Total beginner (detailed post)

davisse

Using a new username for this as I'm including some personal information below. Tried to make this as clear as possible so here goes.

I have recently opened an account with Degiro but haven't made any deposit into my account as of yet. Some details that might give you an idea as to where I am at the moment: Now 34 and it's stupidly only dawned on me now that I should really get my act together and start thinking about the future. Basically used to spend anything I took in but have managed to gather together a paltry savings sum of 9k. Only began contributing to a pension fund at the start of the year so not a whole lot gone in to that as of yet.

Searched around for similar topics and saw a post from topper_harley2 mentioning the below questions, so hopefully I'll give you a clearer picture by answering them.

• Have you any high interest debts like car loan/credit card etc - No. Don't have a car and credit card is cleared as soon as I use it to purchase anything.
• Have you an SVR mortgage - No. Currently renting (paying 650 p/m not including bills).
• Have you a rainy day fund of 3-6 months salary - Yes (3 months salary in an instant access savings account).
• Have you a pension - Yes. Only began paying in to it at the beginning of the year. Employer contributes 10% and I 5%.
• Have you kids - No.
• Are you married - No.
• Have you any investment property - No.
• How long are you happy to be without this money - Want to begin a long term investment (i.e. 30+ years).
• What would you do if value dropped 30% overnight - Continue to invest. Obviously would prefer the value to jump when I'm looking to cash out, so no problem with a drop.

Other points:

• Salary is 33k.
• Not saving for anything in particular (not looking to buy a house, car etc).

I've picked up my first book on investing so still working my way through that (want to read a good bit more before actually making any deposit).

Some questions:

• I currently transfer 1,000 to my instant savings account each month. I'm contemplating stopping this and instead transferring 800 to Degiro each month and the remaining 200 to the instant access account for other bits and bobs. Is this a smart/foolish move? Should I instead make quarterly deposits to Degiro of 2,400?
  
  
• Is Degiro a safe place to continue pumping money in to? Stupid question, will it be there in ten years time? If not, where do I stand?
  
  
• The below portfolio is no doubt common enough, but can this exact portfolio be invested in through Degiro (I haven't made a deposit yet so can't see what's available to invest in)? Or is there a 'better' alternative?
  
  
  • 34% - Vanguard US Bond Index (VBMFX)
  • 33% - Vanguard Total US Stock Market Index (VTSMX)
  • 33% - Vanguard Total International Stock Market Index (VGTSX)
  
  
• I'll admit I'm still a bit in the dark when it comes to taxation for investments. Say I went with the above portfolio. And I wasn't looking to withdraw any dividend for the foreseeable future (happy to continue investing and leaving the funds there until retirement). What do I need to do in terms of Revenue, do I need to fill in a form each year? If there's a good post outlining all this in simple terms please point me in that direction! So year 1, I invest 9,600. Year 2, another 9,600 etc. So after 8 years that's 76,800. Let's say for argument sake the value of my investment now stands at 110,000. What tax implications will this have? And following on from this, let's say after 30 years the value of my investment is 1,000,000, tax implications?
  
  
• Example
  
  
  • Year 1: Buy Vanguard Total US Stock Market Index (VTSMX) for €1,000
  • Year 8: VTSMX now valued at €1,500 (gain of 500, so I would need to pay €165 in CGT (US ETF) in year 8, is this right?)
  • Year 9 onwards: I decide not to sell my shares and continue to invest...do I need to do anything in this scenario or is it just a case of paying tax again in year 16?
  • If I continue to invest quarterly does this cause much of an issue?
  
  
• ETF dividends - are they automatically reinvested?

Hopefully you guys will be able to clear up some of the above, thanks!

SureYWouldntYa

Any advice here is from random strangers on the internet, get professional advice thats what financial advisors are for and they will be able to answer all your questions

PaulKK

The Vanguard ETFs are US domiciled so the 7/8 year rule doesn't apply. You only pay cgt when you sell those.

The Vanguard ETFs pay dividends and cannot be automatically reinvested.

troyzer

davisse wrote: »

Using a new username for this as I'm including some personal information below. Tried to make this as clear as possible so here goes.

I have recently opened an account with Degiro but haven't made any deposit into my account as of yet. Some details that might give you an idea as to where I am at the moment: Now 34 and it's stupidly only dawned on me now that I should really get my act together and start thinking about the future. Basically used to spend anything I took in but have managed to gather together a paltry savings sum of 9k. Only began contributing to a pension fund at the start of the year so not a whole lot gone in to that as of yet.

