Index Investing

valoren

Hi,
Looking to invest in index funds. Specifically, the FTSE 100, S&P 500 and the Nikkei.

What are the options for the Irish investor?
The timeframe for investing would be from 6 months to 2 years based on a technical indicator I am using.

I am interested in the iShares ETF's but not sure if Irish investors are allowed?

I like the ability to buy and sell etf's when required and not attracted to minimum investments periods from the Life Assurance companies.

Any help appreciated.

arrowloopboy

valoren wrote: »

Hi,
Looking to invest in index funds. Specifically, the FTSE 100, S&P 500 and the Nikkei.

What are the options for the Irish investor?
The timeframe for investing would be from 6 months to 2 years based on a technical indicator I am using.

I am interested in the iShares ETF's but not sure if Irish investors are allowed?

I like the ability to buy and sell etf's when required and not attracted to minimum investments periods from the Life Assurance companies.

Any help appreciated.[/quote

Are you intending on using a little bit of leverage ?

valoren

No leverage just putting a lump sum in and out of an index tracker.

arrowloopboy

Just humour me,
If you buy the FTSE100 (or something tracking )today at 6300.00

At what level would you cut your losses at if the FTSE100 began and continued to fall ? Would it be 10,20%, 50% ?

valoren

arrowloopboy wrote: »

Just humour me,
If you buy the FTSE100 (or something tracking )today at 6300.00

At what level would you cut your losses at if the FTSE100 began and continued to fall ? Would it be 10,20%, 50% ?

When the coppock curve (momentum oscillator) indicator is negative. Very long term strategy. Buy and stay invested when it is positive. Sell and stay out when it's negative.

gene_slackman

valoren wrote: »

Hi,
Looking to invest in index funds. Specifically, the FTSE 100, S&P 500 and the Nikkei.

What are the options for the Irish investor?
The timeframe for investing would be from 6 months to 2 years based on a technical indicator I am using.

I am interested in the iShares ETF's but not sure if Irish investors are allowed?

I like the ability to buy and sell etf's when required and not attracted to minimum investments periods from the Life Assurance companies.

Any help appreciated.

the FTSE etf ( EWU ) can be bought on the nyse but i would not buy it , that indice is too heavy re the energy sector

the s + p is the most well balanced and widely covered indice when it comes to etf,s

id simply buy shares in toyota ( TM ) rather than buying the nikkei , its one of the largest companies in the world and can be bought as an ADR on the nyse

kal7

any thoughts on which company to but ETF FTSE 100 tracker with.

Lump sum, no leverage, long term investment.

db, UBS, IShares Vanguard, Lyxor

Thanks.

draiochtanois

This post has been deleted.

valoren

draiochtanois wrote: »

This post has been deleted.

I'm trying to avoid buy and forget, jut sticking it in for the long term
It only gives the buy sell signals very rarely from what I can see.
It has a solid track record of capturing bull markets. It's not fool proof for sure. I've applied the formula to the historical data for the major indices. You just update the last close for the index at month end. If it's positive then stay in. Negative cash out. This suits me personally.

Having a lump sum in cash is investing too but when that indicator is positive then it would be moved to an index tracker.

I'm currently looking at the new ireland regional indexed funds.
They have state steet funds for the major indices.

Only worry is the charges. Have emailed to find out. I'm wondering if it's best to go the low TER of an ETF instead. Open an account with TD and buy the tracker ETF's instead. It's incredibly frustrating.

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:coppock_curve

FURET

arrowloopboy wrote: »

Just humour me,
If you buy the FTSE100 (or something tracking )today at 6300.00

At what level would you cut your losses at if the FTSE100 began and continued to fall ? Would it be 10,20%, 50% ?

Why on earth would anyone sell at a loss? If the FTSE fell 30%, I'd be buying not selling. It's already very good value, being lower now than it was in 1999. Sooner or later that dog will heel.

