Degiro vs trading212(invest)

Saudades

I was looking into Blackrock iShares S&P 500.

Degiro have this listed under ISIN IE0031442068, trading under Euronext Amsterdam as Euro Currency (which seems correct as it's an Irish domiciled ETF).

Trading212 have this listed under the exact same ISIN IE0031442068 but traded as British Pound on the London exchange.

So if I invested with Trading212, am I subject to currency risk?

Useful thread by the way. Are there any other differences, fees , hidden fees, or otherwise, between Degiro and Trading 212 that haven't been covered on this thread?

Saudades

sk8board wrote: »

Am I correct to assume:

1. If you’re only buying ETFs, then the shorting of shares isn’t an issue and a basic a/c is just as safe as a custody one

2. The bank guarantee scheme protection of €20k on DEGIRO is only for cash left in the a/c uninvested, and doesn’t mean your investments are unprotected above that amount.

3. You still own your investments irrespective of the broker going bust - their book of business would simply transfer out to another broker, or you’d get the option to move it yourself

I read through the thread and I see nobody answered your three very good questions; were you able to obtain answers elsewhere?

sk8board wrote: »

I’ve always hoped the increasing popularity of ETFs with amateur/DIY investors would make the Revenue clear the complexity. In another few years you’ll see thousands of small investors not even realising there is an 8 year deemed disposal, and/or will be filing incorrectly, if at all. It’ll be a mess.

How does the tax compliance work exactly; do Degiro/Trading212 send your details to Revenue, who in turn I presume they keep this record on your file, wait for your tax-return, and then match them off for accuracy?

Bob24

Saudades wrote: »

I was looking into Blackrock iShares S&P 500.

Degiro have this listed under ISIN IE0031442068, trading under Euronext Amsterdam as Euro Currency (which seems correct as it's an Irish domiciled ETF).

Trading212 have this listed under the exact same ISIN IE0031442068 but traded as British Pound on the London exchange.

So if I invested with Trading212, am I subject to currency risk?

Useful thread by the way. Are there any other differences, fees , hidden fees, or otherwise, between Degiro and Trading 212 that haven't been covered on this thread?

The ETF isn’t currency hedged and all the securities it contains are priced in USD.

So regardless of which version you buy, your currency risk is with the USD.

JackieChang

Twould make you want to fiddle the system.

woodturner

Sorry for jumping in here but I was just wondering if any of you have the ability to send a referral? I can't access the free shares by referring family or friends as I think I need to receive a referral from an Irish user.

JackieChang

woodturner wrote: »

Sorry for jumping in here but I was just wondering if any of you have the ability to send a referral? I can't access the free shares by referring family or friends as I think I need to receive a referral from an Irish user.

It's not available to Irish residents.

JackieChang

Supercell wrote: »

Basically they are penalising you for taking a loss quickly, or are strong believers that "time in the market beats timing the market". Rebalancing pies will be a total nightmare with these rules as would adding to or selling them. I have left my pies and am just not gong to touch for a while.

I've just found out about a thing called an investment trust. They are not taxed like ETFs, but they are almost the same thing.

For example, Scottish Mortgage (confusing name) investment trust has holdings in Tesla, Amazon etc.

As far as I can tell there's none of the 8 year deemed disposal bullshyt like the ETFs.

Probably a better way to invest. There are a few of them on Trading 212.

Check out Scottish Mortgage, Smithson and Allianz Technology.

Detailed info on them here: https://www.theaic.co.uk/aic/find-compare-investment-companies?type=Filter&sort=10sptr&az=&country=&region=&objective=&sector=&manager=

They all seem to be in GBP. Couldn't find any euro ones.

Bob24

JackieChang wrote: »

I've just found out about a thing called an investment trust. They are not taxed like ETFs, but they are almost the same thing.

For example, Scottish Mortgage (confusing name) investment trust has holdings in Tesla, Amazon etc.

As far as I can tell there's none of the 8 year deemed disposal bullshyt like the ETFs.

Probably a better way to invest. There are a few of them on Trading 212.

