21 - Want to start investing savings - Don't know what to pick

Parapara2017

(IRL) 21, Want to start investing savings - Don't know what to pick

Hi.

I have 1000 to save per month (or more). Have an initial 5k lump sum ready with DEGIRO to invest.

So I want it pretty simple, just to have the money doing something for me. Not interested in trading stocks constantly.

So I think I want about 35% of my monthly income (after expenses) to be invested. The rest I will save in the bank for easy access.

So that's roughly 350/400 pm to add to investments.

What I have so far is 21% Bonds / ETFs (Which is better? I like ETFs should I treat that similarly to bonds ie age in bonds?) and the rest in index funds.

And should I have the savings in one of each? One Etf / one index fund for example or? I think onea that just track the global markets would be best?

I logged into my DEGIRO account to invest the 5K and got shown a giant massive constantly changing list of ETFs and I was just overwhelmed by the choice... no idea where to start.

So..... help a newbie please?

danko82

I am in the situation but I have 120k plus 2k montly...

wordofwarning

What is your investment outlook? 1/5/10/20 years. If it is 10+ years plus I would go for 100% shares. Bonds are too low risk, low return for the long run

danko82

120k I can invest them for 5 10 years, as I am saving other 2k monthly

topper_harley2

danko82 wrote: »

120k I can invest them for 5 10 years, as I am saving other 2k monthly

You already have a dedicated thread, here: http://www.boards.ie/vbulletin/showthread.php?t=2057730847.

There is no need to hijack this one as well.

topper_harley2

OP, ensure you have emergency fund in place before investing in stocks. 3-6 months living expenses would be good.

Also, consider if you require some of this for house deposit in next ten years.

Have you searched this forum about ETFs? There are loads of threads about percentages of ETFs/bonds allocations, as well as loads of info about taxation issues of UCIT vs non-UCIT ETFs. You should througly understand impacts of Irish tax rules in this regard.

Parapara2017

I've got my emergency fund set up and accounted for yeah. Plus little extra incase.

I'm totally new to this so I don't really have an outlook. Just savings for retirement etc i guess.

Would it be worth doing something like this for 5-10 years? Didn't think so, not with the amounts I'd invest. Say for a new car, house etc.

I saw the ETF tax rules about EU domiciled ETFs, so basically to avoid it I just can't invest in any ETFs from the EU or being traded in EU exchanges?

Also what index fund should I pick and again just one or split it? Wouldn't have thought the returns would be good enough if i split it over multiple.

I've got probably just under a year left at my current job then I'll hopefully be starting a new job, but income won't change much, will have increased expenses but ahould hopefully be covered by increase in wages.

cork93

I'm in a similar position OP. Equity valuations are very high at the moment which makes investing more difficult. I ended up buying individual stocks over ETFs. My reasoning was that an ETFs may not do very well in the medium term as I expect a sizable market correction soon. If you def don't need access to the capital for 10+ years then an index ETF is still probably the best option.

I enjoy following my shares though and I realise I'm gambling a bit. Degiro is great once you've decided what you want to buy.

gavmcg92

Only started recently as well.

Have a look at lazy portfolios. After some research I decided to go with the 2nd grader portfolio. It's made up of 3 Vanguard ETFs. 60% VTI, 30%VXUS and 10%BND.

One thing to point out with Degiro, you get charged 2.50 per exchange a year so if you want to keep costs low then keep that in mind.

topper_harley2

Parapara2017 wrote: »

I've got my emergency fund set up and accounted for yeah. Plus little extra incase.

I'm totally new to this so I don't really have an outlook. Just savings for retirement etc i guess.

Would it be worth doing something like this for 5-10 years? Didn't think so, not with the amounts I'd invest. Say for a new car, house etc.

I saw the ETF tax rules about EU domiciled ETFs, so basically to avoid it I just can't invest in any ETFs from the EU or being traded in EU exchanges?

Also what index fund should I pick and again just one or split it? Wouldn't have thought the returns would be good enough if i split it over multiple.

I've got probably just under a year left at my current job then I'll hopefully be starting a new job, but income won't change much, will have increased expenses but ahould hopefully be covered by increase in wages.

Just to be clear, there is really no such thing as true index fund in Ireland. What you will be buying are either ETFs, or unit linked funds.

For example, Vanguard Index funds are a passive investment vehicle whereby you just buy an index and are happy with the markets ups and downs i.e. you get the market return. There is no fund manager intervention buying or selling at a "good time", so there is zero work for the fund provider and the benefit of same is a low AMC of about 0.1% .

However, it is not possible to buy Vanguard index funds directly in Ireland. I repeat, not possible. If you are buying a fund from Irish Life etc., they may advertise them as "index funds", but they are not really, due to their ridiculous AMC. For example, Irish Life's "Indexed Global Equity" fund brochure (http://www.ilim.com/downloads/fund_sheets_retail/01_Retail_Fund_Fact_Sheets/+++-Indexed_Gobal_Equity.pdf) states a standard annual management charge of 1.50%. If its a true index fund, meaning they do nothing, what exactly are they charging you 1.5% per year for?! That AMC will decimate any profit over 20 years.

You can buy ETFs, which are as close as you will get to an index fund. As you said, you should NOT buy UCIT ETFs, due to their terrible taxation. That means, do not buy any ETF domiciled in OECD, not just Ireland, which is pretty much all of them. Hence, if you are doing this, you should concentrate on US/Canadian domiciled ETFs only. US comes with estate tax issues (search here/askaboutmoney), so IMO Canadian ones are the best approach, if one is buying ETFs.

However, if you don't have a pension, I would strongly advise putting your excess cash into that rather than investing post-tax. Similarly, if you are taking about saving for a new car (terribly idea, possibly the worst return on investment you could make), or a house deposit, I would not invest in ETFs/stocks. Put your money in a normal saving account for this purpose. Your don't want to find your dream house/(eek, car) in 5/10 years and have your investment portfolio crash, resulting in you not having the ability to buy your house.

phantom_lord

Max out your pension first OP and take advantage of the tax relief/

Cute Hoor

topper_harley2 wrote: »

However, if you don't have a pension, I would strongly advise putting your excess cash into that rather than investing post-tax.

Excellent advice imo.

topper_harley2 wrote: »

You can buy ETFs, which are as close as you will get to an index fund. As you said, you should NOT buy UCIT ETFs, due to their terrible taxation. That means, do not buy any ETF domiciled in OECD, not just Ireland, which is pretty much all of them. Hence, if you are doing this, you should concentrate on US/Canadian domiciled ETFs only. US comes with estate tax issues (search here/askaboutmoney), so IMO Canadian ones are the best approach, if one is buying ETFs.

Who are buying your Canadian ETFs with, presumably you are buying in Canadian dollars.
Any particular ETF(s) you would recommend.

topper_harley2

Cute Hoor wrote: »

Excellent advice imo.




Who are buying your Canadian ETFs with, presumably you are buying in Canadian dollars.
Any particular ETF(s) you would recommend.

You cab buy them on Degiro as far as I remember, from Toronto exchange. I am not buying anything at moment, I have stepped back from investments as I bought house recently, and have decided to overpay for guaranteed rate of return (3.5%).
Attached is list of US/Canadian ETFs that I used previously.