To answer the question, I think the OP has some good choices for tracking the FTSE:

Vanguard FTSE 100 ETF (VUKE) (0.09% TER)
Vanguard FTSE 250 ETF (VMID) (0.10% TER)

...also, the OP could look at Vanguard FTSE Developed Europe (VEUR, 0.12% TER), of which UK stocks comprise roughly one-third. This is an excellent ETF with 520+ constituents giving great exposure to France, Germany, Switzerland, Italy, Spain, Holland, Denmark, Ireland, Portugal, Sweden, Norway, Greece, Finland, Belgium, Austria etc. It can be bought in euros from the Amsterdam exchange.

For the S&P 500, go with Vanguard's VUSA (in euros from Amsterdam or GBP from London) or VUSD from London with USD. The total expense ratio is only 0.07%. I buy VUSD myself.

For the Japanese index, again, Vanguard offer VJPN for a TER of 0.19%.

Be aware that all Vanguard ETFs pay out quarterly dividends gross of tax and this might incur tax for liable investors. iShares have accumulating (i.e. non-dividend-paying) equivalents but the total expense ratios are a little bit higher.

Europe and the UK are better value for money than the S&P 500 right now. But market timing is a mug's game: get invested and stay invested. View market crashes as buying opportunities. Anyone who sold their S&P 500 ETF in 2008 during the crash was very unwise (S&P 500 up 300% since then).

valoren

Thanks FURET, that's what I'm looking for exactly.

One question, would it be better to go with for example the S&P500 Euro denominated etf which is listed on the NYSE or with the LSE GBP one? Is there a currency risk involved? I'd assume there would be with the GBP etf?

FURET

valoren wrote: »

Thanks FURET, that's what I'm looking for exactly.

One question, would it be better to go with for example the S&P500 Euro denominated etf which is listed on the NYSE or with the LSE GBP one? Is there a currency risk involved? I'd assume there would be with the GBP etf?

You should not buy from the US exchange. Buy from London if you want to buy in dollars or Amsterdam if you want to buy in euros.

The currency issue is tricky. Certainly the base currency of the S&P 500 is USD.
You can buy the S&P 500 in euros or GBP so of course, there will be a risk that a strengthening euro or pound vs the dollar will undermine your returns in euros or dollars. Similarly, a weakening euro or pound vs the dollar would boost your returns in euros and pounds. You can see currency factors at play by comparing the returns of VUSD and VUSA on Google Finance.

VUSD is the Vanguard S&P 500 ETF traded in dollars; VUSA is the exact same ETF traded in euros. Clearly over the past few months, VUSA seems to have outperformed VUSD. But this seeming outperformance is due solely to the fact that the euro has weakened against the dollar. If the euro had strengthened against the dollar by the same degree, VUSA would have underperformed VUSD by the same amount!

To make things simple: take the euro price per share of VUSA at any given moment and convert it to dollar: it will be exactly the same as the current USD price per share of VUSD.

So it's up to you. Right now, VUSA looks good, but there will come a day when the euro will strengthen. The trading currency is just a wrapper. What you are actually buying are 500 dollar-based businesses.

arrowloopboy

FURET wrote: »

Why on earth would anyone sell at a loss? If the FTSE fell 30%, I'd be buying not selling. It's already very good value, being lower now than it was in 1999. Sooner or later that dog will heel.

To answer the question, I think the OP has some good choices for tracking the FTSE:

Vanguard FTSE 100 ETF (VUKE) (0.09% TER)
Vanguard FTSE 250 ETF (VMID) (0.10% TER)

...also, the OP could look at Vanguard FTSE Developed Europe (VEUR, 0.12% TER), of which UK stocks comprise roughly one-third. This is an excellent ETF with 520+ constituents giving great exposure to France, Germany, Switzerland, Italy, Spain, Holland, Denmark, Ireland, Portugal, Sweden, Norway, Greece, Finland, Belgium, Austria etc. It can be bought in euros from the Amsterdam exchange.

For the S&P 500, go with Vanguard's VUSA (in euros from Amsterdam or GBP from London) or VUSD from London with USD. The total expense ratio is only 0.07%. I buy VUSD myself.

