Vanguard Index Funds

Johnny Favourite

I am opening an account with zecco where I hope to put about $3000 per month into three different index funds.

Emerging Markets, Total World Stocks and a retirement fund linked to my age.

My question is.. what are the tax implications?

Will the US tax me on any earnings?

Will I have to declare my earning every year to the Irish Inland revenue and pay them?

Or do I only pay tax when I sell shares in these funds?

Does this method of investing make sense or could you recommend a better way to invest in broad based index funds??

Any advice would be greatly appreciated.

JF

willietherock

Are you talking about Vanguard etfs or index funds? If its the funds I'd love to know how an Irish person can get access to them. Are these available in euro currency?

Johnny Favourite

As the title says they are index funds not ETFs.

On the American sites like etrade and zecco you can look them up and there is an option to buy so I had presumed that was one way you could do it.

If any of the more experienced investors on here would like to chip in on whether this way of accessing these funds is a good idea or not it would be greatly appreciated.... and any ideas on the tax implications??

Jim2007

Johnny Favourite wrote: »

As the title says they are index funds not ETFs.

On the American sites like etrade and zecco you can look them up and there is an option to buy so I had presumed that was one way you could do it.

If any of the more experienced investors on here would like to chip in on whether this way of accessing these funds is a good idea or not it would be greatly appreciated.... and any ideas on the tax implications??

I don't really understand why a European would want to adapt this strategy???

- Firstly these funds are designed for the American tax system, in many cases these funds pass on the gains or losses to the individual members of the fund with each transaction fund makes and this kind of stuff is going to make it very complicated for you as an Irish Resident.

- Secondly I doubt that these funds can legally offered to non residents, even if you are able to buy them, you may find that your legal rights are limited or even non existent!

- Then there is the question of pumping large amounts of money in an internet operation that is unregulated by the financial watch dogs in Europe: if anything goes wrong what are your rights and how will you be able to enforce them??

- On top of all that is the massive exposure to the dollar that you will build up over time, or are you planning to hedge that???

Unless you are an American, planning to retire there, I really don't see the merits of this

Jim.

Johnny Favourite

Thank you Jim for your input.

I don't want to incur the expenses of of actively managed mutual fund. From my research they rarely beat the market anyway. I do not have the time or the expertise to pick individual stocks and build up a portfolio that way. So I wanted to get exposure to the stock market by investing in board based index funds like the ones I mentioned.

The only place I could find them were in the states and Vanguard in particular had some some funds that really appealed to me.

I have taken what you have said on board and am very grateful.

Would you have any advice on how a European could go about investing in similar funds without having to go through American sites or being so tied into the fortunes of the US dollar??

willietherock

Johnny Favourite wrote: »

Thank you Jim for your input.

I don't want to incur the expenses of of actively managed mutual fund. From my research they rarely beat the market anyway. I do not have the time or the expertise to pick individual stocks and build up a portfolio that way. So I wanted to get exposure to the stock market by investing in board based index funds like the ones I mentioned.

The only place I could find them were in the states and Vanguard in particular had some some funds that really appealed to me.

I have taken what you have said on board and am very grateful.

Would you have any advice on how a European could go about investing in similar funds without having to go through American sites or being so tied into the fortunes of the US dollar??

Broad based etf, euro denominated.
Ishares, dbx trackers, usb , lyxor are main service providers. Try and keep expenses i.e ter/broker cost/bid spread, to less than 1% cost. Pick etf with dividend reinvested option. Dollar cost average over long term = v good retirement nest egg.

p.s if you or anyone else knows how Vanguard mutual index funds are available to Irish citizens please let me know.

ixus

Be careful on your Emerging Markets investments for the moment. You may believe in the Random Walk theory but putting money into Middle East or African EM's is foolish given their present state. If you look at Brazil, they are constantly raising rates trying to turn off the hot money flows.

While you may not want to pick stocks etc, you should still be protective of your money. No one cares more about your money apart from the people who want it.

hmmm

willietherock wrote: »

p.s if you or anyone else knows how Vanguard mutual index funds are available to Irish citizens please let me know.

Vanguard will take on Irish clients, last time I looked they were looking for 100k minimum investment.

The ETFs are a good substitute.

Johnny Favourite

Hello IXUS and thank you for your input.

Yes, your right I do follow the random walk theory and it's also convenient for someone without the time or expertise to build up a portfolio by picking individual stocks.

I take what you said on board about EMs. Have you any thoughts which indexes you might recommend at this time??

Nappy

Hi,

reopening an old thread here. Have vanguard funds become more available to irish citizens? And if not what are alternatives for irish/European investors? Is 100k still the minimum?

Any advice would be much appreciated

Cheers

phantom_lord

Nappy wrote: »

Hi,

reopening an old thread here. Have vanguard funds become more available to irish citizens? And if not what are alternatives for irish/European investors? Is 100k still the minimum?

Any advice would be much appreciated

Cheers

No I still don't think they're readily available here. Find it hard to believe that it's so difficult to set up a PRSA with just extremely cheap trackers.

Blacktie.

You can access vanguard funds through a broker.

amadain

Blacktie. wrote: »

You can access vanguard funds through a broker.

But what are the likely broker fees ?

Interesting article here

http://www.bloomberg.com/news/articles/2015-12-01/vanguard-s-gain-is-wall-street-s-pain-as-billions-leave-the-financial-industry

lcwill

Buy Vanguard ETFs