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Child Item

Beginning to Invest - All questions go here please

iMax

Guys,

Looking for a little bit of info from those more knowledgeable than me.

My five year old daughter has the above sum in her college fund. We've really skimped for it over the years (started before she was born).

Times are getting harder for us economically & it looks like we won't be able to contribute to it like we were (or at all) for the foreseeable future, but I want to keep it growing if at all possible.

It's currently in an AIB kids account where it ears a meager interest rate.

We were thinking of maybe the state solidarity thing or prizebonds (someone's gotta win, right???). IS there anything else we should look at ? No risk is much preferred (as much as anything can be no risk). I know you don't get as high a return, but it's my daughter's future I'm dealing with.

We don't mind it being locked away (probably a good idea in the long run). Also we'd like to be able to capitalise by being able to add to it if possible.

Looking forward to the replies

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AlphabetCards

Lads,

I'm looking to buy and hold shares in a company, as a once of purchase. Is there any mechanism for my dividends to automatically be reinvested, or to achieve this will I need to set myself up on a platform (AJ Bell) and use received dividends to purchase more shares? It's only one company I'm interested in, and I forsee myself holding onto these shares for 12-15 years.

Bone question, I know!

pavb2

I'm looking to invest about €30 k for about 10 years not interested in trading but just to get a better interest return than the banks at a low to medium risk

I'm thinking of setting up a Degiro account and investing in an ETF like the Vanguard. Is this a reasonable option or should I be looking at a government bond or something else.

Skelet0n

pavb2 wrote: »

I'm looking to invest about €30 k for about 10 years not interested in trading but just to get a better interest return than the banks at a low to medium risk

I'm thinking of setting up a Degiro account and investing in an ETF like the Vanguard. Is this a reasonable option or should I be looking at a government bond or something else.

You can't trade in US domiciled ETFs on Degiro, only EU ones.

pavb2

What are the next best alternatives?

Skelet0n

pavb2 wrote: »

What are the next best alternatives?

You can trade in EU domiciled ones, however the taxes are much worse.

jive

Skelet0n wrote: »

You can trade in EU domiciled ones, however the taxes are much worse.

Has anyone found a low-cost broker where you can trade US domiciled ones? I saw some mentioned but a follow-up post said they were not open to Irish residents. I also saw some US brokers mentioned (although >$100,000 for low fees). Anyone have any experiences / brokers worth mentioning?

Pussyhands

Can anyone explain simply what ETF, KID, US domiciled ETFs etc. are?

How is an ETF different to a single stock?

What and why are the taxes different?

rolion

Hello,

Thanks for sharing the experience...

As a matter of curiosity, laziness and not lastly being smart...may I ask you what software or trading platforms do you use daily to track shares fluctuation, yesterday/today/tomorrow prices, up & down and also inside intel and past records and future trends, PLEASE !?

Thanks.

Lenny1234

What is a foreign tax ID number for a W-8BEN form?

LunAtlFringe

For Ireland that would be your PPS number, for UK it would be your NI number, for Norway your personnummer etc.

garbanzo

Good thread folks.

In my case I am dripping €100 a month into my DEGIRO account and I am buying (so far anyway) five specific Irish shares each month. I tend to try and buy on the dips in the share prices.

I’m 19 months into this and I am down €3 as of today ! Not exactly Warren Buffet territory.

BUT I’ve a small lump sum in there which I would have probably frittered away if I hadn’t done this. Plan is to do this for around 10 years so will hopefully have €12k plus investment growth by then but I appreciate there are no guarantees when it comes to owning shares. I have some bitter experience of having held Anglo Irish Bank shares &#55357;&#56897;&#55357;&#56897;

It’s actually a bit of fun too as a big cheer goes up in the house anytime the portfolio rises. One day we’ll hopefully have enough money to fuel the yachts.

Sabre Man

garbanzo wrote: »

Good thread folks.

In my case I am dripping €100 a month into my DEGIRO account and I am buying (so far anyway) five specific Irish shares each month. I tend to try and buy on the dips in the share prices.

I’m 19 months into this and I am down €3 as of today ! Not exactly Warren Buffet territory.

BUT I’ve a small lump sum in there which I would have probably frittered away if I hadn’t done this. Plan is to do this for around 10 years so will hopefully have €12k plus investment growth by then but I appreciate there are no guarantees when it comes to owning shares. I have some bitter experience of having held Anglo Irish Bank shares ��

It’s actually a bit of fun too as a big cheer goes up in the house anytime the portfolio rises. One day we’ll hopefully have enough money to fuel the yachts.

How much are you paying in transaction fees each month? You're better off buying more shares less often, eg. spending €300 each quarter instead of €100 each month.

Jim2007

garbanzo wrote: »

Good thread folks.

In my case I am dripping €100 a month into my DEGIRO account and I am buying (so far anyway) five specific Irish shares each month. I tend to try and buy on the dips in the share prices.

I’m 19 months into this and I am down €3 as of today ! Not exactly Warren Buffet territory.

