Is investing in a stock like BRK a tax effective alternative to ETFs?

brainboru1104

What are the pros and cons of such an approach?

peacock20

Tax effective alternative, yes. Taxed as a stock @33% on gains when sold. No deemed disposal rule. Just decide whether you think the holdings in the stock is enough for you. IMO not a bad way to invest passively, but others may differ. Fair to say that Buffet and Munger are in God's waiting room now, that might sway peoples thoughts, if they are still in charge of things at all, that is

Is there deemed disposal on an ETF that pays out dividends? As far as I know the reason you pay the tax on year 8 is because the ETF has been accumulating, but if you pay tax on your dividends maybe that's not the case? Although I think I know the answer to that.

Will probably just go with an investment trust like FCIT, it's much more diversified than BRK. But have to do more research into it first.

massdebater

https://www.boards.ie/discussion/2058216245/is-investing-in-a-stock-like-brk-a-tax-effective-alternative-to-etfs

Brk top 10 holdings are something like 40% Apple, 4/5 banks, Coca cola, Heinz etc. It's a tax effective option, yes, but not a good substitute for an S&P 500 type etf/investment trust imo.

brainboru1104

https://www.boards.ie/discussion/comment/118120987#Comment_118120987

What is FCIT? Is that taxed differently to ETFS?

brainboru1104

https://www.boards.ie/discussion/comment/118121379#Comment_118121379

Yeah, it's not as diversified. But I suppose it does allow someone to invest in a portfolio without having to manage it.

I don't really have the time to do that, but I'd like to use my savings for something, especially with current interest rates and inflation.

grassmoon

Investment trusts are good option too.

Viscount Aggro

Currency risk to USD.

Estate taxes on anything over 60k,

Rules it out for me.

Diarmuid

https://www.boards.ie/discussion/comment/118125636#Comment_118125636

Doesn't the estate taxes only apply to US domiciled brokers? Comment in another thread

https://www.boards.ie/discussion/comment/92931539#Comment_92931539

Yellow_Fern

https://www.boards.ie/discussion/comment/118125601#Comment_118125601

The attraction of Berkshire, or equivalents, is avoiding income tax on dividend income, which cannot be avoided on investment trusts.

grassmoon

https://www.boards.ie/discussion/comment/118136190#Comment_118136190

The main attraction is avoiding deemed disposal. The income on dividends isn't the major issue here. If you want to avoid dividends, then growth ITs like SMT or MNKS are options.

Supercell

Many IT's dont give any or very little dividends, compare annual performances of BRK.B to SMT, you might get a surprise, BRK.B isnt the only show in town. IT's (unlike ETF's) are treated the same as ordinary shares here for CGT purposes.

BAM is another US stock that has outperformed the market for many years too.