Results from investing in just the S&P500

Cyrus

https://www.boards.ie/discussion/comment/118423313#Comment_118423313

It'll be down longer than a day and I think long term apple may struggle , they haven't innovated since jobs passed away in my opinion and that will catch up eventually.

Pussyhands

https://www.boards.ie/discussion/comment/118424494#Comment_118424494

Doesn't really matter what Apple does. Steve Jobs was seen as the main man, who died prematurely in his prime. Buffet is 91, you're naive if you think BRK.B isn't going to be left in good hands.

Cyrus

https://www.boards.ie/discussion/comment/118424543#Comment_118424543

of course it matters what they do, yes Jobs was the main man, and they have prospered since he died, but that has been off the back of the products he introduced, people wont accept annual refreshes of the same devices forever, i hope they have something else to offer because if they dont it will be a similiar story to their demise a few decades back.

I am sure BRK.B will be left in very capable hands but you are naive if you don't think him dying will impact a) the share price in the short to medium term and b) the overall direction they take.

StupidLikeAFox

OP, why did you go for S&P500? I know it's prob the most well known, but did you consider an all-world etf or diversifying a bit with an emerging markets etf?

notsocutehoor

I'd expect that Buffet's involvement at the moment is just a light hand on the tiller, his leaving/death will have an immediate negative impact on the share price (buying opportunity) but it will rebound quickly imo

Pussyhands

https://www.boards.ie/discussion/comment/118425578#Comment_118425578

Apple will, as they say they will, be known as a health care company. You already see it in their ads. "X fell off his bike and was unconscious, Apple watch rang emergency services and gave coordinates.

TalleyRand83

Is there some merit in the etoro smart portfolios to avoid the tax hassle that ETF's bring (8 year deemed disposal)? I hope I'm correct about this.

I'm looking at the euro economy and Asian dragons smart portfolios as a wide reaching insta-diversication to go along with my own stock picks.

Something along the lines of allocating funds going forward:

50% My own pick portfolio (which is very heavily weighted towards US stocks)

30% Euro Economy

20% Asian Dragons portfolio

theleanist

https://www.boards.ie/discussion/comment/118425631#Comment_118425631

Hi StupidLikeAFox, yes I considered a few options. When I started looking at the whole area of investing I hadn't a clue of index funds vs managed funds etc. I was thinking of picking individual stocks etc. But, after a bit of research I liked the strategy of just investing in index funds with the lowest fees. It was what I was most comfortable with, and seemed to provide a decent return from what I read. So, I decided to give it a go on that basis.

In terms of why S&P - It was actually something I read about Buffet and where he wanted his estate to be invested for his family after he dies. He had instructed his trustees to put 90% of his estate into a low cost S&P 500 index fund for his family after he dies.

"The 90/10 plan

Buffett's plan is about as simple as it gets. In his 2013 letter to Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) shareholders, he wrote that the instructions in his will state that the trustee is to invest 90% in a low-cost S&P 500 index fund, with the remaining 10% to be invested in short-term government bonds. (Note: all of Buffett's Berkshire shares will be distributed to charities.) "

Source: fool.com/investing/2019/09/08/warren-buffetts-investing-plan-for-his-family-why.aspx

Buffets reason why...

"I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions, or individuals -- who employ high-fee managers."

So, I thought if this is what Warren Buffet would choose for his family it would be a good place to start for mine!

massdebater

https://www.boards.ie/discussion/comment/118480113#Comment_118480113

That's interesting he's giving all his Berkshire shares to charities when he dies. That'll be a lot of shares to be sold then! Anyone know what % of berkshire Buffet owns?

theleanist

Happy New Year everyone!

So…I'm sure January hasn’t been a good month for most investing here! Hopefully things settle soon in east Europe for everyone involved over there.

Just to recap

The purpose of this thread is to give regular updates on (1) the performance of my first trade and (2) the value of my overall S&P500 investments. I know the results are quiet small in comparison to some of the other figures posted elsewhere on the forum, especially on the Prize Bond thread. But, hopefully people find it an interesting thread to follow.

The performance of my first trade

• I purchased 26 units of the S&P for €40.685 in July 17
• The current buy rate as of 25.01.22 is €73.153
• This works out as a 10.27% AER after tax
• The best available regular saving rate available to me in July 17 was 1.5% AER after tax from the 10 Year National Solidarity Bond.
• So, despite recent stock market drops, still far better results than if I had invested in a regular saver.

