Money to Invest

Figel Narage

Hi All,

Just looking for some idea's regarding investing. I have large amount in savings plus going to receive a large lump sum in the next few years. I've been reading about putting some of it into an index fund but from what I've read, in Ireland it's not worth it with the taxes and poor performance in comparison with the U.S. From what I can see it's only really property that is a viable option but becoming a landlord does not sound appealing, is there any other options to an Irish investor?

NickSantigo

etfs are not impossible but it is best to read through the article below to get a better understanding of the tax:

https://www.irishtimes.com/business/personal-finance/don-t-invest-in-an-etf-until-you-understand-the-tax-1.3421331

If you were considering property you could look at putting some of your money into REITs (Real Estate Investment Trusts)

Some Irish ones are
IRES
Hibernia
Yew Grove

There are a lot of more mature American REITs too which are worth looking into. The company have to pay a high percentage (think it's 80) of their profits in dividends. It is a nice way to create an extra stream of income without the hassle of being a landlord

Figel Narage

NickSantigo wrote: »

etfs are not impossible but it is best to read through the article below to get a better understanding of the tax:

https://www.irishtimes.com/business/personal-finance/don-t-invest-in-an-etf-until-you-understand-the-tax-1.3421331

If you were considering property you could look at putting some of your money into REITs (Real Estate Investment Trusts)

Some Irish ones are
IRES
Hibernia
Yew Grove

There are a lot of more mature American REITs too which are worth looking into. The company have to pay a high percentage (think it's 80) of their profits in dividends. It is a nice way to create an extra stream of income without the hassle of being a landlord

Thanks for the info. Yes I've heard of IRES and Hibernia and REIT's in general although never looked into it a lot. Do you have any money with American REIT's? I have a bit of money with a P2P bridge lender but that was a small amount of money and I was just doing it for fun and would never consider throwing in a lot of money into that. I'd like to through a fair chunk of my savings into something where the money is put to work. The saving rates are depressing and also I'd like a passive income stream. Having too much money really is a problem haha

NickSantigo

Figel Narage wrote: »

Thanks for the info. Yes I've heard of IRES and Hibernia and REIT's in general although never looked into it a lot. Do you have any money with American REIT's? I have a bit of money with a P2P bridge lender but that was a small amount of money and I was just doing it for fun and would never consider throwing in a lot of money into that. I'd like to through a fair chunk of my savings into something where the money is put to work. The saving rates are depressing and also I'd like a passive income stream. Having too much money really is a problem haha

I have a very small amount invested in Simon Property (SPG). If you had an account with someone like Degiro you could spread out your investment between a few of the American and Irish Reits. You won't get huge growth but because of the way they are set up, it is a nice way of creating a passive income stream rather than letting it rot in a bank

Figel Narage

NickSantigo wrote: »

I have a very small amount invested in Simon Property (SPG). If you had an account with someone like Degiro you could spread out your investment between a few of the American and Irish Reits. You won't get huge growth but because of the way they are set up, it is a nice way of creating a passive income stream rather than letting it rot in a bank

I see, and what are the tax implications of the Irish and American REIT? Biggest interest is the passive income stream more than anything, extreme growth is great but I'd be more inclined to creating passive income

mitresize5

I wouldn't go rushing into REIT's any time soon.

Commercial property, be it office or retail, is going to take a big hit as a result of the Covid crisis. A lot more people will work from home full time decreasing the pressure on office space and the move to online for retail shows no sign of slowing.

blindside88

If it’s excess funds that you have no need for and you’re not already maxing out pension contributions I’d suggest starting there. If you’re paying tax at the higher rate you can make 40% immediately.

Figel Narage

blindside88 wrote: »

If it’s excess funds that you have no need for and you’re not already maxing out pension contributions I’d suggest starting there. If you’re paying tax at the higher rate you can make 40% immediately.

Don't have a pension yet, still pretty young but will look into getting one before I turn 30. Company I'm in doesn't offer it but I'll be leaving there sooner rather than later. But yes passive income would be my main motivator from what I can see there's not a whole lot of options. As i've said I have money with a high risk P2P lender but wouldnt want to put in a lot of money into it but it's still passive nonethless

NickSantigo

mitresize5 wrote: »

I wouldn't go rushing into REIT's any time soon.

Commercial property, be it office or retail, is going to take a big hit as a result of the Covid crisis. A lot more people will work from home full time decreasing the pressure on office space and the move to online for retail shows no sign of slowing.