For the Japanese index, again, Vanguard offer VJPN for a TER of 0.19%.

Be aware that all Vanguard ETFs pay out quarterly dividends gross of tax and this might incur tax for liable investors. iShares have accumulating (i.e. non-dividend-paying) equivalents but the total expense ratios are a little bit higher.

Europe and the UK are better value for money than the S&P 500 right now. But market timing is a mug's game: get invested and stay invested. View market crashes as buying opportunities. Anyone who sold their S&P 500 ETF in 2008 during the crash was very unwise (S&P 500 up 300% since then).

People sell losses so they don't turn into bigger losses , so that's pretty simple ( ask all the fools that held sh1tty bank shares down to pennies ).

And re the s&p sellers in 08 , with the aid of the best technical indicator going ( hindsight) , your exactly right !!!!

FURET

arrowloopboy wrote: »

People sell losses so they don't turn into bigger losses , so that's pretty simple ( ask all the fools that held sh1tty bank shares down to pennies ).

And re the s&p sellers in 08 , with the aid of the best technical indicator going ( hindsight) , your exactly right !!!!

Most people who invest heavily in individual stocks do so because they don't know how to invest intelligently. They are hugely risk-exposed and, indeed, their investments may never recover if they go down.

People who invest in indexes, however, do not need to be so concerned. Stocks fell more than 50% in 2008. Did all of the companies within the various indices lose 50% of their customers and profits that year? Of course not. Intelligent investors invest in broad, low-cost indexes, view crashes as buying opportunities, reinvest their dividends, and keep some powder dry by maintaining a chunk of their investments not lower than 20% in safe short-term bonds. I have six figures invested in various broadly diversified ETFs. Despite this, I would be happy to see a crash sale at any time because I'm a long-term investor and am not 100% exposed to stocks. All broad market crashes over the past 100 years have turned out to be amazing buying opportunities for people who have the right temperament.

If someone is likely to be so spooked by a 50% market crash that they would sell, they shouldn't invest to begin with!

FURET

arrowloopboy wrote: »

And re the s&p sellers in 08 , with the aid of the best technical indicator going ( hindsight) , your exactly right !!!!

Actually no hindsight required. Here is a post from the home of intelligent investing, Bogleheads (named after Vanguard founder Jack Bogle) dated October 24 2008:

Tips on answering the question - What Should I Do?
That is a question I have been getting quite frequently. Rather than post ad-hoc when this topic comes up, I decided to make my own post that slices together some advice that I have already put on this forum.

What should you do in this current market environment?

First, do not act emotionally. Think things through before making any changes. Second, if you decide to make a radical change, don't do it until next week. Chances are you will change your mind again by then.

Here is how I believe people should handle the current situation based on how I classify investors;

* 1) Early Savers (20s and 30s) - buy equities index funds like crazy with what you can and do not look at your account balance for 10 years.

* 2) Mid-life Accumulators (40s and 50s) - rebalance your portfolio back into equities when it needs to be rebalanced, and you will be very happy you did by the time you retire.

* 3) Near Retirees and retirees (60s and 70s) - live off your cash flows from dividends, interests, Social Security, pensions, annuities, and other. Leave your principal alone.

The only people who should be concerned are those who are currently taking out 7% or more per year from their portfolio to live on. This situation is just as much a budgeting issue as a portfolio management issue. My first response is to spend less. However, if spending cannot be controlled, then there may be a legitimate reason to change an asset allocation because the portfolio was more aggressive than it should have been from the beginning. Looking further at this topic:

When should you change your asset allocation strategy?

Significant changes to your stock and bond asset allocation strategy is a major decision and can be compared to changing careers. There are several good reasons to change your asset allocation strategy along life’s journey. Below are three reasons I believe a person has a legitimate reason to make an asset allocation change:

1) Your target retirement goal is well within reach.
2) You realize that you will not need all your money during your lifetime.
3) You have realized that your tolerance for risk is not as high as you once thought.

