First Investment into Stockmarket

TiGeR KiNgS

Hi Everyone,

So after years of deliberation, I finally jumped in and bought 5K of ETF Vanguard S&P 500 VOO on DeGiro.

I'm 29 and intend on putting in 1K per month thereafter. Is this a good investment strategy or should I be looking at other funds/opportunities?

All input welcomed.

Thanks,
TK

Francie Barrett

TiGeR KiNgS wrote: »

Hi Everyone,

So after years of deliberation, I finally jumped in and bought 5K of ETF Vanguard S&P 500 VOO on DeGiro.

I'm 29 and intend on putting in 1K per month thereafter. Is this a good investment strategy or should I be looking at other funds/opportunities?

All input welcomed.

Thanks,
TK

The ETF strategy is good, but I wouldn't restrict myself to just the US stock market. Have you considered a European ETF? VGK would compliment VOO quite nicely.

Prezatch

It's a decent, relatively safe strategy - I presume you've read up on the tax consequences of investing in a US domiciled ETF vs a European domiciled ETF (US is better for you).

One must also remember that if the USD/EUR fx rate starts to move with the EUR getting stronger, you're USD position will become weaker and this could wipe out a lot of gains made by share price appreciation, depending on how far the rate goes.

Francie Barrett

Also, if you're going down the regular monthly sum route, after keeping your costs low, the next most important thing to consider is discipline. I've seen it first hand so many times - when the markets decline, people sell up and decide to wait "for things to calm down". This strategy is akin to going into the January sales, spotting a bargain, but then passing it up because you'd rather pay full price for the item next month when the sale ends. Basically, when the market looks good, you invest. When the market looks bad, you invest.

Good article from Terry Smith on it here - http://www.ft.com/cms/s/0/74457b4c-801f-11e2-adbd-00144feabdc0.html#axzz49BX39KoM

He runs a fund that is in the top 1% of performance in the UK for the last 5 years. He's forgotten more about investing than the likes of you and I have will ever learn. If he can't time the market, mugs like us have no hope whatsoever.

iainBB

Depending on the type of investing you are planning to do. short medium long term. active / passive. etc.

I invest in ETF's in the medium term a few days to months if markets go down In change to inverse ETF's when the market is stale I use narrow market ETF's that are doing well.
ETF's are great but you still need to manage them to some degree.

sober_joe

JoeyD wrote: »

It's a decent, relatively safe strategy - I presume you've read up on the tax consequences of investing in a US domiciled ETF vs a European domiciled ETF (US is better for you).

One must also remember that if the USD/EUR fx rate starts to move with the EUR getting stronger, you're USD position will become weaker and this could wipe out a lot of gains made by share price appreciation, depending on how far the rate goes.

many etf,s are domiciled in ireland , which of the following etf,s is better for an irish citizen from a taxation POV

voo = $ denominated vanguard s + p 500 etf

vusa = euro denominated vanguard s + p 500 etf

Prezatch

sober_joe wrote: »

many etf,s are domiciled in ireland , which of the following etf,s is better for an irish citizen from a taxation POV

voo = $ denominated vanguard s + p 500 etf

vusa = euro denominated vanguard s + p 500 etf

VUSA is denominated in GBP. It is also a UCITS fund which is not good from a taxation point of view

lcwill

JoeyD wrote: »

VUSA is denominated in GBP. It is also a UCITS fund which is not good from a taxation point of view

You can get VUSA denominated in USD, GBP, EUR or CHF as it is listed on various stock markets - I bought it on Euronext Amsterdam in Euro. Underlying assets are in dollars though and that is what counts.

newacc2015

lcwill wrote: »

You can get VUSA denominated in USD, GBP, EUR or CHF as it is listed on various stock markets - I bought it on Euronext Amsterdam in Euro. Underlying assets are in dollars though and that is what counts.

It is whether it is a UCITS fund or not that matters. It appears you brought a USCITS fund. The currency is not what is important. It is whether it is UCITS or not
http://www.morningstar.nl/nl/etf/snapshot/snapshot.aspx?id=0p0000yxkb

iainBB

TiGeR KiNgS wrote: »

Hi Everyone,

So after years of deliberation, I finally jumped in and bought 5K of ETF Vanguard S&P 500 VOO on DeGiro.

I'm 29 and intend on putting in 1K per month thereafter. Is this a good investment strategy or should I be looking at other funds/opportunities?

All input welcomed.

Thanks,
TK

Can I ask TK what is your thinking, buy and hold for long haul. And top up each mouth same ETF

lcwill

newacc2015 wrote: »

It is whether it is a UCITS fund or not that matters. It appears you brought a USCITS fund. The currency is not what is important. It is whether it is UCITS or not
http://www.morningstar.nl/nl/etf/snapshot/snapshot.aspx?id=0p0000yxkb

I was just referring to the currency risk aspect.

Every time you buy US listed firms or SP500 ETFs you are buying some USD exposure.

UCITS or not is a separate legal/tax issue. I live outside Ireland and UCITS is best for me tax wise.

iainBB

Any involvement in USA. your return would have to be higher then inflation QE and exchange rate. Long term investment in US dollars assets is a no no. Dipping in and out is perfect

Pawwed Rig

How the fund is classified can make a difference to the tax rate on dividends and gains. It may fall into the 41% funds regime and may need to be disclosed on your tax return in the year of purchase.

lawred2

So what would be the best classification for let's say the S & P 500 for an Irish resident? With regards to tax purposes and fund related costs?

gavmcg92

lawred2 wrote: »

So what would be the best classification for let's say the S & P 500 for an Irish resident? With regards to tax purposes and fund related costs?

I tend to like $SPY. It's US domiciled and so the dividends are subject to income tax and the gains are subject to CGT as opposed to Irish domiciled which are charged at 41% and fall under the 8 year roll up rule.

I have gone with a lazy portfolio 60% VTI, 30% VXUS and 10% BND.

keane2097

I'm 50/50 between VTI and VXUS FWIW (not bothering with bonds for the moment).

You can get similar equity coverage with one ETF (VT) if you are really lazy, but the fee is higher for that than it is for the two separated.

lawred2

gavmcg92 wrote: »

I tend to like $SPY. It's US domiciled and so the dividends are subject to income tax and the gains are subject to CGT as opposed to Irish domiciled which are charged at 41% and fall under the 8 year roll up rule.

I have gone with a lazy portfolio 60% VTI, 30% VXUS and 10% BND.

My trading account is within the confines of a Davy PRSA - I presume that changes the perspective somewhat with regards to the tax treatment of these investments?