Beginning to Invest - All questions go here please

MidnightQueen

I'm new to investing. Lots of recommendations to use DeGiro as a platform. I'm looking to invest a small sum in American shares. Is DeGiro the best for that? I understand theres capital tax on that too for 30% if you eventually sell your shares. Help much appreciated.

Jim2007

MidnightQueen wrote: »

I'm new to investing. Lots of recommendations to use DeGiro as a platform. I'm looking to invest a small sum in American shares. Is DeGiro the best for that? I understand theres capital tax on that too for 30% if you eventually sell your shares. Help much appreciated.

You'd probably want to define what a small about is.... you need to remember that nothing is free, look at what the cost acquiring the shares plus the holding costs, plus and related taxes and remember who have to clear that amount to start to benefit.

beggars_bush

I'm looking for an investment product that is relatively safe for 2-3 years

anyone got any suggestions?
would a product that primarily invests in bonds issued by eurozone governments and bond-based financial instruments be a sound bet?

Bob24

beggars_bush wrote: »

I'm looking for an investment product that is relatively safe for 2-3 years

anyone got any suggestions?
would a product that primarily invests in bonds issued by eurozone governments and bond-based financial instruments be a sound bet?

If you want bonds for a 3 years timeline, you could directly get Irish government bonds, with no management fee and no tax due on the interest: https://www.statesavings.ie/our-products/3-year-savings-bond

Now just a word of warning: while you are right that government bonds are usually considered very safe, they are debt owed to you and with the coronavirus situation and the recession which is on the way governments seem to be spending like there is no tomorrow with no consideration for balancing budgets. If one day debt becomes unsustainable and at an election the winning candidate is the one saying “burn the creditors” - one of those creditors will be you.

dxhound2005

Bob24 wrote: »

If you want bonds for a 3 years timeline, you could directly get Irish government bonds, with no management fee and no tax due on the interest: https://www.statesavings.ie/our-products/3-year-savings-bond

Now just a word of warning: while you are right that government bonds are usually considered very safe, they are debt owed to you and with the coronavirus situation and the recession which is on the way governments seem to be spending like there is no tomorrow with no consideration for balancing budgets. If one day debt becomes unsustainable and at an election the winning candidate is the one saying “burn the creditors” - one of those creditors will be you.

If that happens, then we are all truly sunk. Anyway I think they are not the sort of bonds people are asking about. And they want some better return than €10,000 turning into €10,100 after three years.

Are my State Savings products (including Prize Bonds) guaranteed?
The repayment of all State Savings money, including Prize Bonds, is a direct, unconditional obligation of the Irish Government. When you save with State Savings you are placing your money directly with the Irish Government. State Savings forms part of the sovereign debt of Ireland which is managed by the National Treasury Management Agency (NTMA).

Bob24

dxhound2005 wrote: »

If that happens, then we are all truly sunk. Anyway I think they are not the sort of bonds people are asking about. And they want some better return than €10,000 turning into €10,100 after three years.

What do you have in mind in terms of what the OP was asking about? They mentioned they were looking at eurozone government bonds. At the moment even much more risky greek bonds won't offer much better yield than state savings products once you take the tax advantage into account, so if EZ gov bonds is what they are after I think state savings is a good place to start.

The only way I ca thing of to get significantly better return with EZ gov bonds is by betting on were interest rates are going, and reselling the bonds with a profit at a latter stage (i.e. relying on capital appreciation rather than interests), but this becomes speculation and I don't believe this is what the OP is looking for. And if that was the idea, I don't think I would go for EZ bonds - I'd pick bonds for countries which still have somehow positive interested rates and for which there is more opportunity for rates to go lower.

And it is for another thread I guess, but IMO debt haircuts are a real possibility in the coming few years.

Jim2007

Bob24 wrote: »

And it is for another thread I guess, but IMO debt haircuts are a real possibility in the coming few years.

Absolutely not on government bonds, corporate bonds is a different matter.

Bob24

Jim2007 wrote: »

Absolutely not on government bonds, corporate bonds is a different matter.