Searched around for similar topics and saw a post from topper_harley2 mentioning the below questions, so hopefully I'll give you a clearer picture by answering them.

• Have you any high interest debts like car loan/credit card etc - No. Don't have a car and credit card is cleared as soon as I use it to purchase anything.
• Have you an SVR mortgage - No. Currently renting (paying 650 p/m not including bills).
• Have you a rainy day fund of 3-6 months salary - Yes (3 months salary in an instant access savings account).
• Have you a pension - Yes. Only began paying in to it at the beginning of the year. Employer contributes 10% and I 5%.
• Have you kids - No.
• Are you married - No.
• Have you any investment property - No.
• How long are you happy to be without this money - Want to begin a long term investment (i.e. 30+ years).
• What would you do if value dropped 30% overnight - Continue to invest. Obviously would prefer the value to jump when I'm looking to cash out, so no problem with a drop.

Other points:

• Salary is 33k.
• Not saving for anything in particular (not looking to buy a house, car etc).

I've picked up my first book on investing so still working my way through that (want to read a good bit more before actually making any deposit).

Some questions:

• I currently transfer 1,000 to my instant savings account each month. I'm contemplating stopping this and instead transferring 800 to Degiro each month and the remaining 200 to the instant access account for other bits and bobs. Is this a smart/foolish move? Should I instead make quarterly deposits to Degiro of 2,400?
• Is Degiro a safe place to continue pumping money in to? Stupid question, will it be there in ten years time? If not, where do I stand?
• The below portfolio is no doubt common enough, but can this exact portfolio be invested in through Degiro (I haven't made a deposit yet so can't see what's available to invest in)? Or is there a 'better' alternative?
  • 34% - Vanguard US Bond Index (VBMFX)
  • 33% - Vanguard Total US Stock Market Index (VTSMX)
  • 33% - Vanguard Total International Stock Market Index (VGTSX)
• I'll admit I'm still a bit in the dark when it comes to taxation for investments. Say I went with the above portfolio. And I wasn't looking to withdraw any dividend for the foreseeable future (happy to continue investing and leaving the funds there until retirement). What do I need to do in terms of Revenue, do I need to fill in a form each year? If there's a good post outlining all this in simple terms please point me in that direction! So year 1, I invest 9,600. Year 2, another 9,600 etc. So after 8 years that's 76,800. Let's say for argument sake the value of my investment now stands at 110,000. What tax implications will this have? And following on from this, let's say after 30 years the value of my investment is 1,000,000, tax implications?
• Example
  • Year 1: Buy Vanguard Total US Stock Market Index (VTSMX) for €1,000
  • Year 8: VTSMX now valued at €1,500 (gain of 500, so I would need to pay €165 in CGT (US ETF) in year 8, is this right?)
  • Year 9 onwards: I decide not to sell my shares and continue to invest...do I need to do anything in this scenario or is it just a case of paying tax again in year 16?
  • If I continue to invest quarterly does this cause much of an issue?
• ETF dividends - are they automatically reinvested?

Hopefully you guys will be able to clear up some of the above, thanks!

Always pay for proper, professional advice. You shouldn't be guiding your decisions based on boards.ie comments.

Having said that, is this in a PRSA? If you're doing it mostly for a pension you'd be nuts not to go for a PRSA. The tax benefits are enormous.

That seems like a pretty high bond ratio in your early thirties. You definitely want more equity in the early years to maximise growth while you can afford to take a few hits. You're going to lose money on VBMFX in the short and medium term. 

You should probably look at a bit more diversity in your equities too. Vanguard have more than one international ETF. Probably should put a small amount away in FX and precious metals too. That's just me though, I work in an industry where it's easy to see the value of the latter.

650Ginge

SureYWouldntYa wrote: »

Any advice here is from random strangers on the internet, get professional advice thats what financial advisors are for and they will be able to answer all your questions

99.9% of financial advisors have a single purpose to line their own pockets by getting you to sign up for high cost products.

If you continue to read and learn you will know more than those so called financial advisors in a few months.

That's the only advise I'm giving, keep learning, keep as charges as low as pssibe and at some point spend a few weeks investigatingpr tax laws it will be for worthwhile.