Beginning to Invest - All questions go here please

VonLuck

Bob24 wrote: »

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.

Very useful, thanks. Will certainly research them.

The problem I'm having is that I read up about all the supposed investment options out there from an investment website for newcomers, but then I read a post here and it mentions something I've not come across before. Is there a comprehensive list of all of these (including tax implications) so that I can weigh them all up together?

Just concerned that I see something that seems like a good option and then invest only to see something else that's much more suited to me and it's too late at that stage. Feel a bit lost with the options at the moment. A severe case of overchoice!

PCros

Is there any difference between Trading 212 or Degiro or are they the same same?

I am starting off and really only interested in passive investing in a couple of stocks over a few years.

I know Revolut gives you 3 free trades a month but theres a limitation in stocks to choose from compared to the above.

TIA

Shedite27

PCros wrote: »

Is there any difference between Trading 212 or Degiro or are they the same same?

I am starting off and really only interested in passive investing in a couple of stocks over a few years.

I know Revolut gives you 3 free trades a month but theres a limitation in stocks to choose from compared to the above.

TIA

Thinks most on here use Degiro. Main advantage Trading212 has over them is that it allows you to buy fractional shares (so buy $500 worth of Amazon instead of having to buy a full share at $3000+)

Bob24

VonLuck wrote: »

The problem I'm having is that I read up about all the supposed investment options out there from an investment website for newcomers, but then I read a post here and it mentions something I've not come across before. Is there a comprehensive list of all of these (including tax implications) so that I can weigh them all up together?

Just concerned that I see something that seems like a good option and then invest only to see something else that's much more suited to me and it's too late at that stage. Feel a bit lost with the options at the moment. A severe case of overchoice!

Unfortunatly I have never came across any comprehensive source which gives advice from an Irish perspective (i.e. taking Irish specificities into account).

Having said that, if someone is to make only one investment which is aimed at replacing a savings account with better returns in exchange for a bit more volatility, buying shares in Personal Assets Trust every month might not be a bad way to start and is simple enough to do/understand.

Basically with a single investment vehicle you get a diversified and rather defensive portfolio across different asset classes with the proportion readjusted by a professional manager on a regular basis for a relatively low management fee. This won't make anyone rich, but it should at the very least preserve purchasing power with a medium-term timeframe (which savings accounts don't achieve as they offer negative real interest rates once adjusted for inflation), and there is a reasonable hope it will actually increase that purchasing power over time. Also there is no significant drawback I know if in terms of doing this from an Irish perspective (you just need to report dividends and possible shares disposal to Revenue each year and pay income tax and CGT accordingly).

And then once the person gets more confortable with investing they can look into more agressive investment options and/or and picking individual shares themselves.

mbarosin

Revolut only appear to sell US$ stocks so an element of currency risk (upside and downside of course) is introduced.
Would this put people off using Revolut in general? I was only considering using them because I already have an account.

crystalbrite

If I invest 10000e in a Fund that returns 7% per year after 10years I will have 19672e.
If I cash out I have made 9672e profit.
Tax 33% @(9672-1270) = 2772e. (I know if actual fund could be 40%)

Am I better cashing out each year, where my gain will be less than the 1270e exemption and then buying back straight away?
This way I get to use the 1270e exemption every year rather than just once?

Does paying into a fund managed by someone else already take care of all these tax concerns?

Taylor365

crystalbrite wrote: »

If I invest 10000e in a Fund that returns 7% per year after 10years I will have 19672e.
If I cash out I have made 9672e profit.
Tax 33% @(9672-1270) = 2772e. (I know if actual fund could be 40%)

Am I better cashing out each year, where my gain will be less than the 1270e exemption and then buying back straight away?
This way I get to use the 1270e exemption every year rather than just once?

Does paying into a fund managed by someone else already take care of all these tax concerns?

Cash out and reinvest the 1270 each year. Don't have to touch your initial capital at all.


Now, where is this guaranteed 70%+ return over 10 years fund you mentioned?

Bob Harris

crystalbrite wrote: »

If I invest 10000e in a Fund that returns 7% per year after 10years I will have 19672e.
If I cash out I have made 9672e profit.
Tax 33% @(9672-1270) = 2772e. (I know if actual fund could be 40%)

Am I better cashing out each year, where my gain will be less than the 1270e exemption and then buying back straight away?
This way I get to use the 1270e exemption every year rather than just once?

Does paying into a fund managed by someone else already take care of all these tax concerns?

10 years compounded @ 7% is a net gain of 6900
Cash out every year for 700 quid and it's a net gain of 7000.
For a hundred quid I'd save myself the hassle.

In any case after 8 years you have the deemed disposal rule whereby you pay as if you had disposed of your investment. A way for the government to get their hands on your money sooner.