Debt was already unsustainable for some governments before the virus situation, and the current spendings are massive what tax collection will drop massive, this will call for debt relief mechanisms. It don't have to be haircuts/defaults (although I still thing it will be on the table for some countries - Greece and Italy probably being at the top of the list), it could also be very negative real interest rated once inflation is taken into account (what at the end of the day is not dissimilar to a haircut as far as the impact on the purchasing power of bondholders is concerned).

dxhound2005

Bob24 wrote: »

What do you have in mind in terms of what the OP was asking about? They mentioned they were looking at eurozone government bonds. At the moment even much more risky greek bonds won't offer much better yield than state savings products once you take the tax advantage into account, so if EZ gov bonds is what they are after I think state savings is a good place to start.

The only way I ca thing of to get significantly better return with EZ gov bonds is by betting on were interest rates are going, and reselling the bonds with a profit at a latter stage (i.e. relying on capital appreciation rather than interests), but this becomes speculation and I don't believe this is what the OP is looking for. And if that was the idea, I don't think I would go for EZ bonds - I'd pick bonds for countries which still have somehow positive interested rates and for which there is more opportunity for rates to go lower.

And it is for another thread I guess, but IMO debt haircuts are a real possibility in the coming few years.

The confusion, if there is any, is that a product which is a straight savings product with a fixed 1% return after 3 years, has the word Bond in its title. And as a NTMA savings product, it is unconditionally guaranteed by the Government.

Anyone who wants to know about savings products can see the details on the State Savings site. They can tie up their money for various periods, up to 10 years if they judge it to be wise. Nobody can second guess what will happen in the future.

Or if they want to save with the banks, this list of Best Buys is kept up to date.

https://www.askaboutmoney.com/threads/savings-best-buys.90481/

Jim2007

Bob24 wrote: »

Debt was already unsustainable for some governments before the virus situation, and the current spendings are massive what tax collection will drop massive, this will call for debt relief mechanisms. It don't have to be haircuts/defaults (although I still thing it will be on the table for some countries - Greece and Italy probably being at the top of the list), it could also be very negative real interest rated once inflation is taken into account (what at the end of the day is not dissimilar to a haircut as far as the impact on the purchasing power of bondholders is concerned).

It will not happen to with government bonds because they would just be shooting themselves in the foot. Do a bit of actual research into bond ownership, institutions required to hold government bonds etc.... it would be a pointless exercise.

Bob24

Jim2007 wrote: »

It will not happen to with government bonds because they would just be shooting themselves in the foot. Do a bit of actual research into bond ownership, institutions required to hold government bonds etc.... it would be a pointless exercise.

I am aware of regulatory requirements forcing some institutions to hold government bonds, but you might also have came across a few of those points while doing your research:
- EZ bonds have seen haircuts before: Greece. So even without making assumptions on the future, it simply is stating a fact to say that haircuts on EZ bonds can happen (and it would be factually incorrect to say it can't happen).
- Outside the EZ we have seen defaults in the past few weeks (for exemple Lebanon recently defaulted *for the first time in its history*).
- We are entering very special times and in the last few weeks a lot of things which were never supposed to happen have happened in global financial systems or with government budgets.

So of course those decisions wouldn't be taken lightly, but IMO it would be naive to think haircuts/defaults simply can't happen and that any money put in a government bond is 100% safe.

Plus as I said, near-zero interest rates combined to inflation (which I think might come in the medium term) would be another way to effectively reduce the actual purchasing power of creditors once they see their money back. Not technically defaulting but similar outcome for the creditor.

But going back to my original post, this was just an informational side warning to the OP so that they are clear on what bonds are and can do their own research and make up their own mind about that potential risk of they want to. I wasn't telling them not to get bonds or that all governments are about to default.