BUT I’ve a small lump sum in there which I would have probably frittered away if I hadn’t done this. Plan is to do this for around 10 years so will hopefully have €12k plus investment growth by then but I appreciate there are no guarantees when it comes to owning shares. I have some bitter experience of having held Anglo Irish Bank shares ��

It’s actually a bit of fun too as a big cheer goes up in the house anytime the portfolio rises. One day we’ll hopefully have enough money to fuel the yachts.

Have you read Warren Buffet's letters, or probably more importantly Charlie Mungers comments?

In the end you will be very lucky to come out with the money you put in at the rate you are going.

If you are investing a 100 Euro a month in five shares, then you are a great customer as far as the broker is concerned because you are paying too much in fees, even to the ones who are supposedly allowing to trade for free.

And if you are investing in 5 Irish stocks then you are failing to apply the most basic rules. With very few exceptions, Irish stocks are in terms of the investing literature small and micro caps and have no place in the small investors portfolio.

You are far more likely to come out with 12k in 10 years time, if you save up you cash for at least 6 months and then buy some kind of fund, such as say F&C Investment Trust PLC or Fundsmith or something like that.

LoganRice

-snip-

AlmightyCushion

There are some fee free ETFs on Degiro. You would be much better putting your money in these. Much cheaper and much better diversification.

indigobleat

I have gone to an independent financial advisor to set up a pension and an investment portfolio. He has organised that I go with the standard life myfolio investments. In our emails and our meetings, it has always been expressed that I would get an improved allocation rate of up to 105% because I was going through his service and would be leaving the money in the product for the medium term (I would sacrifice the improved allocation rate, if I take the money out earlier than agreed). On the back of this information, I decided I would go with his financial advice service and pay him 1400-1800 for work to be done

Now the whole thing has been set up but he just sent an email to confirm, but with the bombshell that there is no improved allocation rate available because I am investing less than 100k. So based on the €60k or so that I am investing, with no improved allocation rate, he is effectively telling me that I'm down €3000.

The ROS deadline is next week, so if I want to make a decision to stop this investment, I will lose out on the tax benefits for 2018. I also have a concern that this is the reason that he has chosen this week to drop this bombshell, leaving me with little time to arrange an alternative pension plan. I am also concerned that I am leaving my life savings with this man who has been providing incorrect information to me, and also paying him a hefty sum for the privilege.

He is accredited with the financial advisor board, but seems very junior.

Any advice? Should I go ahead with the investment? Should I ask for a discount? Is there time to go ahead with Cornmarket or someone else before the ROS deadline next week?

garbanzo

Thanks for the comments Sabre Man and Jim2007. A couple of points of clarification.

Firstly, I do understand that buying monthly as I am, the fees can add up. However, it isn’t an awful lot with a DEGIRO and I’m prepared to bear that. Let’s just say I wouldn’t be doing it this way if I was going to Davy’s or Goodbody’s !

I’m fairly well exposed to global equity markets via my pension fund so I’m happy I’m getting the benefit of that. The Irish stocks I’m holding are products I generally buy so it’s nice to take a flight or buy something and remind yourself you are (an admittedly modest) shareholder.

I’m about to contradict myself now as I have my eyes on ETFs and am considering taking a plunge on the Vanguard S&P 500 (domiciled in Amsterdam). It’s the tax treatment (8 year rule) that has me unsure though...

sk8board

I think if someone is concerned about the base €2 degiro fee, it speaks more to your actual risk profile than anything else.

I used a degiro €20 introduction which got me through those initial months of playing about, for free, but e.g. I averaged in €5,000 into SPDR recently and it cost me €2 + €1.90 = €3.90 (0.07%).

I have some free ETF's too, but they were free by coincidence rather than picking them for that reason.

The functionality alone on degiro is worth the tiny fees.

beggars_bush

I have recently inherited a 6 figure sum (after tax) and I'm trying to figure out an investment approach

I'll have a good state pension from work when I retire in about 25 years, so I'm wondering what direction would people be thinking to make that money work a bit

Jim2007

AlmightyCushion wrote: »

There are some fee free ETFs on Degiro. You would be much better putting your money in these. Much cheaper and much better diversification.

There is no such think as a fee free fund, except in the advertising. These guys are not there to make you rich, they're their to make their employers and themselves rich and they don't do it by giving stuff away free. The beauty of a fee free fund is that punters stop looking at the costs.....

AlmightyCushion

Jim2007 wrote: »

There is no such think as a fee free fund, except in the advertising. These guys are not there to make you rich, they're their to make their employers and themselves rich and they don't do it by giving stuff away free. The beauty of a fee free fund is that punters stop looking at the costs.....

*sigh* When I say fee free, I mean that DeGiro don't charge fees to buy them. When you're buying in such low quantities like the OP wants to do then this could save them a lot of money.

Jim2007

AlmightyCushion wrote: »

*sigh* When I say fee free, I mean that DeGiro don't charge fees to buy them. When you're buying in such low quantities like the OP wants to do then this could save them a lot of money.