The value of my overall S&P500 investments

• I purchased another 17 units of the S&P500 (VUSA) at a total price of €1,244 yesterday. This means, in total, I’ve invested €39,227 into the S&P500 (VUSA) since July 2017
• The value before tax now stands at €55,480
• The value after tax is €48,799
• And the profit after tax is €9,571

My investment goal for 2022

I purchased almost €14K of the S&P in 2021. This was really good going, but was helped by Covid – I went nowhere so spent nothing! I don’t expect I’ll have such a frugal year in 2022. I do want to keep the momentum going however. My aim for 2022 is to purchase at least €12k of the S&P during the year.

jon1981

https://www.boards.ie/discussion/comment/118533596#Comment_118533596

Good plan. Scaling into ETFs every 2-4 weeks is the best risk management approach vs dropping in a one off lump sum every year.

SnowyMuckish

https://www.boards.ie/discussion/comment/118556784#Comment_118556784

Just wondering can you explain why you think it’s better to invest regularly instead of once a year? Isn’t there tax implications? Trying to learn from the sidelines here thanks!

jon1981

https://www.boards.ie/discussion/comment/118556815#Comment_118556815

The tax is no different whether you're dripping feeding it in or a lump sum, assuming you have actual gains. The benefitting of investing regularly is that you smooth out massive drops in the market by having readily available cash to take advantage of those very drops. You limit your downside exposure.

https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=1943bd1c7c50

SnowyMuckish

Don’t you have to remember each date of purchase and value on that given day to file your taxes on the 8th year? So multiple purchases more complicated? Maybe my understanding isn’t right yet!

jon1981

https://www.boards.ie/discussion/comment/118556866#Comment_118556866

right, so you have more admin to take care of, but the tax is burden is no different. You can get a report from your broker account handy enough to save you remembering.

From what I've read, lump sum investing can out perform regular investing but that tends to be over a 20 year period to account for boom/bust cycles.

Irish94

https://www.boards.ie/discussion/comment/118421119#Comment_118421119

Just to confirm, is it €20,000 or €100,000 of your investment that is guaranteed if DeGiro did go belly-up?

Pussyhands

https://www.boards.ie/discussion/comment/118557094#Comment_118557094

Just to add one thing, and I'm not sure if this is correct but I assume it is....your shares are safe. If you own shares and a broker goes down, you still own the shares.

I think the guarantee is for cash lodged in degiro, that's not in your portfolio.

Layne

Does the OP have to deal with managing dividends?? Do these have to be noted separately for tax purposes??

I see that the Blackrock equivalent to VUSA (called CSPX) reinvests any dividends automatically, not sure if VUSA does.

Also OP have you any update on your investment at the end of Q1 2022??

Marymoore

Hi OP, just curious about fees when investing. Is it better to do one lump sum or invest bits each month? Are you charged monthly transaction fees or how are fees charged on degiro?

notsocutehoor

https://www.boards.ie/discussion/comment/118875409#Comment_118875409

There are no monthly/annual fees with Degiro, and if you are trading certain ETFs there are no fees for buying/selling either. Details here https://www.degiro.ch/data/pdf/ch-en/Free_ETFs.pdf

AmberKat

https://www.boards.ie/discussion/comment/118397989#Comment_118397989

Hey OP,

I would not recommend this approach as you are locking in the tax payment, gain and new price, eliminating the opportunity for it to balance out if the value of the ETF drops in the future.

As an example (I'll keep it in dollars to avoid the currency exchange complexity and cost, also ignoring the monthly limit on free trades that Degiro have for the same reason)

Buy 100 ETF shares @$1 => $100

After 8 years you have 100 ETF shares @$5 => $500

This is a $400 Gain = $164 DD Exit Tax (41%)

If you sell and rebuy you now have a cost base of $5 per share, with $336 remaining to invest which allows you to:

Buy 67 ETF shares @$5 => $335 in shares and $1 left over that you can't reinvest.

After 5 years you decide to sell but the shares are only worth @$4 each now you don't owe any tax because you are now making a loss compared to the new cost base but you can't reclaim the tax you overpaid earlier. Which means you end up with $268 (plus the $1 that you couldn't reinvest)

If you can pay the tax due from other cash you have, you would be due a tax rebate if you end up selling for less as you would have overpaid the tax. So you paid $164 in year 8 but now you are selling @$4 you would only have owed $123 so you can claim back $41 which leaves you with: $277 (100 shares instead of the 67 plus the tax rebate less the tax paid previously) => $8 more

The other option if you don't have the cash from other sources, it to only sell what you need to sell to cover taxes. It's messier than not selling anything but allows you to benefit from the tax rebate if you need to sell when the price is lower in the future.