Consider a reduction to risk when you are within reach of your financial goals. That is the time to take your foot off the gas pedal and move into the middle lane. For example, assume you wish to retire in 3 years with $2,000,000 in retirement savings. If you already have $1,800,000 in savings, the rate of return you need to achieve your goal does NOT require a high risk asset allocation strategy. It might be time to permanently lower your equity exposure because you no longer need to take as much risk.

Second, a change to your asset allocation strategy may be appropriate if you realize that you will not outlive your money and will likely have excess assets. In that case, you are investing part of your portfolio for yourself and another part for the needs of those who will inherent your wealth. Your overall asset allocation should reflect the needs of both parties jointly. Assume you have $2,000,000 in retirement savings. You may need $1,000,000 of that amount which might be allocated at 30 percent stocks and 70 percent bonds. The second $1,000,000 will be passed on to your heirs. Since heirs tend to be younger, they can be more aggressive. That portion might be allocated at 70 percent stocks and 30 percent bonds. With both allocations put together, an appropriate asset allocation strategy for this example might be a portfolio that is 50 percent stocks and 50 percent bonds.

The third reason to change an allocation is because you have taken on more risk than you can handle. If you are not sleeping at night because you are worried sick about your portfolio, and you are on the verge of making an emotional decision to ‘sell it all”, then you should consider permanently reducing your equity position to see if that helps. Your portfolio has an appropriate level of risk when you are able to think clearly during all market conditions. Once you find this level of risk, stay at that level, even when the market recovers.

I hope this helps!

http://www.bogleheads.org/forum/viewtopic.php?f=10&t=26284

Anyone who followed the above, rudimentary Bogle-esque advice during the market canyon in 2008 would have a big smile on their face today. It has ever been thus.

alb

What's the story with tax returns regarding buying VEUR or VUSA on the Amsterdam exchange via keytrade as a broker for example? From what I've seen on askaboutmoney the handling of ETFs in general is annoying for Irish poeple, especially if they are 'off-shore' (are these vanguard ones off-shore in the example scenario I suggest?). More specifically are profits subject to exit tax or CGT? can losses be offset against other CGT gains? Do you need to inform revenue at purchase time?

FURET

alb wrote: »

What's the story with tax returns regarding buying VEUR or VUSA on the Amsterdam exchange via keytrade as a broker for example? From what I've seen on askaboutmoney the handling of ETFs in general is annoying for Irish poeple, especially if they are 'off-shore' (are these vanguard ones off-shore in the example scenario I suggest?). More specifically are profits subject to exit tax or CGT? can losses be offset against other CGT gains? Do you need to inform revenue at purchase time?

Tax treatment is pretty punitive for those liable. One way to mitigate is to buy an accumulating ETF (one that doesn't pay dividends). Regardless, every 8 years whether you want to or not you have to pay CGT on your profits.

Let's imagine you bought 100 shares of VEUR in Jan 2014, another 100 in Feb 2014, and another 100 in March 2014.

Based on current regulations you would have to pay Revenue CGT on profits (if any) in Jan 2022, Feb 2022, and March 2022. A logistical nightmare and something you have to self-declare when the time comes. Not to mention the fact that this would utterly destroy the compounding process, which is the basis of investment growth.
If you can buy accumulating ETFs as part of a legally tax-sheltered self-directed pension account, that would help! The key is to maintain TERs very low, stay the course, don't try and be clever thinking you can time the market (many who have done this before mistake their luck for skill), and don't sell when the stocks go down. A falling market is good for a long term investor.

By the way, VEUR tracks the MSCI Developed Europe index. You can see the constituent businesses here. iShares have an ETF (IMEA) tracking the very same index with the difference being two-fold:

• it doesn't pay dividends
• it has a higher TER (0.33%)

The impact of the TER is as follows:

Let's say the MSCI index grows exactly 10% excluding dividends in 2015.

