Beginning to Invest - All questions go here please

Mechatronical

Hi,

Does anyone know if there's an option on Degiro to set up a weekly payment against an ETF?

Don't see to see an option to do this or see any info so far in order to execute a weekly order.

Taylor365

Are you planning to keep until death? Because your head will explode in 8 years time.

Mechatronical

Not planning on keeping that long 🙂. Was just going to track the S&P with a few euro every week.

Must sort the Will out in 2029 so 🙂.

mortis43

https://www.boards.ie/discussion/comment/117452956#Comment_117452956

hi,

can I ask how UK investment trusts are beneficial for Irish resident investors?

Patsy167

https://www.boards.ie/discussion/comment/118483887#Comment_118483887

Pros of Investment Trusts in Ireland:

The current consensus is that gains you realise from investing in Investment Trusts are taxed under Capital Gains Tax of 33%, as opposed to 41% Exit Tax. Note that as with all CGT gains, you need to actually realise the gain in order to benefit from the potentially lower tax rate versus Exit Tax or other!

If you do have gains on disposal you can claim to write-off these gains against Capital Losses you may have from past investment losses

You may benefit from the annual CGT allowance of €1,270, or €2,540 combined if you have a joint investment. In essence, each year you can realise Capital Gains across all your relevant investments of up to €1,270 (single) or €2,540 (joint) each year before you start paying tax on realised gains

While they are classed as ‘closed ended’ shares, they are listed on the stock exchange, traded daily and therefore you may be able to buy and sell them with very little if any delay

Some Investment Trusts in Ireland have performed strongly compared to an index approach or retail investment product funds (others less so – see below)

Depending on the values at the time, when you invest in Investment Trusts you may be buying at a discount (cheaper) or premium (dearer) to the Net Asset Value (NAV). Obviously you stand to benefit if you buy at a discount. You will have a heads-up on this when you are considering buying.

On a given day this can vary. The same applies however when you sell so it can be both Pro & Con on entry or exit

The underlying assets can be less diverse and less transparent than an index

You can invest in niche or specific sectors if you wish via separate ITs

Cons of Investment Trusts in Ireland:

As they are actively managed shares the fund fee alone tends to be 1%+ (0.2% on an index fund)

There is a potential illiquidity issue if outflows are higher than inflows, or if you must sell at discount below the NAV

Being actively managed one has no way of knowing which IT will or won’t potentially outperform the market over a period of time

I believe Revenue have never actually confirmed the taxation status of ITs and like anything it is subject to change or challenge in future – so be prepared if the sands begin to shift

If dividends are not reinvested, are paid out to you, you need to report these payments and taxable at your Income Tax + PRSI + USC rates

If domiciled in UK and an investor dies with a holding above the nil-rate band in UK (£325k currently), it can lead to Inheritance Tax payable in UK, and potential double-taxation in extreme circumstances

You would need to sell some holdings to actually realise the gain, in order for you or your accountant to utilise against your previous Capital Losses

UK based equity so FX fees and trading fees apply

If you need to sell and the Investment Trust is selling at a Discount, you would lose potentially big money. This wouldn’t be good because you would be selling at a lower price than the Net Asset Value (NAV)

Total fees can be c1-4% per year (and can be hard to get a definitive on the fees due to the opacity of some of them)

If you read some of the disclosures and Key Investor Documents these companies make it very clear that they are not intended for ‘retail investors’ they are designed for institutional investors

These same KIDs show total yearly fees of over 3.9% (in fund fees alone), when ‘performance fees’ are included

mortis43

Thank you so much for this

Markus Antonius

Why are volumes for accumulative ETFs so low on Degiro? These seem like the better option to me over distributative ones.

I want to buy a Nasdaq ETF Acc ETF (Invesco EQQQ NASDAQ-100 UCITS ETF EUR Hdg Acc) but the volumes are so low it's putting me off it. (Acc ~50 whereas Dist ~1000 volume)

a_squirrelman

https://www.boards.ie/discussion/comment/118534850#Comment_118534850

IE00BYVQ9F29 has decent volume.

Markus Antonius

https://www.boards.ie/discussion/comment/118535185#Comment_118535185

That's more like it, thanks!

SnowyMuckish

https://www.boards.ie/discussion/comment/117891869#Comment_117891869

Complete beginner and I’ve just spent the last few months learning about ETFs.

So are ETFs a waste of investment now? What should one do instead?

Shedite27

https://www.boards.ie/discussion/comment/118552341#Comment_118552341

definitely not a waste of investment. You're only taxed on the profits, so it's making you profits regardless.

A lot of this forum prefer to invest in Investment Trusts. Similar to ETF's in some ways but different tax treatment if you're holding for more than 8 years. There's a thread explaining them here: https://www.boards.ie/discussion/2058183673/investment-trust-watch#latest

Other option would be to go the individual stock route, Learn App by MyWallSt is a good way to get started if you want to learn about that

SnowyMuckish

Thanks shedit, I must start looking into Investment Trusts next!

I’ve only caught the investment bug since I joined Revoult 😂 but I don’t want to actually commit my money to anything yet until I educate myself a bit on what I’m doing. I find investopedia a great source for answering questions about general investment. Does anyone know of any other good educational sources that I could look into? (Apologies if this has been asked here before, I haven’t had a chance to read through here yet).

