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s&p funds vs individual stocks + 8 year deemed disposal

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  • 05-01-2019 7:44pm
    #1
    Pussyhands
    Registered Users Posts: 8,239 ✭✭✭


    Are the funds much less attractive with the 8 year deemed disposal rule?

    Are they not worth going for?

    BTW not just S&P but any ETFs.


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    #2
    Austria!
    Registered Users Posts: 1,435 ✭✭✭Austria!


    They're so much more attractive than stockpicking you should just suck it up. SP500 has great gains but these come from only a fraction of companies and you're unlikely to pick them. The biggest mistake people make after that is cashing in winning stocks too early, which can't happen with index funds.


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    #3
    Jim2007
    Moderators, Business & Finance Moderators Posts: 9,988 Mod ✭✭✭✭Jim2007


    Pussyhands wrote: »
    Are the funds much less attractive with the 8 year deemed disposal rule?

    Are they not worth going for?

    BTW not just S&P but any ETFs.

    It is not that simple. You are talking about comparing investing strategies not stocks versus funds. Index investing is a strategy as is value investing, growth investing, dividend investing and so on. Each requires a different skill set and mentality.

    Index investing requires the least skill and time commitment and is probably the lest taxing from a mentality point of view. All you have to do is dollar cost average on an index and hold your nerves during a recession so that you continue to invest regularly. It is unlikely that you will ever see your portfolio to fall in value below the index by much, so the urge to get out is not so strong.

    Other strategies based on individual stocks require a lot of time, skills, confidence in your abilities and nerves of steel. You need time and skill to identify the best stocks that meet the strategy, confidence in your decision making to execute it and the nevers for the rough ride it will require to see it out. There will be times when your portfolio will be up 80% or more and others when it is down maybe up to 40%! In my experience (30+ years), very few people can execute such strategies over the long term.

    So while the tax implications of index investing may seem high, my expectation would be that most people will still fair better with it, than trying to follow other strategies.


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    #4
    Mach 3
    Registered Users Posts: 233 ✭✭Mach 3


    OP, the way you are still looking at different strategies, suggests that you have yet to find what you're comfortable with. Personally I would be of the opinion that you have the makings of a options trader, but you would need to spend at least six months researching and start answering your own questions.

    Further to Jim's point on maintaining discipline - we are now seeing lack of it in the ETF sphere from retail/small investors.
    Anyone who thinks ETF's are a buy and hold for the long term without management is seriously deluded (many are now questioning their nerves) . Even Mr Buffett takes profits.


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    #5
    Austria!
    Registered Users Posts: 1,435 ✭✭✭Austria!


    Mach 3 wrote: »
    Anyone who thinks ETF's are a buy and hold for the long term without management is seriously deluded (many are now questioning their nerves) .


    I would counter that anyone who thinks they can time the market is more likely to be deluded.


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    #6
    Mach 3
    Registered Users Posts: 233 ✭✭Mach 3


    Austria! wrote: »
    I would counter that anyone who thinks they can time the market is more likely to be deluded.

    You are not countering anything. Re-read what you quoted, this time include the words "without management" that you apparently skipped over.


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    #7
    Austria!
    Registered Users Posts: 1,435 ✭✭✭Austria!


    I didn't miss them. I thought you meant that you were actively managing the ETF, which could only mean deciding to sell and buy at various times instead of holding for the long term. If that's not what you meant then I don't know what you meant.


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    #8
    An_Toirpin
    Banned (with Prison Access) Posts: 424 ✭✭An_Toirpin


    Austria! wrote: »
    They're so much more attractive than stockpicking you should just suck it up. SP500 has great gains but these come from only a fraction of companies and you're unlikely to pick them. The biggest mistake people make after that is cashing in winning stocks too early, which can't happen with index funds.
    The exit tax regime is brutal. What if you find yourself at a deemed disposal of a lump sum during a 2011-like year. You could find yourself paying tax with zero profit. If you just buy a random 20 companies in the S and P is it really likly to be worse?


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    #9
    Jim2007
    Moderators, Business & Finance Moderators Posts: 9,988 Mod ✭✭✭✭Jim2007


    An_Toirpin wrote: »
    The exit tax regime is brutal. What if you find yourself at a deemed disposal of a lump sum during a 2011-like year. You could find yourself paying tax with zero profit. If you just buy a random 20 companies in the S and P is it really likly to be worse?

    That is probably the worst case scenario, but even still it is not a loss capital, which you almost certainly would have incurred if you went stock picking. The reason being you are ignoring what we today call Behavioral Finance. Most money is lost because of this, rather than anything else. Look at the price of GE for instance, if you bought it in say 2016 as part of your 20 stocks at 31, would you still hold it today at 8, or would you have sold off the end of this year... And when it turns around at what price will you buy back in 17, 18 higher...