• VEUR would in theory grow 9.88% (because the TER is 0.12%)
• IMEA would in theory grow 9.67% (because the TER is 0.33%)

Bruno26

Hi FURET- great advice. I've just read Millionaire Teacher and currently reading A Random Walk Down Wall St. Your posts reinforce what I've been reading. Planning on reading one of the John Bogle books next. Two questions if you don't mind. Can you recommend any particular books or resources to learn more about index investing? Irish brokers are very expensive. Can you recommend an alternative broker for index investing?

FURET

Bruno26 wrote: »

Hi FURET- great advice. I've just read Millionaire Teacher and currently reading A Random Walk Down Wall St. Your posts reinforce what I've been reading. Planning on reading one of the John Bogle books next. Two questions if you don't mind. Can you recommend any particular books or resources to learn more about index investing? Irish brokers are very expensive. Can you recommend an alternative broker for index investing?

Bogle's book Common Sense on Mutual Funds is great. There's also Asset Allocation by Rick Ferri. The Bogleheads forum is also a great place for theory-related questions, though in terms of practical advice it has a strong US bias naturally enough.

I don't live in Ireland so my own brokerage-related requirements and restrictions will differ from yours...but one of the cheapest, best, and most well-renowned brokerages is Interactive Brokers (IB). There are a few caveats though. In the first instance the minimum opening balance is the currency equivalent of 10k USD. For cost-effectiveness it is good to invest relatively large amounts at a time, so don't be too put off by the steep requirement.

The second caveat is that an IB account that is domiciled in the US is considered an in situs US asset, meaning that any cash over 60k USD sitting in the account would be theoretically liable for US Estate Tax. The solution: Avoid buying US-domiciled ETFs and never keep cash in excess of 60k USD in the account. As an Irish resident, I think if you were to open an IB account it would in fact be domiciled in the UK (check this); so you would avoid the US Estate tax issue (as long as you also avoided US-domiciled ETFs**) but you would have a lesser deposit guarantee in the event of foul play.

The next best brokerage by popular consensus would appear to be Saxo Capital Markets. Opening balance required is 5k and the commissions are in some cases 300% higher than Interactive Brokers, but again, all things considered not too bad. Their software does have some annoying limitations; for example, the aforementioned VUSA ETF trades in GBP on the London Stock Exchange as VUSA and in USD on the same exchange as VUSD. Saxo's software will only allow you to buy VUSA; they don't trade VUSD.

** A US-domiciled ETF is one that is instituted and trades on a US exchange. VOO is a US-domiciled ETF. VUSA/VUSD is actually domiciled in Ireland so you avoid the US Estate tax issue - hence my advice up-thread to not buy from the NYSE.

Bruno26

FURET wrote: »

Bogle's book Common Sense on Mutual Funds is great. There's also Asset Allocation by Rick Ferri. The Bogleheads forum is also a great place for theory-related questions, though in terms of practical advice it has a strong US bias naturally enough.

I don't live in Ireland so my own brokerage-related requirements and restrictions will differ from yours...but one of the cheapest, best, and most well-renowned brokerages is Interactive Brokers (IB). There are a few caveats though. In the first instance the minimum opening balance is the currency equivalent of 10k USD. For cost-effectiveness it is good to invest relatively large amounts at a time, so don't be too put off by the steep requirement.

The second caveat is that an IB account that is domiciled in the US is considered an in situs US asset, meaning that any cash over 60k USD sitting in the account would be theoretically liable for US Estate Tax. The solution: Avoid buying US-domiciled ETFs and never keep cash in excess of 60k USD in the account. As an Irish resident, I think if you were to open an IB account it would in fact be domiciled in the UK (check this); so you would avoid the US Estate tax issue (as long as you also avoided US-domiciled ETFs**) but you would have a lesser deposit guarantee in the event of foul play.