Check out Scottish Mortgage, Smithson and Allianz Technology.

Detailed info on them here: https://www.theaic.co.uk/aic/find-compare-investment-companies?type=Filter&sort=10sptr&az=&country=&region=&objective=&sector=&manager=

They all seem to be in GBP. Couldn't find any euro ones.

Investment trusts are almost always actively managed rather that passively tracking an index, so I would not call them almost the same thing as ETFs. And another key difference is that they are close ended meaning they can’t issue new shares at will and their market cap isn’t necessarily tracking the NAV of the trust.

But having said that, yes I do think they are a good investment vehicle, especially in the context of our stupid deemed disposal tax (I have read on another forum that Revenue attempted on some people to argue investment trust should be taxed the same as ETFs, but they eventually relented and accepted that they are publicly listed companies and thus should be taxed as per the usual CGT rules).

Also the reason you noticed they are all listed on the LSX in GBP is because they are a U.K. specific investment vehicle which goes back over 100 years. The first one which was created is called Foreign & Colonial (F&C) and goes back to 1868 - it still exists and you can still buy shares in it! (although in the same category Scottish Mortgages which you mentioned has been performing much better in the past few years, but it also has more adventurous holdings and less diversification compared to F&C)

JackieChang

Bob24 wrote: »

Investment trusts are almost always actively managed rather that passively tracking an index

And another key difference is that they are close ended meaning they can’t issue new shares at will and their market cap isn’t necessarily tracking the NAV of the trust.

Are the above points a bad thing? I'm an investment n00b so I can't tell.

Jim2007

JackieChang wrote: »

Are the above points a bad thing? I'm an investment n00b so I can't tell.

Not necessarily, it just means that you need to understand exactly how they work so that you can make an informed decision. Paying a fee of 2% on a managed fund delivering 7% is better that paying 0.5% on an ETF delivering say 2%...

The motivation for the suggesting that you are better of buying a tracker with a low fee on it versus a fund, assumes that the managed fund is using an index as the benchmark.

These days it is not so black and white, because most people have got the idea of an index fund (ETF) being better than a managed fund doing the same. So most managed funds try to do something else to attract clients.

You need to go slowly check the stuff out and make sure you understand what you are getting into before you part with your money.

I doubt many people who are invested in Fundsmith are complaining about the fees, with an annualised return of 18%

Bob24

JackieChang wrote: »

Are the above points a bad thing? I'm an investment n00b so I can't tell.

Neither good nor bad, just differences compared to an ETF.

If I had to summarise the impact of those differences in one sentence: with an ETF tracker you are passively following the average trend of stock markets, whereas with a trust your are relying on the long term investment strategy of a fund manager (or a team of them) who is charging a fee (usually rather reasonable fee when it comes to investment trusts). So with no pun intended: there is an element of trust in the second scenario whereas you believe the fine manager is good enough to beat the market by more than the fee they are charging.

in2dark

Looks like the pie is not available to my account:-(
Pity it is a great idea...

iAcesHigh

in2dark wrote: »

Looks like the pie is not available to my account:-(
Pity it is a great idea...

taking into account everything stated before, pie is a nightmare considering Irish Tax system...

in2dark

iAcesHigh wrote: »

taking into account everything stated before, pie is a nightmare considering Irish Tax system...

If you recalibrate yes, but if you just buy each week or month? Very very handy

iAcesHigh

in2dark wrote: »

If you recalibrate yes, but if you just buy each week or month? Very very handy

The problem is still very much there when selling as you need to use first in, first out system and trillion small investments make that extra hard on paperwork. extra hard... Especially if you do it after few years and you were buying it on regular basis...

in2dark

the problem remains that i dont have the option on the app


as I said before I am not planning to sell, just keep on buying....

JackieChang

in2dark wrote: »

the problem remains that i dont have the option on the app


as I said before I am not planning to sell, just keep on buying....

Did you sign up for the beta?

I got it already. I guess they're ironing out a few bugs before they release it to the rest of the beta group.

in2dark

JackieChang wrote: »

Did you sign up for the beta?