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    #10
    dor843088
    Registered Users Posts: 1,171 ✭✭✭dor843088


    Why don't people just dollar cost average into berkshire hathaway ? It's basically an index fund , it's got the best stock picker of all time , no silly 8 year deemed disposal tax nonsense ,dividends reinvested tax free . Am I missing something?


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    #11
    jive
    Registered Users Posts: 5,762 ✭✭✭jive


    dor843088 wrote: »
    Why don't people just dollar cost average into berkshire hathaway ? It's basically an index fund , it's got the best stock picker of all time , no silly 8 year deemed disposal tax nonsense ,dividends reinvested tax free . Am I missing something?

    You’re not missing anything but you are ignoring the obvious risks. It’s essentially one company, doesn’t outperform index funds like it used to, munger and Buffett don’t have much left in the tank and it’s nowhere near as diversified as an index fund.

    For Irish tax purposes, it probably makes more sense than exposing yourself to the deemed disposal rule but personally I wouldn’t put everything on one company whereas I’d happily put everything on an index fund.

    Given the tax advantages it should definitely be considered as part of anyone’s portfolio. Still can’t believe how daft the tax rules are here on investments.


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    #12
    An_Toirpin
    Banned (with Prison Access) Posts: 424 ✭✭An_Toirpin


    dor843088 wrote: »
    Why don't people just dollar cost average into berkshire hathaway ? It's basically an index fund , it's got the best stock picker of all time , no silly 8 year deemed disposal tax nonsense ,dividends reinvested tax free . Am I missing something?
    There a few other holding companies that have similarities but none seem to really perform exactly like an index which is a worry.


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    #13
    Austria!
    Registered Users Posts: 1,435 ✭✭✭Austria!


    What's the standard diversified low fee ETF available on degiro these days? Is there a real cause for anything more global than the VANGUARD S&P500?


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    #14
    Diarmuid
    Registered Users Posts: 3,981 ✭✭✭Diarmuid


    dor843088 wrote: »
    Why don't people just dollar cost average into berkshire hathaway ? It's basically an index fund , it's got the best stock picker of all time , no silly 8 year deemed disposal tax nonsense ,dividends reinvested tax free . Am I missing something?

    Since / until the KPI issue with US based ETF's is resolved, this is the approach I'm taking.


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    #15
    dor843088
    Registered Users Posts: 1,171 ✭✭✭dor843088


    Diarmuid wrote: »
    Since / until the KPI issue with US based ETF's is resolved, this is the approach I'm taking.

    Just berkshire ? I like markel as well. There are a few others but those two I like best.


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    #16
    rkelly174
    Registered Users Posts: 22 ✭rkelly174


    Can you buy this Berkshire Hathaway in Degiro? If so what is it called?


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    #17
    cefh17
    Registered Users Posts: 990 ✭✭✭cefh17


    rkelly174 wrote: »
    Can you buy this Berkshire Hathaway in Degiro? If so what is it called?

    Brk.B


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    #18
    Mach 3
    Registered Users Posts: 233 ✭✭Mach 3


    DzeyY69WoAEmcuL.png:large


    For those that were wondering.


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    #19
    heffo500
    Registered Users Posts: 963 ✭✭✭heffo500


    I have purchased stocks in the past but am I trying to understand my tax liability in regards ETFS, Does any one have an article/document where I can work out my tax liability?


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    #20
    heffo500
    Registered Users Posts: 963 ✭✭✭heffo500


    Diarmuid wrote: »
    Since / until the KPI issue with US based ETF's is resolved, this is the approach I'm taking.

    Have you seen any US ETFs resolving this? I am correct in saying due to Mifid II we cannot purchase a US ETF unless it has a KIID produced?


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    #21
    Taylor365
    Registered Users Posts: 2,994 ✭✭✭Taylor365


    Mach 3 wrote: »
    DzeyY69WoAEmcuL.png:large


    For those that were wondering.
    What is the last price? (Scale to the right) Points? It's not dollars.


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    #22
    Diarmuid
    Registered Users Posts: 3,981 ✭✭✭Diarmuid


    heffo500 wrote: »
    Have you seen any US ETFs resolving this? I am correct in saying due to Mifid II we cannot purchase a US ETF unless it has a KIID produced?

    I haven't checked recently but I doubt it will resolve itself.


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    #23
    heffo500
    Registered Users Posts: 963 ✭✭✭heffo500


    Diarmuid wrote: »
    I haven't checked recently but I doubt it will resolve itself.

    I asked Blackrock iShares and received the below:


    We apologize for the delayed response. Unfortunately, BlackRock does not offer Key Investor Information Documents (KIID) for our US domiciled ETFs and we do not have any plans at this time to register the US domiciled ETFs in the EU. However, we may offer similar products that are registered and domiciled in the EU which can be found at the link below:

    https://www.blackrock.com/uk/individual/products/product-list#!type=ishares&tab=overview&view=accordion


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