Since you are investing regularly it just means you buy less or don't buy new shares that year to cashflow the tax.

AmberKat

https://www.boards.ie/discussion/comment/118421119#Comment_118421119

It's worth clicking on the link in that answer as it would be easy to misunderstand and think you are only covered to €20k in shares, when it's not actually saying that (see below). My understanding always was that the €20k is only supposed to cover you for transactions in process if they became insolvent. So your shares that you have already purchases and are just holding are yours and not in danger. Which now that I double check today everything on both sites seems to confirm this:

Degiro confirm this on their website:

At DEGIRO you can rest assured that your investments are held securely. We use a separate legal entity (SPV) to hold your assets. This means they are held separate from the assets of DEGIRO. The sole task of this entity is to administer and safeguard your investments. By law, it cannot perform any commercial activities. In the event that something would happen to DEGIRO, your investments will not be treated as recoverable assets to creditors and will remain in the safekeeping of the separate entity

I do wonder how the type of account you have with Degiro might impact on the below, but as I have a custody account I haven't investigated.

https://www.bafin.de/EN/Verbraucher/Schieflage/Einlagensicherung/einlagensicherung_node_en.html

What funds are covered by the statutory investor compensation schemes?

Liabilities from securities transactions that are payable to customers are covered by the statutory investor compensation schemes. This includes funds owed to investors in connection with securities transactions (e.g. dividends, distributions or disposal proceeds).

The schemes also protect your claims against your bank for the return of the securities held in custody for you. You are eligible for compensation if an institution has embezzled or misappropriated your securities or funds and is no longer able to return them.

If your insolvent bank has misadvised you, however, the investor compensation schemes will not apply. You will thus not be compensated for any lost profits or losses incurred due to a misguided investment strategy.

Do deposit guarantee schemes also cover securities?

Securities (including shares in investment funds) are not deposits. They are owned by the customer and not the bank, which merely holds the securities in custody on behalf of its customers. In the event of insolvency, assets under management in securities accounts may therefore be transferred to other institutions if they do not serve as security (collateral) for amounts owed to the bank in question by the customer. Special protection is not required for this reason.

garbanzo

Eh….it’s a bit of a crock ‘o sh1te this last few weeks. I still plan to hang on in for the long term.

g

Atlas_IRL

https://www.boards.ie/discussion/comment/119054663#Comment_119054663

Keep dollar cost averaging in, any drops will eventually recover and the cost basis will balance out.

BishopBrennen

https://www.boards.ie/discussion/2058221794/results-from-investing-in-just-the-s-p500

Interesting thread, fair play!.

Can I ask which VUSA ETF do you purchase, which stock exchange version? I see degiro offer it on EAM / TDG / LSE / SWX / MIL. I'm guessing the EAM Netherlands exchange but just making sure?

Also, will you be doing the tax yourself on it? If only one original initial lump sum was purchased into the ETF would the tax be as simple of 41% of any unrealised gains at yr8 on that 1 purchase and therefore be very simple to calculate. Or am I being too simplistic?

HillCloudHop

For those not aware, the investment trust JAM tracks the S&P 500 very well and is taxed as a single stock under CGT.

BishopBrennen

https://www.boards.ie/discussion/comment/119194187#Comment_119194187

I looked into I.T's a little as an alternative to an ETF or Index fund. The main con's of an IT I could see were it relies on a human fund manager beating the market (or does it? Does it just track the Index?), fund fees and also stamp duty to be paid on each purchase? More risky than an Index fund / ETF.

Pro's (that I see)- simple tax like stocks CGT. Can offset losses against other CGT's, etc.

It's widely stated that passive funds beat actively managed fund every time over a long term, is it different for a trust such as JAM by the way it tracks or tries to act like an Index tracker?

HillCloudHop

https://www.boards.ie/discussion/comment/119202953#Comment_119202953

Past performance is no guarantee of future results, but JAM play it pretty safe with their holdings and are diversified by sectors. Nothing too fancy. They have beaten VUSA (S&P 500 index fund) over the past 5 years for what it's worth. I can't see them deviating too much from the S&P 500 performance.

https://www.google.com/finance/quote/JAM:LON?comparison=LON%3AVUSA&window=5Y

BishopBrennen

https://www.boards.ie/discussion/comment/119203856#Comment_119203856

Thanks for the tip, it seems strange that an actively managed fund beat the S+P index over a 5yr period.