The next best brokerage by popular consensus would appear to be Saxo Capital Markets. Opening balance required is 5k and the commissions are in some cases 300% higher than Interactive Brokers, but again, all things considered not too bad. Their software does have some annoying limitations; for example, the aforementioned VUSA ETF trades in GBP on the London Stock Exchange as VUSA and in USD on the same exchange as VUSD. Saxo's software will only allow you to buy VUSA; they don't trade VUSD.

** A US-domiciled ETF is one that is instituted and trades on a US exchange. VOO is a US-domiciled ETF. VUSA/VUSD is actually domiciled in Ireland so you avoid the US Estate tax issue - hence my advice up-thread to not buy from the NYSE.

Wow. Thank you for such a detailed response. That's clarified a lot for me.

FURET

Most welcome

arrowloopboy

FURET wrote: »

Most welcome

A ftse annual spread bet would be by far the cheapest way to track the ftse .

valoren

I'm thinking now of simply buying units in the Vanguard FTSE Developed Europe (VEUR, 0.12% TER) etf each month to the value of €1,000. Essentially euro cost averaging. I'm 34 so going by the recommendation I should buy as much as I can regularly irregardless of market sentiment. Setting up a broker account with davy for this. (think there's a 25 euro charge for non IE or UK listed instruments + the dealing charge)

I figure that I'll save as much each month so may as well put it to use instead of sitting in a bank account.

FURET

valoren wrote: »

I'm thinking now of simply buying units in the Vanguard FTSE Developed Europe (VEUR, 0.12% TER) etf each month to the value of €1,000. Essentially euro cost averaging. I'm 34 so going by the recommendation I should buy as much as I can regularly irregardless of market sentiment. Setting up a broker account with davy for this. (think there's a 25 euro charge for non IE or UK listed instruments + the dealing charge)

I figure that I'll save as much each month so may as well put it to use instead of sitting in a bank account.

Valoren, it sounds like you are focused on long-term growth with a view to retirement. VEUR is an excellent fund - it allows you to buy fantastic businesses at very low cost - but my advice is that you need to be fully aware of the tax consequences before making any leaps into ETFs. Index investing works optimally if your investments are fully tax-sheltered and low cost, so for you, that might mean having a talk with the Irish Pensions Authority to see what the best practice is. If you can self-invest your pension fund at low cost and reinvest dividends without triggering a taxable event, that is a win-win-win for you!

I would not limit myself to VEUR; you should also look at a certain allocation to US stocks (approx. 25%, certainly less than VEUR because you are a European and do not want to be too exposed to the vicissitudes of currency fluctuation) and bond ETFs (even though bonds are pretty crappy the past number of years, we can't assume they will continue to be so, they act as a portfolio parachute when stocks crash, and they are a source of dry powder useful for re-balancing purposes when stocks go down).

Since REITs (i.e. Real Estate Investment Trusts, essentially property companies that manage malls and retail units, business parks, apartments houses and office blocks) are often negatively correlated with both stocks and bonds, they can also provide a useful component in a balanced portfolio. Again, there are a number of REIT ETFs available; take a look at the iShares European Property Yield UCITS ETF for example (but do shop around). There is no need for REITs to be more than 10% of your portfolio.

Many will say that emerging markets are essential, but the truth is that they have tended to underperform developed markets for the past 20 years, they are volatile, and the risk of corruption and loss of your investor rights is greater than the risks borne by developed investors. Since emerging markets account for only around 13% of the global stock market, there is not much point putting more into them than that.

A sample portfolio could be (again I hasten to add that this is purely an example portfolio):

• 25% short-term investment grade European corporate bonds (IE15, TER .20%)
• 25% S&P 500 (VUSA, TER 0.07%)
• 45% Developed Europe stocks (VEUR, TER 0.12%)
• 5% European REIT (IPRP, TER 0.4%)

When balanced, the weighted average Total Expense Ratio of this portfolio would be a meager 0.1415%.

fe1sagain

Hi

I had a read of the thread and another here on a somewhat related topic and just briefly wanted to get some advice.

I am interested in investing in some products instead of keeping it in deposit accounts. I had a look at Irish Life products and they are 10k min investment (couldn't tell if this is per product or if you can spread across a few).

