book above is don't try time the market. It is better to invest in a low cost broad based index fund like an ETF and hold. These etf's have shown consistent growth of ~7% over the long-term beating inflation and actual active day traders. One issue with this is ETFs are taxed different here in Ireland.

Also the book above was originally written in the 70s and has been updated with revisions throughout the years I think. There maybe a more up to date modern book.

Bob24

VonLuck wrote: »

Can anyone give me clear guidance on mutual funds (index funds and ETF's) for an Irish Investor? Is it best to avoid them all together due to the tax implications?

Since they are subject to exit tax and the 8 years deemed disposal rule (rather than the regular CGT and dividend taxation regime), it:
- makes tax reporting more complicated
- increases the tax liability in most (but not all) cases
- doesn’t have an equivalent of the yearly CGT exemption
- reduces the compounding effect of your investment because you are taxed as you go rather than at the end (this applies only if you are a long term holder - more than 8 years)
- prevents your from offsetting losses on one investment against gains on another (could be annoying if you have multiple funds for diversification and one of them is making large losses)

So overall it definitely isn’t great. Now I don’t think it means they should be avoided at all cost. If you find one fund you like and want to go for it, just keep the above in mind when deciding if they fund is a good option.

crystalbrite

Bob24 wrote: »

Since they are subject to exit tax and the 8 years deemed disposal rule (rather than the regular CGT and dividend taxation regime), it:
- makes tax reporting more complicated
- increases the tax liability in most (but no all) cases
- doesn’t have an equivalent of the yearly CGT exemption
- reduces the compounding effect of your investment because you are taxed as you go rather than at the end (this applies only if you are a long term holder - more than 8 years)
- prevents your from offsetting losses on one investment against gains on another (could be annoying if you have multiple funds for diversification and one of them is making large losses)

So overall it definitely isn’t great. Now I don’t think it means they should be avoided at all cost. If you find one fund you like and want to go for it, just keep the above in mind when deciding if they fund is a good option.

I suppose for a beginner, we aren't going to like any fund. We are clueless and daunted by the massive list of different stocks/ETFs etc to invest in. We are looking for a starter guide from someone to basically tells us what to invest in a why. Relatively safe options that you can't go wrong with investing in (I know there is always some risk). We can then use this as a starting point of our research and from there expand so it isn't so daunting.

A practical list of someone saying I've invested in these exacts stocks X, y, z.

Does any guide like this exist for an Irish person? Or a book of some kind?

VonLuck

Bob24 wrote: »

Since they are subject to exit tax and the 8 years deemed disposal rule (rather than the regular CGT and dividend taxation regime), it:
- makes tax reporting more complicated
- increases the tax liability in most (but no all) cases
- doesn’t have an equivalent of the yearly CGT exemption
- reduces the compounding effect of your investment because you are taxed as you go rather than at the end (this applies only if you are a long term holder - more than 8 years)
- prevents your from offsetting losses on one investment against gains on another (could be annoying if you have multiple funds for diversification and one of them is making large losses)

So overall it definitely isn’t great. Now I don’t think it means they should be avoided at all cost. If you find one fund you like and want to go for it, just keep the above in mind when deciding if they fund is a good option.

That's very clear, really appreciated.

Is purchasing individual shares the obvious alternative, or what is the general consensus here for someone new to investing?

Bob24

crystalbrite wrote: »

We are looking for a starter guide from someone to basically tells us what to invest in a why. Relatively safe options that you can't go wrong with investing in (I know there is always some risk).

VonLuck wrote: »

That's very clear, really appreciated.

Is purchasing individual shares the obvious alternative, or what is the general consensus here for someone new to investing?

No worries.

My opinion is that UK investment trusts are a good vehicle. They are close-ended fund (i.e. with a fixed amount of shares) which can be easily purchased on the London Stock Exchange and are legally structured as companies (i.e. they are taxed like individual companies while offering diversification like funds). Also they can offer asset class diversification within the fund. Note that many of them pay a small dividend which will be taxed as income, but IMO this is no big deal.

2 "generalist" trusts I would recommend:
- Personal Assets Trust is a good option for someone who wants to beat inflation and saving accounts rate (by quite a margin), while limiting risk and volatility. It has a mix of safe company shares, inflation protected bonds, gold, and cash.
- Scottish Mortage is a much more agressive one which focuses on growth companies and also has some private equity investments. Potential returns are much higher but risk and volatility also are much higher.

It is more specialised, but I personaly also like Schroder Asian Total Return. I believe East Asia is less overvalued than US stocks and has better growth opportunities, and IMO the trust is well managed.

2 links around these:
- See here a list of recommandations by category: https://whichinvestmenttrust.com/trusts-we-like/
- See here a comprehensive database of available options: https://www.trustnet.com

Another option obviously is to buy individual shares yourself. It is a very fine way to invest but obviously requires a bit more homework as well as well as more attention in terms of following your portfolio on a regular basis.

patsy_mccabe

Bigbooty wrote: »

Any decent books to recommend before I begin investing in stock?

'The Intelligent Investor' and 'Security Analysis ' by Benjamin Graham.
Also look at every video with Warren Buffet and Charley Munger in it.
As Buffet says ' all investing is value investing.

Shedite27

For those that want to do it DIY (for tax and saving some fees), all funds have a factsheet available to them that you can see the top 10 holdings. They can be a good idea for what to invest it. Ark are the best performing ones for the past few years. They've a few funds that you can see the top 10 holdings:
Ark Innovation: https://ark-funds.com/arkk
Ark Next Gen Internet: https://ark-funds.com/arkw
Ark Genomic: https://ark-funds.com/arkg

You can see it for the big Irish Investment houses too, eg Aviva/Merrion fund (page 2): https://aviva-fundcentre.longboatanalytics.com/api/pdf/GetMonthlyFactsheet?fundid=-25005799

Bigbooty

crystalbrite wrote: »

I started reading "A random walk down Wallstreet".

I thought it was quite good and got me familiar with a lot of terms. I think I got maybe 70% through. Kind of gave up on a part discussing tax implications but it was all US based. That's the issue with most of these books and other sites (e.g. Reddit), they are mainly US based. Would like more Irish based advice.

The main takeaway from the book above is don't try time the market. It is better to invest in a low cost broad based index fund like an ETF and hold. These etf's have shown consistent growth of ~7% over the long-term beating inflation and actual active day traders. One issue with this is ETFs are taxed different here in Ireland.

Also the book above was originally written in the 70s and has been updated with revisions throughout the years I think. There maybe a more up to date modern book.

patsy_mccabe wrote: »

'The Intelligent Investor' and 'Security Analysis ' by Benjamin Graham.
Also look at every video with Warren Buffet and Charley Munger in it.
As Buffet says ' all investing is value investing.

Thanks. Will have plenty of homework to keep me busy over the next two weeks now.