What exchange do you purchase it on, it doesn't appear to be listed on Degiro or at least I don't see it?

TheTruth89

https://www.boards.ie/discussion/comment/118887782#Comment_118887782

Why is the Tax at 41% for exiting? its abit excessive no? basically taking half of what ever you have made..

Is this just an Irish thing where the revenue rinse you or is this the standard tax for this the world over?

HillCloudHop

https://www.boards.ie/discussion/comment/119208051#Comment_119208051

I buy JAM on Interactive Brokers. I do think IB is a better broker overall compared to DEGIRO. They have generally lowers fees and more access to stocks and funds. They got rid of their monthly inactivity fee last year too, which is another plus.

Many of the more diversified boring investment trusts do have pretty decent long-term records. FCIT is another option if you want more global exposure. It's similar to a global tracker and has been around long before index funds even existed. It will never outperform the market by much, but the management team is sensible and won't do anything crazy either.

https://www.google.com/finance/quote/FCIT:LON?comparison=LON%3AVWRL&window=5Y

The investment trusts that go off the beaten path are higher risk. SMT is one which is growth heavy and has done poorly since November. Very volatile.

Mad_maxx

https://www.boards.ie/discussion/comment/119194187#Comment_119194187

Is that the JP Morgan investment trust ?

Mad_maxx

I'm thinking that based on the exit rule and 41% tax after eight years, Berkshire Hathaway might be the best bet for passive investing ,that JPM investment trust looks appealing but you still have 0.5% annual fees and it's a lot less liquid than Berkshire, Berkshire tends to lag the S+P but should do well in next number of years due to significant exposure to banks

TalleyRand83

https://www.boards.ie/discussion/comment/119194187#Comment_119194187

Finally an easier way for S&P500 investment, not seeing it on DeGiro so guessing I'll have to set up an IB account

Shedite27

https://www.boards.ie/discussion/comment/119247593#Comment_119247593

Berkshire is a great idea for the coming years, ultimate value stock which tends to do well when internet rates rise.

Euppy

Unfortunately you need $400k to buy one share of Berkshire! They really need to do a stock split, but that would detract from the coolness of the AGM

MiketheMechanic

https://www.boards.ie/discussion/comment/119276853#Comment_119276853

Just buy BRK.B. Trading around $275 at the moment 🙂

Euppy

never thought of other class of shares. Thanks!

Wombatman

This thread is about results right? We see many posts stating exact gains when markets are booming. My portfolio is down around 20% since the start of the year. Wondering what to do about it. I expect most on here are in a similar boat.

Shedite27

https://www.boards.ie/discussion/comment/119292933#Comment_119292933

Down 20% for the year? Stop boasting

TalleyRand83

https://www.boards.ie/discussion/comment/119219139#Comment_119219139

What other funds are there like the JP Morgan S&P but cover specific other indices, are there good UK & European ones?

Layne

Bit the bullet today and lobbed a few quid into the Vanguard S&P 500 VUAA ETF.

The main reasons I went with this one over the more popular VUSA ETF is that it is traded in Euros on the Milan SE so no Fx fees. Also, it is accumulating so no dealing with dividend payments and managing the tax on them.

I plan to buy every 3 months approx. On the advice of another Boardsie I have calculated the approximate tax due on each investment as it matures on its 8 year anniversary, I will save this amount seperately so that if I do not want to sell after 8 years I can just pay the tax due and continue to hold as the returns grow exponentially over time. That is the plan anyways. I just hope my tax calculations are accurate!!

TalleyRand83

https://www.boards.ie/discussion/comment/119325792#Comment_119325792

Anyone got any info on this? I'd much rather investments like JAM as the tax care involved in ETF's would drive me mad as I'm looking to throw lumps of money in when I can rather than methodically. JAM covers S&P but hoping for all world or specific like FTSE and Euro too, thanks

HillCloudHop

https://www.boards.ie/discussion/comment/119541113#Comment_119541113

Find & Compare Investment Companies | Closed-End Funds | The AIC

Try that investment trust site, see if there is something suitable for you.

I've invested in several ITs besides JAM.