Put in your lump sum, add regularly, the deemed disposal will be a balls but if your get 7% you'll have a nice chunk of cash after 10 years.

VonLuck

As someone who has a relatively small lump sum sitting in a savings account earning almost zero interest, would it be a wise initial move to invest in say 20 different companies in the S&P 500 (just as an example) across different sectors, primarily Blue Chip companies? I wouldn't expect the returns to be in any way substantial over the few years it's invested, but at least it would be a start.

From my own perspective I'm worried I'll end up with analysis paralysis where I end up trying to figure out the best up and coming company out there. I'd end up not investing in anything for a long time until I'm comfortable with any research I've done on individual companies. It's happened before where I started research and got swamped by the raft of information out there and just abandoned ship without investing anything.

My logic is that at least my money is working while I'm doing research and then I'll be ready to use any future monthly savings set aside for investing into something with potentially greater returns. With my toe already in the water with the initial investment I will have a vested interest in pursuing it further. And if things went somewhat well in my initial lump sum investment, sell and purchase shares in another company I've done extensive research on.

I know it may sound foolish doing only a small amount of research for my initial investment, but I figure it's a relatively safe bet (as safe as investing can be) buying shares in your Apples, Amazons, Googles etc. as a first foray into investing. Any thoughts?

Shedite27

VonLuck wrote: »

As someone who has a relatively small lump sum sitting in a savings account earning almost zero interest, would it be a wise initial move to invest in say 20 different companies in the S&P 500 (just as an example) across different sectors, primarily Blue Chip companies? I wouldn't expect the returns to be in any way substantial over the few years it's invested, but at least it would be a start.

From my own perspective I'm worried I'll end up with analysis paralysis where I end up trying to figure out the best up and coming company out there. I'd end up not investing in anything for a long time until I'm comfortable with any research I've done on individual companies. It's happened before where I started research and got swamped by the raft of information out there and just abandoned ship without investing anything.

My logic is that at least my money is working while I'm doing research and then I'll be ready to use any future monthly savings set aside for investing into something with potentially greater returns. With my toe already in the water with the initial investment I will have a vested interest in pursuing it further. And if things went somewhat well in my initial lump sum investment, sell and purchase shares in another company I've done extensive research on.

I know it may sound foolish doing only a small amount of research for my initial investment, but I figure it's a relatively safe bet (as safe as investing can be) buying shares in your Apples, Amazons, Googles etc. as a first foray into investing. Any thoughts?

Exactly how I got into it. Buy your bluechips. Then as you read more into it and feel more confident, rotate from the megacaps to the growth companies.

Shedite27

mickger844posts wrote: »

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.

Sorry missed this.

Log into MyAccount.
Go to Payments/Repayments --> Make a Payment
Click Tax, then Next
If you can see an option for Capital Gains Tax on the next screen, you're registered.

Bob24

VonLuck wrote: »

I know it may sound foolish doing only a small amount of research for my initial investment, but I figure it's a relatively safe bet (as safe as investing can be) buying shares in your Apples, Amazons, Googles etc. as a first foray into investing. Any thoughts?

I think what you are planning to do is fine, BUT I would recommend to no just buy large US tech companies. The ones you are mentioning are all fine companies, but they are all in the tech sectors and all very generously values. I’d throw some companies like Nestlé, Unilever, LVMH, Pfizer, etc into the mix (not necessarily those ones, but you get the idea of having some diversification).

VonLuck

Bob24 wrote: »

I think what you are planning to do is fine, BUT I would recommend to no just buy large US tech companies. The ones you are mentioning are all fine companies, but they are all in the tech sectors and all very generously values. I’d throw some companies like Nestlé, Unilever, LVMH, Pfizer, etc into the mix (not necessarily those ones, but you get the idea of having some diversification).

Oh 100%. That was a simplified example as they were the biggest companies that came to mind. Would be looking at different sectors in different countries.

Also is 20 different companies too diversified? I've read that some investors have only 10 companies in their portfolios. I'm guessing people tend to sell shares in one of their companies if they find another company worth investing in, instead of adding another one to their portfolio. Am I right?

timetogo1

PCros wrote: »

Is there any difference between Trading 212 or Degiro or are they the same same?

I am starting off and really only interested in passive investing in a couple of stocks over a few years.

I know Revolut gives you 3 free trades a month but theres a limitation in stocks to choose from compared to the above.

TIA

I use them both.

As the previous poster said fractional shares are a benefit in T212. Other differences are

With T212 you can load up to €2000 from a cc fee free (after the first 2k there's a 0.7% fee). So the money can be in the T212 account immediately. Degiro do bank transfer only so it takes a day. Obviously using CC credit to fund an account is not smart but it works fine for me as I pay it off monthly.