I got it already. I guess they're ironing out a few bugs before they release it to the rest of the beta group.

This explains then... Thanks. Did now

iAcesHigh

in2dark wrote: »

as I said before I am not planning to sell, just keep on buying....

even worse, as one day, when you do decide to sell you'll have huuuuuuuge tax reporting "issue" Just run through comments before...

JackieChang

If I get a job up the north can I become a UK tax resident? Seriously thinking of tax "avoidance" (not evasion) down the line due to this potential arse raping from Revenue.

Saudades

JackieChang wrote: »

I've just found out about a thing called an investment trust. They are not taxed like ETFs, but they are almost the same thing.

For example, Scottish Mortgage (confusing name) investment trust has holdings in Tesla, Amazon etc.

As far as I can tell there's none of the 8 year deemed disposal bullshyt like the ETFs.

Probably a better way to invest. There are a few of them on Trading 212.

Check out Scottish Mortgage, Smithson and Allianz Technology.

Detailed info on them here: https://www.theaic.co.uk/aic/find-compare-investment-companies?type=Filter&sort=10sptr&az=&country=&region=&objective=&sector=&manager=

They all seem to be in GBP. Couldn't find any euro ones.

They do look interesting. What's the implication currency wise though?
We would have to convert Euro to STG, and then for example the Smithson half the investment would be STG/USD, and when you want to cash out, it's STG back to Euro.

Seems volatile on the surface or perhaps it's a good thing having investments in other currencies.

Bob24

Saudades wrote: »

They do look interesting. What's the implication currency wise though?
We would have to convert Euro to STG, and then for example the Smithson half the investment would be STG/USD, and when you want to cash out, it's STG back to Euro.

Seems volatile on the surface or perhaps it's a good thing having investments in other currencies.

Besides minor currency conversion costs when you buy shares in the trust, this makes no difference.

The reference always is the currency of the underlying assets anyway (regardless of owning Microsoft shares directly, through an ETF denominated in EUR, or though a trust denominated in GBP, those shares are valued in USD anyway).

JackieChang

Saudades wrote: »

They do look interesting. What's the implication currency wise though?

No idea. It's probably less efficient than investing directly into the list of companies.

The reason I'm doing this is because I got bored of watching individual stocks. Had about 30 in my portfolio at one stage.

So now I let Scottish mortgage do it for me. If it costs a bit of FX then so be it. There's also a management fee to consider.

Another reason is I get exposure to big names that aren't available to the average Joe. For example, via Scottish mortgage I am holding SpaceX. And Palantir, that mysterious AI firm that will be IPO-ing soon.

Saudades

JackieChang wrote: »

No idea. It's probably less efficient than investing directly into the list of companies.

The reason I'm doing this is because I got bored of watching individual stocks. Had about 30 in my portfolio at one stage.

So now I let Scottish mortgage do it for me. If it costs a bit of FX then so be it. There's also a management fee to consider.

Another reason is I get exposure to big names that aren't available to the average Joe. For example, via Scottish mortgage I am holding SpaceX. And Palantir, that mysterious AI firm that will be IPO-ing soon.

Interesting. Yes I'm tempted with the SMT and the Smithson myself (and the Fundsmith but that's classed as ETF).

JackieChang

Saudades wrote: »

Interesting. Yes I'm tempted with the SMT and the Smithson myself (and the Fundsmith but that's classed as ETF).

Definitely have a Google around about SMT. There are discussions about them on Reddit and I think money saving expert. There are pros and cons.

For example one con to be aware of is the amount of unlisted companies they hold. They're not on any stock exchange yet, so it's bordering on venture capitalism.

They've some German "Uber for the skies" company in their holdings. SMT believe airplane taxis will be a thing in the future. You might not agree with that.

About 20% of their holdings are these unlisted companies. However I think they held Amazon and Tesla when they were unlisted back in the day and they bet correctly on them exploding in value. Future growth seems to be their thing. So they get in early.