I agree with you about Commercial Reits. There is definitely a lot of uncertainty with them. However retail and residential Reits should be solid in the long term for the OP trying to create a passive income stream

Figel Narage

NickSantigo wrote: »

I agree with you about Commercial Reits. There is definitely a lot of uncertainty with them. However retail and residential Reits should be solid in the long term for the OP trying to create a passive income stream

Would a residential focused REIT provide dividends every quarter? How are they taxed?

NickSantigo

Figel Narage wrote: »

Would a residential focused REIT provide dividends every quarter? How are they taxed?

The distribution of dividends from Reits is different for each individual company. Some pay quarterly, some annually, some biannually. There is one American Reit that even pays out monthly.

I am not a tax expert. I understand the dividends you receive are treated like any income so you pay income tax on them. If you sell your share in the reit at a profit the normal CGT applies. However, if other posters believe I am wrong please correct me. If you read the links below it might give you a greater understanding on how the dividends are taxed and how Reits in general work in Ireland.



"Legislation introduced in 2013 allowed for the establishment of Reits, which are generally exempt from corporation tax and levies on gains from property values or capital gains tax (CGT). The idea is to shift tax liabilities on to shareholders who must, by law, receive at least 85 per cent of a Reit’s rental profits. It prevents a double taxation and gives investors a way of investing in commercial property without being personally responsible for managing the buildings."

https://www.irishtimes.com/opinion/editorial/the-irish-times-view-on-property-investment-funds-doing-the-reit-thing-1.4045602

"Irish resident shareholders in a REIT will be liable to
income tax on income distributions from the REIT plus
PRSI and USC. "

https://assets.kpmg/content/dam/kpmg/ie/pdf/2017/09/ie-reits-july-2017.pdf

Figel Narage

NickSantigo wrote: »

The distribution of dividends from Reits is different for each individual company. Some pay quarterly, some annually, some biannually. There is one American Reit that even pays out monthly.

I am not a tax expert. I understand the dividends you receive are treated like any income so you pay income tax on them. If you sell your share in the reit at a profit the normal CGT applies. However, if other posters believe I am wrong please correct me. If you read the links below it might give you a greater understanding on how the dividends are taxed and how Reits in general work in Ireland.



"Legislation introduced in 2013 allowed for the establishment of Reits, which are generally exempt from corporation tax and levies on gains from property values or capital gains tax (CGT). The idea is to shift tax liabilities on to shareholders who must, by law, receive at least 85 per cent of a Reit’s rental profits. It prevents a double taxation and gives investors a way of investing in commercial property without being personally responsible for managing the buildings."

https://www.irishtimes.com/opinion/editorial/the-irish-times-view-on-property-investment-funds-doing-the-reit-thing-1.4045602

"Irish resident shareholders in a REIT will be liable to
income tax on income distributions from the REIT plus
PRSI and USC. "

https://assets.kpmg/content/dam/kpmg/ie/pdf/2017/09/ie-reits-july-2017.pdf

I see, thanks for the info. Moving away from property, any other asset's you recommend?

Figel Narage

Anyone have any recommendations?

CBear1993

Not able to help Fige as I’m in my 20s as well and would like to know this, but I haven’t invested any time at all into the whole bitcoin craic/blockchain/cryptocurrency.

What’s your thoughts on it, if any?

Some absolute gobsh*tes around these days pretending like they’re the expert on it. I know of one lad my age doesn’t work, and boasts on his Twitter every day “*insert bitcoin term* is rising baby!!!”
Reckons he’s made 8K this month alone. He’s passing around a Microsoft word “bible” to my deluded friends who are all aboard this supposed gravy train now

Then you’ve other people who invest in shares like Tesla, impossible to know what to put your money into though.

Fixer uppers are still a thing, but unless you get 1/2 other investors into the properties who are willing to do all the renovation work and have you as a sleeping partner it wouldn’t be worth the hassle unless you enjoy that.

Shedite27

Download the Learn app, by MyWallSt. For an hour or two's education, it'll give you a free whistle stop tour of the world of investing, and help you make the decisions for yourself.

You're right, most people on the internet who "are right" are only right in retrospect. Just because someone made loads on Tesla/Amazon shares in the past 5 years doesn't mean it's right for you now.

If you're talking about investing serious money (more than a years salary), I'd talk to a broker too just to get some ideas on what options they have.

jmlad2020

CBear1993 wrote: »

Not able to help Fige as I’m in my 20s as well and would like to know this, but I haven’t invested any time at all into the whole bitcoin craic/blockchain/cryptocurrency.

What’s your thoughts on it, if any?