From reading the two threads I noticed someone said steer clear of Irish Life or similar "life assurance" products. I also note that it was mentioned that being ord res in Ireland is terrible due to the tax implications.

What I would like to know is:

Is there alternatives to the life assurance products? I think the MAPS on Irish Life website were the products I read info on. I would ideally like to initially invest 20k and perhaps across 4 products. I would like an ETF or similar fund products. I am mid twenties and would be looking at a risk of 5/6 in a product and would be looking medium and long term.

I also have no real pension yet. I am looking to start one in 2015 and see it as a tax efficient way of saving due to the relief at the higher rate. I want to invest in addition to this and hope to add approx 5k each year maybe more depending on exit charges etc. Irish life products are designed to keep you in for 5 years with their exit charges.

I am paying 41% DIRT on measily deposit account (while I might move abroad through work, this is not guaranteed and I am very happy in my job at present) so I was thinking of just accepting that there will be tax on any profits and not let it deter me from investing.

On my mobile so hopefully the above is somewhat clear.

Thanks in advance.

ulinbac

Hi fe1,

Firstly as previously mentioned, unless you're incredibly non risk, stay away from BOI, PTSB, AIB investment guys. They are idiots. How do I know this; I spent 2 summers working for one of the above and met a lot of these guys. They go on a 2 WEEK course organised by the bank to learn how to sell their limited products badly!!

If you want good advice, go to a well known financial advisor. You don't have to just see one though. Make appointments with a few and talk to them about what you want from an investment, with all the fees laid out. E.g. They could say, a fund makes 10% a year, which it could but this could be a lot less once fees are taken into account.

The ftse has an average growth rate of 5.5% I think. Open to correction there. I know one of Vanguard main funds has averaged 10%+ over the last 20 ish years.

The other way is to go it alone. Personally I wouldn't buy the FTSE. It's expensive and return is not great when including fees. But each to their own. I spreadbet it during high volatility times and the Santa Rally . It is a lot cheaper but a lot more risky. Start your pension (min 10%), here in UK we give 5% receive another 5% and get tax relieve on 1%, so only pay 4 %. Not sure how it works at home.

Also, regarding a previous post on here. No your stop losses. I saw someone say something like why would they sell if they are down 30%. Personally, I'm out if I'm down 10% If your still in when down 30% it's not the best move. Yes you can buy back when there is a turn around but that other 20% could have been put to good use in the interim and who knows how long a turnaround can take. Just cause something has dropped significantly, there is nothing the say it can't keep going!!!

Maybe put that money in a 90 day account, buy some books and see what happens after. Trade a demo account. Stay away from the sexy side of investing, so oil, fx, index trading, gols etc. At the start. Easy way to lose big!!

Good luck with whatever you decide!!

fe1sagain

Thanks ulinbac. I think I will start the pension around 15% gross salary asap when I return from holidays (so with tax relief it will only cost me 9% of my take home) and get two books I have seen recommended Millionaire Teacher and A Random Walk Down Wall Street and get an understanding before committing anything.

Cheers for the advice re those banks. Am dubious of financial advisors selling products so will certainly shop around, finding the time to talk to them will be the hard part!

colman1212

So just say you're using a trading platform such as plus500 for example, why go for a ETF instead of an index? Is it much of a muchness? Cheers.

FURET

colman1212 wrote: »

So just say you're using a trading platform such as plus500 for example, why go for a ETF instead of an index? Is it much of a muchness? Cheers.

You cannot buy an "index" per se. You can only buy a fund that tracks an index. For example, the S&P 500 is an index compiled by Standard and Poors. But S&P don't offer any vehicle that would allow you to buy the S&P 500. Instead, organizations like Vanguard and Blackrock build an ETF that tracks the S&P 500.
S&P release the data, and Vanguard and Blackrock try as best they can to track it by buying the S&P 500 companies in a way that is proportional, as indicated by the index, which they call the "benchmark".