You can sigh ally you want, of course you pay.... for every free transaction you think you are getting, the broker is paid a routine commission depending on who your transaction is processed, so getting you the best price is not an objective. I've spent 30 years in this game.... absolutely notting is for free.

TheDalioLama

What's the rationale for investing into a stock portfolio over a combo of overpaying your mortgage/ maximising pension contributions?

The latter appears low risk and guarantees a certain return (mortgage interest saving) & has tax advantages (pension). Whereas stock market gains in Ireland are taxed a bit on the heavy side, and that's after taking on some risk.

Doesn't seem worth it. Am I missing something?

sk8board

TheDalioLama wrote: »

What's the rationale for investing into a stock portfolio over a combo of overpaying your mortgage/ maximising pension contributions?

The latter appears low risk and guarantees a certain return (mortgage interest saving) & has tax advantages (pension). Whereas stock market gains in Ireland are taxed a bit on the heavy side, and that's after taking on some risk.

Doesn't seem worth it. Am I missing something?

like everything, it depends on your personal scenario - e.g. if you have a tracker mortgage, you'd be mad to pay it off early rather than investing the money, as your invested funds only need to return 1% after tax to pay for itself.

I have a 2.9% mortgage and choose to not pay it down, as in the long term returns have proven to at least match that after tax from investing the money, but most importantly I still have access to the invested funds at a few hours notice, whereas money paid into the mortgage to pay off your house can't be accessed without selling the house.

it also depends on your financial values - owning your house outright is a great feeling.

Jim2007

sk8board wrote: »

like everything, it depends on your personal scenario - e.g. if you have a tracker mortgage, you'd be mad to pay it off early rather than investing the money, as your invested funds only need to return 1% after tax to pay for itself.

But you would not be mad to:
- Invest in a high risk asset class
- Fail to diversify among classes
- Fail to diversify within the class
- Borrow to invest
- Accept a low return rate on high risk investment

There is a reason why Irish households lost more wealth in the last recession and failed to recover as quickly....

Don't confuse owning a house and investing.

Blacktie.

sk8board wrote: »

I have a 2.9% mortgage and choose to not pay it down, as in the long term returns have proven to at least match that after tax from investing the money, but most importantly I still have access to the invested funds at a few hours notice, whereas money paid into the mortgage to pay off your house can't be accessed without selling the house.

it also depends on your financial values - owning your house outright is a great feeling.

I currently have a 2.75% APR on my mortgage and was looking at the difference between overpaying or dumping the overpayment into the market. It looks like I'd need an averaged return of 6% to break even and everything above it is profit. It just doesn't seem worth it to me.

FastFullBack

Blacktie. wrote: »

I currently have a 2.75% APR on my mortgage and was looking at the difference between overpaying or dumping the overpayment into the market. It looks like I'd need an averaged return of 6% to break even and everything above it is profit. It just doesn't seem worth it to me.

Really good blog on the topic here

Basically if you invested the over-payment amount, basically it will take longer to pay your mortgage, but at the end of it you'll have an additional asset you wouldn't have had if you went down the over-payment route. Certainly food for though.

Blacktie.

FastFullBack wrote: »

Really good blog on the topic here

Basically if you invested the over-payment amount, basically it will take longer to pay your mortgage, but at the end of it you'll have an additional asset you wouldn't have had if you went down the over-payment route. Certainly food for though.

Yeah I've considered that. So I'm over paying to pay off the mortgage in 15 years instead of 33 or whatever it is now. So I'm comparing the amount of money I'd have left after 33 years for both scenarios where I 1-invest and keep the payments at minimum and 2-overpay the mortgage. Taking into account the fees and also the deemed disposal rules I'll need a 6% return to make it worth it. This is assuming I withdraw all the cash at the end but not sure how to compare like for like without doing that.

If we're just talking the break even point of 6% with scenario one I pay over twice the amount of taxes than scenario 2 but the end value is the same.

That article is calling for a 9% return. While not unheard of that's considered a very good return. The market has been unusually booming for the last few years since the major recession of 08. I just can't see it keep going that way and don't believe in this idea of perpetual growth.

sk8board

2.9% mortgage would require around 5% return before tax.
I had a 1% tracker, paid off in 2012, which would be less than 0.5% rate today (less than the rate of inflation).
I don’t regret paying it off, as it’s a great feeling, but I know I could have done more with the money too.

Perhaps a bigger question to consider is if you might need that money in the short/medium term.
if you put money into a mortgage, it’s essentially gone forever (or until you sell, but then you still need to live somewhere presumably).

Also, personally I wouldn’t pay off my mortgage before having a fund for kids college, or the next car change or whatever; never mind a 6-month rainy day fund.
Touch wood if you found yourself sick, having your money tied up in the house won’t be of any use.

rodge123

Looking to start putting about €300 a month aside for our daughter who is two. Might help her through college or with a property in 20+ years.

Unsure if we should pay it into a fund of some sort or pick and choose companies to invest in individually.
Pro and Cons of each option? What are best long term growth prospects if picking a fund? Lot of research and market watching required if going to invest individually?

Cheers