I was looking at individual stocks first when I started my research but I felt ETFs seemed a safer option as you get exposure to the industry you like but with less risk compared to individual stocks.

If you invest in an ETF based on a particular industry as opposed to a general one following the market like s&p500 do you get a full list of what you’re investing in? If so what would stop you taking that list and just investing in those stocks yourself? Is this where the cost effectiveness of ETFs come in?

My ever evolving plan was an initial lump sum and 5% of income into a pot until it grows enough then split once a year ( due to complicated looking tax calculations of having to do it monthly) into a few different areas:

s&p500

a renewable energy ETF

a Electric Vehicle ETF

Tech ETF

Anyone got any thoughts on that as a plan?

massdebater

https://www.boards.ie/discussion/comment/118553327#Comment_118553327

If you use Trading212, you can create your own investment "pie" which is the same as making your own ETF (but not taxed so heavily). Over the last few years, the majority of gains from the S&P500 came from the top few companies so you could create a pie with the top 10 or something like that and be done with it. SPY is the main S&P500 ETF if you're researching, you can easily check what their top holdings are. Remember that past performance doesn't mean it will necessarily continue, but it can be useful as a starting point. Best of luck with it!

Shedite27

https://www.boards.ie/discussion/comment/118553327#Comment_118553327

I can't reccomed the Learn app highlight enough, takes about 2 hrs to get through all the tutorials and great base knowledge.

You could of course get the components of the ETF and do it yourself but it'd be a lot of work, rebalancing if any one stock gets too big etc. Most ETF's list the top 10 biggest holdings, some like Ark list every single holding

I like the idea of sector specific ETF's especially for trends you aren't clear on. IT security for example is one that I couldn't tell you the difference between a few competitors so buying the whole basket of them makes sense.

Brad48

Hello, I am a new investor and am just wondering what tax implications are on normal US stocks here in Ireland, I saw it was 20% including withholding tax and now I see it may have increased to 25%, can anybody clarify this to me as I have a hard time finding it online, thanks

Shedite27

https://www.boards.ie/discussion/comment/118562078#Comment_118562078

Any dividends you get from it are taxed as income.

Any profit you make when you sell the stock is CGT so taxed at 33%

Brad48

Thank you!!, one other thing to confirm on dividends, do I just have to pay income tax on them or is it usc and Prsi too?

agoodpunt

AAPL

Is an annual pension fee charge of 1% the norm?

Shedite27

https://www.boards.ie/discussion/comment/118562404#Comment_118562404

It counts as all your income, so yeah you'd have to pay all of it. If you earn a salary of 50k and get 5k dividends, your income for tax purposes is now 55k

Shedite27

https://www.boards.ie/discussion/comment/118562427#Comment_118562427

.75% is the standard charge, though every company has different charges to make their money. Some charge a fixed fee €3.50 per month, and there's different charges for different funds, passive (track the index) funds should be cheapest.

Brad48

Perfect, thanks for the information bud, much appreciated 👌

https://www.boards.ie/discussion/comment/118563706#Comment_118563706

peacock20

I have been listening to The Psychology of Money, can be found on Spotify. About half way through, and really enjoying it. From what I am hearing, he seems to be saying, "buy the market, all the time, when good or bad, and just leave it". I get that, it would be my preferred method, but not what I'm doing. I am in individual stocks, which he is not against, but says to not expect miracles from it.. The bloody ETF situation here has me tormented. Every so often my mindset switches to " should I sell all (very little), and just buy ETFs, and deal with the headache of taxes? Just buy Berkshire maybe?

Someone on here says the ETFs and taxes thing is no big deal, easily tracked. Shedite maybe? Apologies if wrong.

Can someone please convince me to take the plunge!!

Enjoyable book, give it a read/listen.

HillCloudHop

https://www.boards.ie/discussion/comment/118484715#Comment_118484715

Most of larger investment trusts have fees much lower than 1%.

SMT is 0.34% and JAM is 0.33% for example. Neither have additional performance fees either.

That's quite reasonable for active management.

JAM and FCIT are the safest investment trusts as they track their respective benchmarks quite well and are quite diversified.

embraer170

https://www.boards.ie/discussion/comment/118555388#Comment_118555388

Which Learn app is this?

Shedite27

https://www.boards.ie/discussion/comment/118579422#Comment_118579422

https://learn.mywallst.com/

FastFullBack

For people investing in individual shares and ETFs are you guys also maxing out pension (with pension in global equity)

Or some people against pensions?

Patsy167

https://www.boards.ie/discussion/comment/118589584#Comment_118589584

There's a great flow chart on Reddit that walks through the best option for Irish investors and how pensions come into it - https://i.redd.it/kpxp9c7bdgd61.jpg

Shedite27

https://www.boards.ie/discussion/comment/118589584#Comment_118589584

Absolutely. If you pay basically 50% tax on your top income, then your option is €100 to your pension or pay €50 tax and €50 to your investment account. So your investment return has to gain 100% before it gets back level. Then if your employer is contributing or even matching your contributions, it could be €200 to your pension compared with €50 to your investment account. I don't care how good you are at investing, you're not making up 300% on a index ETF.

I think the YouTube channel "New Money" is very good. It has a focus on value investing.