Pies - T212 allow you to create pies. Kind of like a personal ETF. Here's an example of one I created copying the top 15 from the ARKK ETF www.trading212.com/pies/l7a3qYeULFOR6tKRWF4CAYs0md8Y . That means you can create a pie and just throw money into it. T212 will sort out the fractional purchases. I created that pie at the start of January as an experiment and put $200 into it and it's up 5% so I'm OK with that. I'll add some more money into it every so often. There's a bit of reading to do with rebalancing. You want to read up on that yourself. It's not too hard.

Yearly reports - The Degiro reports for tax are much more comprehensive. If you use T212 they won't give you a report for the first 11 months so you have to be good with your Excel skills to report to the taxman.

Leverage - Degiro allow you to leverage (with their higher level accounts). This is not a beginner feature but it's useful if you know what you're doing and ARE AWARE OF THE RISKS.

Degiro charge a small fee per transaction (about .50c) plus a small fee per year per exchange (about $2.5). T212 is free. This really doesn't make much difference to most people.

Trading 212 do CFDs. Do not touch these with a 10 foot bargepole. I've experimented with them using their virtual account and always ended up losing on the trades. I don't know enough about them to use them.

Degiro delay some updates on your share pricing info by 15 mins (e.g. on the Nasdaq). This can be a pain in the hole. I don't know if Trading 212 do. These days I use Excel to track my shares as that seems to update everything immediately when I hit the refresh button.

There's probably more but that's what I'm aware of.

crystalbrite

Bob Harris wrote: »

10 years compounded @ 7% is a net gain of 6900
Cash out every year for 700 quid and it's a net gain of 7000.
For a hundred quid I'd save myself the hassle.

In any case after 8 years you have the deemed disposal rule whereby you pay as if you had disposed of your investment. A way for the government to get their hands on your money sooner.

Put in your lump sum, add regularly, the deemed disposal will be a balls but if your get 7% you'll have a nice chunk of cash after 10 years.

By my calculation, my year gain profit doesn't break 1270e until year 10 where I make a profit of 1287e (19672e-18385e).
If I cashed out every year and bought straight back in I would have to pay tax on this for the first time of 6e [33%*(1287-1270e)].

My total profit would be 9666e (19672e-10000e-6e)

vs

If I cashed out for the first time after 10 years I would only have 6899e profit.
19672e-10000e = 9672e Gross profit
Tax = 33%(9672 - 1270e) = 2772e
Net profit = 9672e-2772e = 6899e


So it looks a lot more beneficial to cash out every year. Saving (9666e-6899e)=2767e.

This is a lot larger than the 100e you calculated.
Am I making a mistake somewhere?

PCros

timetogo1 wrote: »

I use them both.

As the previous poster said fractional shares are a benefit in T212. Other differences are

With T212 you can load up to €2000 from a cc fee free (after the first 2k there's a 0.7% fee). So the money can be in the T212 account immediately. Degiro do bank transfer only so it takes a day. Obviously using CC credit to fund an account is not smart but it works fine for me as I pay it off monthly.

Pies - T212 allow you to create pies. Kind of like a personal ETF. Here's an example of one I created copying the top 15 from the ARKK ETF www.trading212.com/pies/l7a3qYeULFOR6tKRWF4CAYs0md8Y . That means you can create a pie and just throw money into it. T212 will sort out the fractional purchases. I created that pie at the start of January as an experiment and put $200 into it and it's up 5% so I'm OK with that. I'll add some more money into it every so often. There's a bit of reading to do with rebalancing. You want to read up on that yourself. It's not too hard.

Yearly reports - The Degiro reports for tax are much more comprehensive. If you use T212 they won't give you a report for the first 11 months so you have to be good with your Excel skills to report to the taxman.

Leverage - Degiro allow you to leverage (with their higher level accounts). This is not a beginner feature but it's useful if you know what you're doing and ARE AWARE OF THE RISKS.

Degiro charge a small fee per transaction (about .50c) plus a small fee per year per exchange (about $2.5). T212 is free. This really doesn't make much difference to most people.

Trading 212 do CFDs. Do not touch these with a 10 foot bargepole. I've experimented with them using their virtual account and always ended up losing on the trades. I don't know enough about them to use them.

Degiro delay some updates on your share pricing info by 15 mins (e.g. on the Nasdaq). This can be a pain in the hole. I don't know if Trading 212 do. These days I use Excel to track my shares as that seems to update everything immediately when I hit the refresh button.

There's probably more but that's what I'm aware of.

Very comprehensive thank you!

Bob Harris

crystalbrite wrote: »

By my calculation, my year gain profit doesn't break 1270e until year 10 where I make a profit of 1287e (19672e-18385e).
If I cashed out every year and bought straight back in I would have to pay tax on this for the first time of 6e [33%*(1287-1270e)].