Some absolute gobsh*tes around these days pretending like they’re the expert on it. I know of one lad my age doesn’t work, and boasts on his Twitter every day “*insert bitcoin term* is rising baby!!!”
Reckons he’s made 8K this month alone. He’s passing around a Microsoft word “bible” to my deluded friends who are all aboard this supposed gravy train now

Then you’ve other people who invest in shares like Tesla, impossible to know what to put your money into though.

Fixer uppers are still a thing, but unless you get 1/2 other investors into the properties who are willing to do all the renovation work and have you as a sleeping partner it wouldn’t be worth the hassle unless you enjoy that.

Many Cryptocurrencies have 25x - 50x in the past 2-3 months so making 8k isn't impossible. However I wouldn't recommend Crypto if you have no knowledge of it. It's essentially gambling as outside of Bitcoin & a handful of other cryptocurrencies, all are likely to fail.

Bitcoin is essentially the Gold of the crypto world and I've been buying it for quite a while.

CBear1993

Whats the best way to get into it? Lots of time reading and learning? Mad that I actually see springboard have courses in blockchain this year as a postgrad through athlone IT or one of the colleges

StupidLikeAFox

CBear1993 wrote: »

Whats the best way to get into it? Lots of time reading and learning? Mad that I actually see springboard have courses in blockchain this year as a postgrad through athlone IT or one of the colleges

Those course are more about the technology which has many other applications of cryptocurrency

BorneTobyWilde

Interesting,

tuff1

Figel Narage wrote: »

Anyone have any recommendations?

Honestly mate with everything going on the safest bet for the moment is to keep the money in cash and see how things play out. Stock markets at an all time high, gold at an all time high, and the world is being held together by printed money. It doesn't bode well and it's well worth just taking a step back for 6-12 months and see how it pans out.

Realistically when things settle you'll want to diversify - maybe look at 50% property, 30% stocks, 20% gold/bitcoin.

Depending on your appetite for risk you can move those numbers around a bit, and choose riskier stocks etc etc

Saudades

tuff1 wrote: »

Honestly mate with everything going on the safest bet for the moment is to keep the money in cash and see how things play out. Stock markets at an all time high, gold at an all time high, and the world is being held together by printed money. It doesn't bode well and it's well worth just taking a step back for 6-12 months and see how it pans out.

That's what's worrying me too. I've opened a broker account and moved most of my cash there, picked out my ETF's on paper so to speak, but I haven't pulled any triggers yet because it seems like a bad idea to purchase anything right now when everything is at an all time high.
It's a long game and I don't wish to time the market once I'm in it - but it may be prudent to time the entry into the market.
I may just step back and leave it until after Christmas what with US elections and winter covid-19 to still come this year it seems like uncertain times.

phil

Figel Narage wrote: »

Don't have a pension yet, still pretty young but will look into getting one before I turn 30.

Surprised noone picked up on this. Max out your pension. Your employer doesn't have an obligation to provide matching contributions, but they need to provide you access to a PRSA. Pension growth compounding from an early age plus it being tax free literally can't be beaten. You will thank yourself in 10 years

perfectkama

I started a what i intend to be a long position in apple of 20K fortuitously I bought on thursday now up already 10% after better than expected results on all business's
On the 24th aug they will do 4 for 1 stock split making the share price more attractive to smaller investors setting a price around of $100 + currently $425 the split will be seamless and zero charge to holders I have attached a link below.
This is a dividend stock.

Another good stock is amzn up over 70% this year i am a longterm holder here and will continue

https://markets.businessinsider.com/news/stocks/apple-stock-split-price-what-that-means-how-many-shares-2020-7-1029455711#

Possible headwinds China...

JackieChang

Figel Narage wrote: »

Anyone have any recommendations?

You mentioned in your first post that you were interested in index funds. And you're right about the tax situation, it's a pain in the arse for Irish investors.

However there's a sort of alternative. Have a look at "investment trusts". I've started investing in one called Scottish Mortgage. Sounds extremely boring but they actually hold some "cool" stocks in their fund, for example SpaceX which is not publicly traded.

https://www.trustnet.com/factsheets/t/be08/scottish-mortgage-investment-trust-plc

The downside is they are very USA heavy - so if America shyts its pants, so does Scottish mortgage.

Some stocks are well down/at all time low due to Covid. IAG for example, depends on your appetite for risk. Some pay decent dividends.

uli84

phil wrote: »

Surprised noone picked up on this. Max out your pension. Your employer doesn't have an obligation to provide matching contributions, but they need to provide you access to a PRSA. Pension growth compounding from an early age plus it being tax free literally can't be beaten. You will thank yourself in 10 years

Isn’t it though that money put into pension can only be taken back at retirement? What if someone needs it earlier?