Mantis Toboggan

So I'm thinking of investing 5-10k in the stock market. Did this a little in the past and got slightly burned so this time I've done a good bit of research into a number of companies. Question is would I be better dividing this between stocks and ETF's? No very little about ETF's.

garbanzo

Interesting to note since the whole Covid-19 business started:

1. My personal equity portfolio of six shares is down 50%

2. My pension fund is down 20%

I know the reasons behind this. Just interesting to see it in fact and thought to share my experience. I’ve about 10 years or so for these to hopefully recover so I’m not over-worried about it. Fingers crossed and all that... ��

Cheers

garbanzo

Bob24

garbanzo wrote: »

Interesting to note since the whole Covid-19 business started:

1. My personal equity portfolio of six shares is down 50%

2. My pension fund is down 20%

I know the reasons behind this. Just interesting to see it in fact and thought to share my experience. I’ve about 10 years or so for these to hopefully recover so I’m not over-worried about it. Fingers crossed and all that... ��

Cheers

garbanzo

If you are 10 years from retirement and on a default strategy, I assume a decent part of you pension is on defensive stocks and bonds, and a small portion even possibly possibly on a cash fund?

Mad_maxx

Mantis Toboggan wrote: »

So I'm thinking of investing 5-10k in the stock market. Did this a little in the past and got slightly burned so this time I've done a good bit of research into a number of companies. Question is would I be better dividing this between stocks and ETF's? No very little about ETF's.

if it was me , id buy half now and then wait another six months to invest the rest , if the virus situation has resolved itself and stocks are much higher , thats a good result , it means you bought value today but also you can buy more without having to look over your shoulder

id wait a week before buying now however , the market appears to be retesting the lows from around st patricks day , better if you get in several percent lower

personally id consider the following sure thing companies in terms of what will always be with us

coca cola ( has a really good dividend and people will still drink coke albeit at home if need be )

johnson and johnson , again they have a very good dividend and are more or less recession proof

google = stock is back a good bit , they have a boat load of cash to weather this crisis

nestle = as safe a company as is out there , it wont treble in value but will allow you sleep at night soundly

volkswagen ( id wait until it drops to 80 euro again ) , cars are not going away , it and toyota are the worlds largest car makers by a mile but VW is in euro where as with toyota you are buying the expensive japanese yen

amazon = will emerge even more powerful after this crisis reseeds

Bob24

Mad_maxx wrote: »

nestle = as safe a company as is out there , it wont treble in value but will allow you sleep at night soundly

Good company for sure, but am I wrong in thinking the Swiss are very punitive for non-residents in terms of taxing dividends?

Ciaran10014

Hi, I am trying to sell shares on degiro and keep getting the message: "The maximum quantity of open orders allowed on this instrument is 0. Please delete some of your pending orders before placing an additional one on this instrument." does anyone know what I am doing wrong? I don't have any outstanding orders. The stock is National American University Holdings (NAUH). Thanks

Shedite27

Ciaran10014 wrote: »

Hi, I am trying to sell shares on degiro and keep getting the message: "The maximum quantity of open orders allowed on this instrument is 0. Please delete some of your pending orders before placing an additional one on this instrument." does anyone know what I am doing wrong? I don't have any outstanding orders. The stock is National American University Holdings (NAUH). Thanks

I can't find that stock on Degiro (basic package), did you buy it throguh degiro?

Ciaran10014

Shedite27 wrote: »

I can't find that stock on Degiro (basic package), did you buy it throguh degiro?

Yeah I bought it maybe about a year ago and haven't looked at my degiro account since.

Ciaran10014

This is it in my portfolio

Jim2007

Bob24 wrote: »

Good company for sure, but am I wrong in thinking the Swiss are very punitive for non-residents in terms of taxing dividends?

As per the double tax agreement - 15% withholding tax offset in the usual way... if non resident.

if resident, it is treated as normal income and taxed at the normal income tax rate - we don't have progressive tax rates. And capital gains from investing are tax exempt.

Shedite27

Ciaran10014 wrote: »

This is it in my portfolio

I can see that's on the Acra index, I can't see any shares listed on that when I search through the Product --> Shares route.

Looks like something to do with the Index rather than just your shares anyway.

Jim2007

Ciaran10014 wrote: »

Yeah I bought it maybe about a year ago and haven't looked at my degiro account since.

Presumably you bought it before it got kicked to the kerb. Look through the notices you received from the broker, there may be something in there telling you what to do or contact support.

Bob24

Jim2007 wrote: »

As per the double tax agreement - 15% withholding tax offset in the usual way... if non resident.

