Financial Advisor

slyph

Did you decide on a third index / revised buying strategy ? If so, what is your reasoning ?

topper_harley2

slyph wrote: »

Did you decide on a third index / revised buying strategy ? If so, what is your reasoning ?

Yeah gonna go with the EuroSTOXX 50. Reasons are same as outlined previously in reply to FURET. I chose the 50 over the 600 due to the lower TER.

New allocation split is

IWDA - 50%. TER = 0.2%
EuroSTOXX 50 - 17%/ TER = 0.25%
Euro Bond - 33%. TER = 0.05%

Total weighted TER is
(0.5 * 0.2) + (0.33 * 0.25) + (0.17 * 0.05) = 0.191%

Buying strategy revised to buy once every three months:
IWDA - 1500
STOXX50 - 500
Bond - 1000

This gives buying expense of
IWDA - E2 + 0.02% of 1500 = E2.30
STOXX50 - E2 + 0.02% of 500 = E2.10
Bond - E2 + 0.02% of 1000 = E2.02

Total = E6.42, which is .214% of the captial being bought.

dalalada

Right so my elder peoples. I am ten years younger than ye (24) with 30k in cash and I want to get it out of the credit union and into something for the long term. There is no debt on this its just savings.

To complicate matters I am moving to england next week to work for the year where i have set up a bank account and working basics etc (possibilty of taking the 30k and converting it into £?).

One More Toy

dalalada wrote: »

And on this would i be mad to invest straight into a stock like netflix or tesla? One thats high risk but in 20 years would be smiling!

Yes you would be mad. Have a look through all the pages here first. Then bring questions

daheff

can anybody recommend a good tax/financial adviser (west dublin area ideally but could travel a bit further afield if required)?

got a few CGT liabilities from profitable trades that I'm hoping to limit and wanted to talk with somebody to see if/how i could do this (legally).


thanks

ixus

daheff wrote: »

can anybody recommend a good tax/financial adviser (west dublin area ideally but could travel a bit further afield if required)?

got a few CGT liabilities from profitable trades that I'm hoping to limit and wanted to talk with somebody to see if/how i could do this (legally).


thanks

Any losses? You can offset losses v profit. You can carry forward losses from previous years i.e. if you had a loss last year v profit this year. Can not carry forward profit and use against losses next year.

That's one place to start looking.

daheff

ixus wrote: »

Any losses? You can offset losses v profit. You can carry forward losses from previous years i.e. if you had a loss last year v profit this year. Can not carry forward profit and use against losses next year.

That's one place to start looking.

I'm lucky enough not to have any losses carried fwd 😀


Thanks though.

elgriff

topper_harley2 wrote: »

Depending on your age you can contribute much more than 4%. 30-39 year-olds can contribute up to 20% of your salary excluding employer contributions. This is what I've done. My pension is 3% and 6%, but I contribute 20%. The AMC on my pension is .45%.

Investing outside of pension is not the most tax efficient as you can see based on tax. Conversely, your money is locked up if you use AVCs though so its a matter of preference. I'm doing both.

Are you sure it is not *including* employer contributions?

topper_harley2

elgriff wrote: »

Are you sure it is not *including* employer contributions?

No its on your own contributions. Double and triple checked this with pension guy in work.

thirtythirty

This has been an interesting read.
One question Topper (or others), how do you balance directing current income flows into longer term investments as discussed, versus shorter term items.

Specifically I have about the same bandwidth as you Topper in terms of income to divert, but I do not send it into AVCs as I do not yet have enough for a house deposit and would expect to be heavily saving for another 2 years before being able to properly consider other investment vehicles.
Would I be better off ploughing full steam ahead into a mortgage deposit and get it done "faster" so as I can then focus on proper investments, or should I split 50/50 now and take longer to build up a deposit (and risk being "life ready" before being monetarily ready for a house) but avail a small bit more, say 10% salary, of the compound interest / tax benefit of an AVC now?

topper_harley2

Hard to say really, very much personal choice. The longer you're invested the better. I'm now saving for deposit and decided to split 75/25 deposit/savings. Basically concentrating on deposit but keeping saving ticking over at same time.
My investing is from previously built up lump sum, which will be fully invested over number of years while saving for deposit and I'll ramp back up then with new investment money once deposit is done. That's my plan anyway.

thirtythirty

Grand thanks I guess that sort of echoes what I was thinking - worth putting some more into AVCs generally but keeping the foot down on deposit saving at the same time.

I've ordered millionaire teacher in the meantime to have a look through that!

Cheers

slyph

Is a lump investment (100k) a bad idea right now with the big dips happening recently ?

I know it's normally said that during a dip you should just keep buying and ride it out.... but what if now you do an initially 100k lump investment and can only do further buying at say 1k/month ? Your subsequent buying is so minor it seems.....

topper_harley2

slyph wrote: »

Is a lump investment (100k) a bad idea right now with the big dips happening recently ?

I know it's normally said that during a dip you should just keep buying and ride it out.... but what if now you do an initially 100k lump investment and can only do further buying at say 1k/month ? Your subsequent buying is so minor it seems.....

No idea. Nobody can answer first question with any certainty.

jive

slyph wrote: »

Is a lump investment (100k) a bad idea right now with the big dips happening recently ?

I know it's normally said that during a dip you should just keep buying and ride it out.... but what if now you do an initially 100k lump investment and can only do further buying at say 1k/month ? Your subsequent buying is so minor it seems.....

Wait until it appears the dip is over. Investing 100k now is much better than doing it last week. If you're in it for the long haul just look at it as buying at a discount. Even if it dips further after you buy, it will likely come back up. Obviously, there is no guarantee but history tends to repeat itself.

