Any thoughts on long term investment

Shai wrote: »

VTI etf. Easiest long-term investment you can make.

Out of curiosity, could you link me to the investment your bank was trying to get you to make?

VTI is a great suggestion in general. However, the problem is the high tax that currently goes along with that for us Irish investors.

Couple of things:

- this fund is a massive rip-off. It's a passively managed fund with a 1.67% expense ratio if held for 7 years and 7.61% expense ratio if held for 1 year. These numbers are insanely bad. The VTI etf has a flat expense ratio of 0.04% per year.

- VTI is an ETF that invests into the total US Stock Market. Unfortunately because of legislation that became active at the start of this year, it is no longer being offered by DeGiro. Although it is possible to get an account with a US stock broker (like firstrade.com) and buy VTI shares through that. Keep in mind that you will incur wire transfer fees when dealing with US brokers ($25 per transfer), so you would want to transfer sufficiently large amounts so as to keep the number of transfers down. Furthermore, there is a $50 charge for withdrawing money from this broker, so this would very much be for long-term investments only.

- the closest thing that DeGiro has to a VTI replacement is the VUSD etf. Both VTI and VUSD are owned by the same company (Vanguard) which has a very very solid reputation. Having said that, VUSD has a 0.07% expense ratio, and unlike VTI - which invests in the total US market - it only invests in the S&P500 (which really isn't that big of a difference).

Now, VUSD is what's called a UCITS etf, which means it is compliant with certain aspects of EU legislation that non-UCITS etfs aren't. This is also the reason why the expense ratio is slightly higher, as well as why DeGiro can offer it. However, UCITS etfs are taxed less favourably than non-UCITS etfs. A thread about this can be found at https://www.boards.ie/vbulletin/showthread.php?t=2057822332.

Anyways, sorry for the info dump, but that's a bit of background you might find handy when you find yourself trying to figure out what a lot of EU investors have been talking about the last few months. Best of luck!

Yes VTI is the name.
The full name is Vanguard Total Stock Market ETF (and VTI is the 'symbol' for that fund). It can be a bit confusing if you're new to it.

Have a look here:
https://finance.yahoo.com/quote/vti

As a complete novice, what differentiates a VTI from Bernie Madoff?

Would suggest it might be worth looking at some UK Investment Trusts due to the more favourable tax treatment if it is going to be a long term investment (33% CGT at sale rather than 41% exit tax with 8y deemed disposal, no offsetting losses). There are a lot to choose from with different flavours of investments. They cost a bit more than an ETF but they can also provide more protection in a bad market depending on what they are investing in.

Straight equity exposure could be something like scottish mortgage trust or foreign and colonial.

Long term capital growth and preservation would generally put you with Personal asset trust, RIT Capital (Rothschild) or Caledonia (Cayzer). There's something reassuring about your money being in the same pot as the poshos but ETFs are very good, especially if you can get US domiciled. One thing to note is that if brexit hits hard it shouldn't do too much damage if you have picked a globally diversified trust as most assets will be earning money outside the UK.

list below, with charges and performance :-

http://tools.morningstar.co.uk/uk/cefscreener/results.aspx?LanguageId=en-GB&Universe=CEEXG%24XLON&CurrencyId=GBP&URLKey=t92wz0sj7c&Site=UK

Hi dublin2000 - if you go to the "closed-end fund screener" below you can select the risk level you can tolerate (e.g. low, -avg, avg) and your minimum acceptable return (e.g. 5% on 5y and 10y). You can also filter out funds with high fees.

http://tools.morningstar.co.uk/uk/cefscreener/default.aspx?LanguageId=en-GB&Universe=CEEXG$XLON&CurrencyId=GBP&Site=UK

Once you've picked some promising ones the best thing to do would be to open their profiles and read their last annual reports (especially what it says with regard to investment strategy) and see if that fits with your preferences.

It can be a bit daunting for sure, lots of info there, but take your time and make sure you get something that is right for you. I'm just a retail investor like yourself, investing savings for the future.

Jim2007 wrote: »

How exactly is VUSA a growth fund? It is simply a large caps index tracker... and with such a high concentration of companies reporting in dollars it might become uncomfortable if say the Chinese decide to reduce their position in US bonds.

You seem to be completely concentrated on large caps, thus missing out on most of the growth that comes from mid caps and small caps.

If you want dividends you’re probably better to pick up some of the traditional dividend companies directly when they are going cheap and avoid the Irish tax implications of holding through an ETF.

The large funds that track shares aim to benefit from the principal of diversification, which you get from a fund that tracks a large basket of shares.

The phrase ''blindfolded monkeys outperform fund managers'' springs to mind.

If you are interested in it, have a read of ''A random walk down Wall Street'', written by Burton Malkiel and published in 1973, now in it's 11th edition. According to the author the principal holds true to the present day - stocks picked at random outperform investment managers. He was asked by the Wall Street Hournal IIRC to do the first random selection many years ago and was pitted against fund managers, and his picks beat the fund managers picks.

Heres a summary of the Wikipedia entry for the book:
''Malkiel examines some popular investing techniques, including technical analysis and fundamental analysis, in light of academic research studies of these methods. Through detailed analysis, he notes significant flaws in both techniques, concluding that, for most investors, following these methods will produce inferior results compared to passive strategies.
Malkiel has a similar critique for methods of selecting actively managed mutual funds based upon past performance. He cites studies indicating that actively managed mutual funds vary greatly in their success rates over the long term, often underperforming in years following their success, thereby regressing toward the mean. Malkiel suggests that given the distribution of fund performances, it is statistically unlikely that an average investor would happen to select those few mutual funds which will outperform their benchmark index over the long term.''

Jim2007 wrote: »

I've spent over 25 years working in the Swiss financial services sector primarily as a vendor of performance and attribution services. I've read all the materials you have quoted and an awful lot more.

Your post in no way answers my question to the OP: why he considers a tracker on a large cap index to be a growth fund.

I appreciate your experience in the financial services is far in excess of most of us on here.

I think you are asking the wrong question at the wrong time for the OP. He is starting out in investment, and could use a steer IMHO. Plus a reading list to educate himself.

I think your own advice is contained and expounded upon in another book ''the Zulu Principle'' by Jim Slater where he explains how to select small dynamic stock and shares.

Squozen wrote: »

Do you have any suggestions? I was planning to cash out when I buy a house in the next 12 months but I'd still want to be putting money into stocks afterwards. I thought the ETF tax issue only hit when you had invested for 8 years?

Disclaimer: I am Australian and know very little about Irish tax, probably to my detriment.

12 months is much too short for an ETF I would say.

Tax is due at 8 years or upon realisation of gains.