Not sure I fully get you.

Switzerland has a 35% withholding tax on dividends right?

So what we’re saying is that for and Irish tax resident 20% can be offset against Irish income and 15% are “lost” to the Swiss government?

Jim2007

Bob24 wrote: »

Not sure I fully get you.

Switzerland has a 35% withholding tax on dividends right?

So what we’re saying is that for and Irish tax resident 20% can be offset against Irish income and 15% are “lost” to the Swiss government?

No the Swiss withhold tax rate is 15% for Irish residents. So the Swiss company will distribute 85% of the declared dividend. I don’t know if Irish law requires the broker to apply additional withholding taxes before the cash hits your account.

I don’t believe the 15% is lost as you say. I expect you either get a credit for it against your taxation or it is treated as an investing expense. It should be no different from the dividends you receive from other foreign companies.

Bob24

Jim2007 wrote: »

No the Swiss withhold tax rate is 15% for Irish residents. So the Swiss company will distribute 85% of the declared dividend. I don’t know if Irish law requires the broker to apply additional withholding taxes before the cash hits your account.

I don’t believe the 15% is lost as you say. I expect you either get a credit for it against your taxation or it is treated as an investing expense. It should be no different from the dividends you receive from other foreign companies.

Are you absolutely positive about 15% withholding tax?

I had done some googling a few weeks ago as I was considering Nestlé shares and all the sources I came across were mentioning 35%, for example:
- https://www.pkf.com/media/10028480/switzerland-tax-guide-2016-17.pdf - "Dividends paid from Swiss capital companies to Swiss residents and non-residents are subject to 35% withholding tax"
- https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-switzerlandhighlights-2019.pdf - "Dividends paid to a nonresident are subject to a 35% withholding tax"
- https://sigtax.com/en/dividend-tax-switzerland - "Dividends and interests are a subject of the withholding tax, at a rate of 35%"

Jim2007

Bob24 wrote: »

Are you absolutely positive about 15% withholding tax?

I had done some googling a few weeks ago as I was considering Nestlé shares and all the sources I came across were mentioning 35%, for example:
- https://www.pkf.com/media/10028480/switzerland-tax-guide-2016-17.pdf - "Dividends paid from Swiss capital companies to Swiss residents and non-residents are subject to 35% withholding tax"
- https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-switzerlandhighlights-2019.pdf - "Dividends paid to a nonresident are subject to a 35% withholding tax"
- https://sigtax.com/en/dividend-tax-switzerland - "Dividends and interests are a subject of the withholding tax, at a rate of 35%"

Article II, Section 2 of the Double Tax agreement:

https://www.newsd.admin.ch/newsd/message/attachments/25548.pdf

The best is to ask your broker how they apply it.

(Seems a bit strange that no one else has chipped in... surely someone here, must own a Swiss MNC and got dividends?)

Mantis Toboggan

Quick question that someone maybe able to help with.

So I've a few CRH shares and got the dividend payments today. The dividend rate is 63 cent per share which I knew about but when I check it on yahoo finance it lists the rate at 83?

Just slightly confused and wondering should I be trusting the info on yahoo?

AlmightyCushion

Mantis Toboggan wrote: »

Quick question that someone maybe able to help with.

So I've a few CRH shares and got the dividend payments today. The dividend rate is 63 cent per share which I knew about but when I check it on yahoo finance it lists the rate at 83?

Just slightly confused and wondering should I be trusting the info on yahoo?

Dividend withholding tax for Irish companies is 25%. It could be that.

Bob24

Jim2007 wrote: »

Article II, Section 2 of the Double Tax agreement:

https://www.newsd.admin.ch/newsd/message/attachments/25548.pdf

The best is to ask your broker how they apply it.

(Seems a bit strange that no one else has chipped in... surely someone here, must own a Swiss MNC and got dividends?)

To complicate the matter more my broker is neither based is Ireland nor in Switzerland so I’m not sure they’ll be to interested in discussing Irish-Swiss tax treaties, but I’ll drop them a message and see what they say! (Although I fear they will give a vague answer so that they don’t commit to anything ...)