Small investment in ETF

David900

Not sure if this deserves a thread on its own but I'd looked around and didn't see an appropriate place to put it.

Basically, as the title alludes to, I'd like to gain equity exposure through an EFT (possibly on an index such as the S&P 500). Ideally I'd like to invest a small amount of money (€1-3k) and just let it sit there. The problem I'm having is that online brokers seem to charge quarterly or annual fees (Stockwatch around €50 pa and TDWaterhouse something similar) which would greatly reduce the return received, if any was left. I'm looking for solutions to the above problem but very willing to listen to suggestions.

Just to give a bit of background, this would be my first foray into investment and I'm looking for a passive investment as I can't dedicate large amounts of time to it.

bear_hunter

David900 wrote: »

Not sure if this deserves a thread on its own but I'd looked around and didn't see an appropriate place to put it.

Basically, as the title alludes to, I'd like to gain equity exposure through an EFT (possibly on an index such as the S&P 500). Ideally I'd like to invest a small amount of money (€1-3k) and just let it sit there. The problem I'm having is that online brokers seem to charge quarterly or annual fees (Stockwatch around €50 pa and TDWaterhouse something similar) which would greatly reduce the return received, if any was left. I'm looking for solutions to the above problem but very willing to listen to suggestions.

Just to give a bit of background, this would be my first foray into investment and I'm looking for a passive investment as I can't dedicate large amounts of time to it.

the premiere ETF for tracking the S+P is ( SPY) , however , a cheaper ETF which also tracks the s+p is ( VOO) , thats vanguard , who tend to offer the most affordable funds

as for the charges you mentioned , the stockbrokers have a yearly managment fee which is the same regardless of whether you buy and hold ETF,S or common stocks through them , the cost of a vanguard fund is usually less than .2 % per anum or upon entry if you buy and sell within a year

David900

bear_hunter wrote: »

the premiere ETF for tracking the S+P is ( SPY) , however , a cheaper ETF which also tracks the s+p is ( VOO) , thats vanguard , who tend to offer the most affordable funds

as for the charges you mentioned , the stockbrokers have a yearly managment fee which is the same regardless of whether you buy and hold ETF,S or common stocks through them , the cost of a vanguard fund is usually less than .2 % per anum or upon entry if you buy and sell within a year

Thanks for the reply.

The Vanguard fund seems relatively cheaper than the others I have seen.

Do you know any stockbrokers that charge on a relatively low percentage as opposed to flat rate fee, which might make this investment a possibility?

bear_hunter

David900 wrote: »

Thanks for the reply.

The Vanguard fund seems relatively cheaper than the others I have seen.

Do you know any stockbrokers that charge on a relatively low percentage as opposed to flat rate fee, which might make this investment a possibility?

yes i do , the irish based stockbrokers are by and large a rip off , goodbodies , davy , etc , davy is the better of the two but both are very expensive

i now deal with TD investing who were formerly known as TD waterhouse , they are british and london based but irish customer can avail of their online service , they are half the price of goodbody for frequent trades and cheaper for infrequent trades too

i think your right to do with an ETF , most people are not experienced enough to pick individual stocks , if you are willing to sit and wait for five to ten years or perhaps longer , an ETF provides a balanced cover of the market , personally speaking i think ETF,S are a great way to build a private pension , when you consider the fact that most banks and brokers charge 5% per anum and the investments come from the same source , i see no reason why most people couldnt manage their own pension , i know their is a tax write off but with such a huge difference in feese , i doubt its worth it

btw , their are ETF,s available to cater to individual sectors , for instance VGT covers the main tech companies like apple , microsoft , google etc , you can also buy etf,s which offer exposure to emerging markets like brazil and china though vanguard do not cover those , ishares however do with EWZ which covers brazil , i have an ETF i presently which provides exposure to the german stock exchange EWG , the likes of mercedes , simens and deutsch bank are among the companies covered

before i go , one thing which is important to be aware of , their is a big difference between ETF,s and ETN,s , ETN,s are electrical traded notes and are an instrument used in futures trading , they are strictly for pro,s , i myself lost money on one i thought provided exposure to soft commodities a few years ago

Buzzliteyear

bear_hunter wrote: »

yes i do , the irish based stockbrokers are by and large a rip off , goodbodies , davy , etc , davy is the better of the two but both are very expensive

i now deal with TD investing who were formerly known as TD waterhouse , they are british and london based but irish customer can avail of their online service , they are half the price of goodbody for frequent trades and cheaper for infrequent trades too

i think your right to do with an ETF , most people are not experienced enough to pick individual stocks , if you are willing to sit and wait for five to ten years or perhaps longer , an ETF provides a balanced cover of the market , personally speaking i think ETF,S are a great way to build a private pension , when you consider the fact that most banks and brokers charge 5% per anum and the investments come from the same source , i see no reason why most people couldnt manage their own pension , i know their is a tax write off but with such a huge difference in feese , i doubt its worth it

btw , their are ETF,s available to cater to individual sectors , for instance VGT covers the main tech companies like apple , microsoft , google etc , you can also buy etf,s which offer exposure to emerging markets like brazil and china though vanguard do not cover those , ishares however do with EWZ which covers brazil , i have an ETF i presently which provides exposure to the german stock exchange EWG , the likes of mercedes , simens and deutsch bank are among the companies covered

before i go , one thing which is important to be aware of , their is a big difference between ETF,s and ETN,s , ETN,s are electrical traded notes and are an instrument used in futures trading , they are strictly for pro,s , i myself lost money on one i thought provided exposure to soft commodities a few years ago

Sound advise above. But could you tell me if there is any low cost way of having such an ETF in a pension fund?

bear_hunter

Buzzliteyear wrote: »

Sound advise above. But could you tell me if there is any low cost way of having such an ETF in a pension fund?

the likes of eagle star or irish life use ETF,s ( or the same principal ) when selecting stocks - assetts , only difference is they charge you 5% per year to manage it , the market is the market at the end of the day , the only advantage a pension fund might have is the goverment aprooved tax write off , how much difference this makes , i cannot say , i do know that i would never ever buy a managed fund ( not a pension ) from the likes of irish life again , they get paid regardless so are not bothered about where the money goes and it often goes on dud investments

you can use ETF,s to buy baskets of stocks , bonds , commodities , you name it , its important to pick the right fund family however , not just in terms of managment costs but also in terms of volume , you want a good spread base , MSCI and vanguard are probabley the largest , PIMCO is the best when it comes to bonds in my opinion

Liam D Ferguson

Buzzliteyear wrote: »

Sound advise above. But could you tell me if there is any low cost way of having such an ETF in a pension fund?

We've set up structures for clients using the Irish Life pension platform, linking in with a TD Waterhouse online trading account, where the ongoing charge to Irish Life was 1% per year for the pension wrapper - no bid/offer spreads or other entry charges. After that you pay TD €15 per trade. Oh and the Government take their levy of 0.6% of your fund in 2013 and 2014. :mad:

You'd need to be transferring a fund of at least €20,000 to avail of this though.

For smaller amounts or while you're accumulating a fund, a low-cost index-tracking fund is as close as you're going to get.

Buzzliteyear

Thanks Liam. Had forgotten about levy.That completes the picture.