P_Cash

draiochtanois wrote: »

that's not investing then it's gambling

Lol

arrowloopboy

colman1212 wrote: »

So just say you're using a trading platform such as plus500 for example, why go for a ETF instead of an index? Is it much of a muchness? Cheers.

Is Plus500 a spreadbetting platform ?

colman1212

arrowloopboy wrote: »

Is Plus500 a spreadbetting platform ?

I didn't think so as it doesn't all the use of CFD's as far as I know. I am very knew to all this though so I could be wrong.

draiochtanois

This post has been deleted.

jank

FURET wrote: »

Let's say the MSCI index grows exactly 10% excluding dividends in 2015.

• VEUR would in theory grow 9.88% (because the TER is 0.12%)
• IMEA would in theory grow 9.67% (because the TER is 0.33%)

Some great posts FURET, outstanding information.
Just a question on the above.

The VEUR > IMEA because of the lower TER, however would IMEA not make up for this as instead of paying out dividends they reinvest it into the ETF, thus your ETF will increase in value? I suppose that is the trade off right?

Also, where can view the payout ratio of these ETF's?

colman1212

Jank, Off topic but what trading platform are you using here in Oz? I've been using etrade and have some stocks with them but it's painful when you want to trade in international markets, have to have orders in before a certain time and no live trading. Also can only use the value of your ASX shares as leverage when it comes to investing in an ETF. Any suggestions would be greatly appreciated.

jank

I use Commsec. They are OK, never had a problem with them although I don't trade with them (I am a buy and hold type of investor), they do do ETF's.
https://www.commsec.com.au/products/exchange-traded-funds.html

I am not sure though that you can buy some of the ETF mentioned here on that platform, they seem to cater for more Aussie focused ETF's.

International shares do have a premium though which is annoying.

jank

On another kinda unrelated point, how are people planning to play the oil drop. I would like to look for an ETF such as this be denominated in euro
http://www.ishares.com/us/products/239741/ishares-global-energy-etf

Prezatch

jank wrote: »

On another kinda unrelated point, how are people planning to play the oil drop. I would like to look for an ETF such as this be denominated in euro
http://www.ishares.com/us/products/239741/ishares-global-energy-etf

Here are a few denominated in EUR:

AMUNDI ETF MSCI World Energy UCITS ETF
Lyxor UCITS ETF S&P 500 Capped Energy
SPDR MSCI Europe Energy UCITS ETF
AMUNDI ETF MSCI Europe Energy UCITS ETF

jank

Cheers for the above. Is there any ETF that tracks the oil spot price but again denominated in euro?

FURET

jank wrote: »

The VEUR > IMEA because of the lower TER, however would IMEA not make up for this as instead of paying out dividends they reinvest it into the ETF, thus your ETF will increase in value? I suppose that is the trade off right?

Yes and no.

For example, for VEUR:

(Share price appreciation + Dividend payout) - TER would give 9.88% if the benchmark grew 10%

...For IMEA:
Share price appreciation minus TER would give 9.67% if the benchmark grew 10%

The advantage of IMEA would be *possibly* avoiding the triggering of a taxable event on the dividends AND saving the cost of reinvesting the dividends (though in reality you would simply add the dividends to your regular monthly contribution, so there should be no additional cost with reinvesting VEUR dividends manually).

For tax efficiency purposes I would probably go with IMEA if I were an Ireland resident. I buy VEUR personally but I don't live in Ireland so the taxation issue isn't a factor.

Also, where can view the payout ratio of these ETF's?

Check the relevant pages of the ETF on the provider's website and look for the dividend yield. For VEUR it is currently 3.3% https://www.vanguard.nl/portal/site/loadPDF?country=nl&docId=1015

Prezatch

jank wrote: »

Cheers for the above. Is there any ETF that tracks the oil spot price but again denominated in euro?

I'd imagine it would be tough to find a broker that had a selection large enough to incorporate what you're looking for. One below as an example:

http://www.bloomberg.com/quote/EBRT:IM