As topper Harley said, no1 can answer your question definitively.

thirtythirty

Halfway through the book and doing some side reading as well.

One question I have burning in my mind though is whether potential gains made through low ETF fees and self managing are wholly eaten away by both CGT every 8 years and tax on dividends (which seems to apply regardless of whether the ETF is distributing or accumulating). Plus additional transaction fees on top of that if you re-invest any dividends that are distributed.

Any quick maths or views that would validate / disprove this concern?

Additionally would you be subject to any dividend witholding tax from a US index, or if the ETF was domiciled in Ireland would you only be dealing with the above headache?

Edit: Regardless of the costs, this thread makes it look like it would become a nightmare to manage once the 8 years are up - each investment in the fund is seen as a different product purchase meaning after 8 years, every year you'd need to be tallying up your monthly purchases and working out CGT on that total. Is it really that messy?

robp

thirtythirty wrote: »

Halfway through the book and doing some side reading as well.

One question I have burning in my mind though is whether potential gains made through low ETF fees and self managing are wholly eaten away by both CGT every 8 years and tax on dividends (which seems to apply regardless of whether the ETF is distributing or accumulating). Plus additional transaction fees on top of that if you re-invest any dividends that are distributed.

Any quick maths or views that would validate / disprove this concern?

Additionally would you be subject to any dividend witholding tax from a US index, or if the ETF was domiciled in Ireland would you only be dealing with the above headache?

Edit: Regardless of the costs, this thread makes it look like it would become a nightmare to manage once the 8 years are up - each investment in the fund is seen as a different product purchase meaning after 8 years, every year you'd need to be tallying up your monthly purchases and working out CGT on that total. Is it really that messy?

It is impossible to really check this as no one knows how the indexes will perform in the coming years. I have checked hypothetical scenarios and from what I can see UCITS ETFs have a serious tax disadvantage but that disadvantage can be minimised by using accumulating ETF. Deciding to go for UCITS ETFs basically boils down to how much you think a passive fund will out perform your basket of stocks. I can't remember the exact amount of out performance needed for the ETFs to beat the stocks after tax but it is pretty easy to calculate.

thirtythirty

I'm probably calculating it wrong, but by my calcs if the ETF outperformed the AVC by 1% each year (7% vs 8%), it only outpaces the AVC in year 30 (on the assumption €100 ETF = €140 AVC). Then when you lump on CGT, it takes 35 years for it to outpace it. I assumed fees of 0.05% and 0.65% for the ETF and AVC. However if you can outpace it by 2% then it only takes 15 years to outpace.

All assuming CGT doesn't increase (as it has done 4 or 5 times over the last decade...).

I'll do a bit more research I think

topper_harley2

thirtythirty wrote: »

One question I have burning in my mind though is whether potential gains made through low ETF fees and self managing are wholly eaten away by both CGT every 8 years and tax on dividends (which seems to apply regardless of whether the ETF is distributing or accumulating). Plus additional transaction fees on top of that if you re-invest any dividends that are distributed.

How can you pay tax on dividend if the ETF is accumulating? You never get any dividend (its re-invested automatically) so how could you even declare it?

thirtythirty

Ye that was my initial thought but then In read somewhere on askaboutmoney that you might have to. Probably not the case though.

My main concern though is the complexity from year 8, 9, 10 onwards etc if you're having to calculate specific gains from the monthly investments you've been adding each year, and separating those specific gains out from the compounded interest of every other addition you've made, as I don't think you do it once at the 8 years and it "resets" for 8 more. Plus you'd be reducing your capital every year just to pay the CGT, massively slowing growth. It seems like crazy punitive treatment of ETFs.

Frogdog

By this time 8 years in the future, I'd be confident that the laws in Ireland regarding investing in and tax of ETFs will have been streamlined with the rest of the world.

thirtythirty

Very true. It seems like Revenue have made a mess of it at the moment and I would not like to be on their receiving end when the current structure starts getting people in a mess as deemed disposal times start racking up!
It's impossible to know what my situation will be at that stage so can worry about how it's handled closer to the time.

Topper I have just realised I posted in a similar thread in AAM but I actually think it was yours via a different username! No need to respond to it.

One More Toy

Quick question guys

I have switched to investing in IBCI and IWDE every month.

However IBCI is a bit prohibitive being almost €200 a share, makes it a little harder to rebalance.

Any other EUR bond ETFs out there you would recommend?

jive

Who is the best broker to go with when investing lump sums into ETFs every 6 months or so with regards to both fees and hassle? Degiro looks good but not sure about the whole lending/non-lending situation and how that works.

topper_harley2

Frogdog wrote: »

By this time 8 years in the future, I'd be confident that the laws in Ireland regarding investing in and tax of ETFs will have been streamlined with the rest of the world.

Late reply I know............how I'd love to believe this. However, I am now seriously thinking about selling both my bond and EuroStoxx ETFs and retaining just the IWDA world equity ETF (using regular deposit accounts as the fixed income part of portfolio). I may also investigate US/Canada domiciled ETFs, but the whole dividend & withholding tax sounds like awful pain.

The tax situation with UCIT ETFs is just not acceptable i.e. specifically, if ETF A is up 10K and ETF B is down 10K (on deemed or actual disposal) you have to pay 41% tax on ETF A profit, leaving you at a E4100 quid loss.

If in future they do change it i'd buy back in, but for now I think having a portfolio with multiple UCIT ETFs is just silly.

Any thoughts?