My total profit would be 9666e (19672e-10000e-6e)

vs

If I cashed out for the first time after 10 years I would only have 6899e profit.
19672e-10000e = 9672e Gross profit
Tax = 33%(9672 - 1270e) = 2772e
Net profit = 9672e-2772e = 6899e


So it looks a lot more beneficial to cash out every year. Saving (9666e-6899e)=2767e.

This is a lot larger than the 100e you calculated.
Am I making a mistake somewhere?

I was assuming (don't ask me why) you were just getting interest on the original capital and pocketing the earned interest so you're figures would be right.

Now you just need a fund that will earn you 7% per year.

PCros

What is the difference between IAG and IAG Plc?

mickger844posts

Probably a silly question but if you make a profits on stocks above the 1270 and leave those profits in your degiro account are they still deemed as profits and liable for CGT? I'm guessing yes but will ask anyway.Cheers

Bob Harris

mickger844posts wrote: »

Probably a silly question but if you make a profits on stocks above the 1270 and leave those profits in your degiro account are they still deemed as profits and liable for CGT? I'm guessing yes but will ask anyway.Cheers

They most certainly are. Revenue don't care where you keep it. Fcukers want their cut.

mickger844posts

Bob Harris wrote: »

They most certainly are. Revenue don't care where you keep it. Fcukers want their cut.

Thought so. Cheers

crystalbrite

Bob Harris wrote: »

They most certainly are. Revenue don't care where you keep it. Fcukers want their cut.

Do revenue know what's in your Degiro account since it's not based in Ireland?
Similar question for revolut.
Can you get away with hiding money in these accounts?

Shedite27

crystalbrite wrote: »

Do revenue know what's in your Degiro account since it's not based in Ireland?
Similar question for revolut.
Can you get away with hiding money in these accounts?

They'll see it when you withdraw the cash.

Shedite27

mickger844posts wrote: »

Probably a silly question but if you make a profits on stocks above the 1270 and leave those profits in your degiro account are they still deemed as profits and liable for CGT? I'm guessing yes but will ask anyway.Cheers

BTW, just in case it's not clear, the profit is only taxable once you sell the stock. If you're account shows you're up 2k, that's not taxable. The taxable amount is the profit on all sales during the year

Bob24

crystalbrite wrote: »

Do revenue know what's in your Degiro account since it's not based in Ireland?
Similar question for revolut.
Can you get away with hiding money in these accounts?

It isn’t all that relevant whether they have direct access to the information. Doesn’t change your tax liabilities.

But to answer the question I’d say they are very unlikely to have the details of your portfolio. However the Flatex cash account associated to the DEGIRO account is almost for sure reported to German tax authorities which are quite likely sharing this with Revenue. And I’d say it is possible DEGIRO is reporting the existence of the trading account to Dutch authorities which could share this with Revenue, but no too sure about that.

VonLuck

This is a very basic question, but what exactly does it mean when a fund "tracks" a stock market index? I understand that it aims to replicate the return of the index, but how is that achieved exactly? For instance, if there's a fund that tracks the S&P 500 does that mean it equally distributes all investments equally across all 500 companies?

VertBlue

Like a few recent posters, I am interested in starting to invest some spare cash. I had done a diploma in financial services between university and starting work so have some idea of the terminology and workings of the markets, but was never in a position to start investing for the future until now.

A question I have is how much faith to put in buy/sell ratings from places like Berenberg? Are there other companies or banks that do these ratings?

PCros

So I signed up to Degiro and I have a quick one.

When buying under "Limit" say with Nio, do I put in the bid price x 10 for 10 shares? This is currently $58.35.

Shedite27

VonLuck wrote: »

This is a very basic question, but what exactly does it mean when a fund "tracks" a stock market index? I understand that it aims to replicate the return of the index, but how is that achieved exactly? For instance, if there's a fund that tracks the S&P 500 does that mean it equally distributes all investments equally across all 500 companies?

Pretty much, S&P is calculated by the weighting of the Market Cap of each company. At the moment the S&P is about 6% Apple and 5% Microsoft, down to 0.01% Under Armour.

So a 5bn fund, that has another $1m to invest, should allocate 6% of that to Apple, 0.01% of that to Under Armour

Shedite27

VertBlue wrote: »

Like a few recent posters, I am interested in starting to invest some spare cash. I had done a diploma in financial services between university and starting work so have some idea of the terminology and workings of the markets, but was never in a position to start investing for the future until now.

A question I have is how much faith to put in buy/sell ratings from places like Berenberg? Are there other companies or banks that do these ratings?

Absolutely zero.

Buy/Sell ratings aren't worth looking at. They're always the current price +20%. Magically, if Tesla goes up $200, they discover that their target price is new price +20%

Chances if they have the price target at below it, they've shorted the company and are looking to move it south.

Nobody ever holds them to account.