FrankGrimes

Have seen a lot of good mentions online about Scottish Mortgage fund and would like to add it to my portfolio. What’s the best way to buy into it based in Ireland (don’t see it in Degiro, are there other broker options or best to go direct)?

JackieChang wrote: »

Definitely have a Google around about SMT. There are discussions about them on Reddit and I think money saving expert. There are pros and cons.

For example one con to be aware of is the amount of unlisted companies they hold. They're not on any stock exchange yet, so it's bordering on venture capitalism.

They've some German "Uber for the skies" company in their holdings. SMT believe airplane taxis will be a thing in the future. You might not agree with that.

About 20% of their holdings are these unlisted companies. However I think they held Amazon and Tesla when they were unlisted back in the day and they bet correctly on them exploding in value. Future growth seems to be their thing. So they get in early.

Bob24

FrankGrimes wrote: »

Have seen a lot of good mentions online about Scottish Mortgage fund and would like to add it to my portfolio. What’s the best way to buy into it based in Ireland (don’t see it in Degiro, are there other broker options or best to go direct)?

It is like any public company listed on the London stock exchange, should be available from any broker including DEGIRO (I do see it on my DEGIRO). You are typing SMT and nothing comes up?

Also for the better or the worse the fund is heavily loaded with Tesla and internet/tech giants (just 2 stocks - Tesla and Amazon - are 20% of the total holdings, which is *very* high concentration for a fund). This largely explains the great performance even throughout the Covid period, but it also means it is heavily exposed if those start correcting.

salmagoo

Supercell wrote: »

Its here - https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/selling-or-disposing-of-shares.aspx



Basically they are penalising you for taking a loss quickly, or are strong believers that "time in the market beats timing the market". Rebalancing pies will be a total nightmare with these rules as would adding to or selling them. I have left my pies and am just not gong to touch for a while.

This isn't actually true! The reason the 4 week rule came in was so that in the scenario that an employee is entitled to RSUs there is an acquisitions of lets 10 shares at 100 each which amounts to 1,000. Then the employer immediately disposes of some of these shares (about 5*100=500) to pay for tax at the marginal rate. The remaining proceeds is deposited to the employee on their payslip.

This rule was introduced this so that there is no gain/no loss in this scenario to avoid complications regarding FIFO for employers and only relates to that same class of share.

I hope this makes sense.

salmagoo

JackieChang wrote: »

@Supercell they are rolling out a new feature which will allow you to create your own mini ETFs and automatically deposit into them. It's called autoinvest and should be coming out in a few weeks. I think it's in beta stage now for a select few.

One thing I'll add for anybody thinking of signing up... DO NOT TOUCH the "CFD" platform until you've spent ages reading up about what they are. You can loose hundreds of euros in seconds. Once you've read up on them, spend a few months on their practice account if you really want to try it.

Thanks so much for this! This is exactly what I have been looking to do! Such a great thread! Yes the CGT calc would be a PAIN but worth it I think! I've been trying to find a way to beat this 41% exit tax with ages.

Colin B

Great thread!looks like UK trust (Scottish Mortgage, etc)are the way to go instead of EFT for the Irish , to simplify tax complications and still diversify!so euro to sterling exchange is the only thing that's variably from our side, fund management and dollar exchange costs are all included in share prices??then more simple/cheaper CGT calculations at the end

JackieChang

Just to add that Scottish mortgage would be one of the more risky funds.

If this is too risky, you could look at Bankers Investment Trust as well. Still fairly tech heavy, but has more stable "blue chip" companies.

Their top 10 holdings along with % weightings:

1 MICROSOFT CORP 2.80
2 AMAZON.COM INC 2.20
3 APPLE INC 2.10
4 ESTEE LAUDER COMPANIES INC 2.10
5 VISA INC 1.90
6 ADOBE INC 1.80
7 MASTERCARD INC 1.80
8 ALPHABET INC 1.60
9 AMERICAN TOWER CORP 1.60
10 FACEBOOK INC 1.60

More info: https://www.trustnet.com/factsheets/t/he03/the-bankers-investment-trust