Degiro vs trading212(invest)

Amouar · 17-04-2020 2:05pm #1

Hi all,

I have an account with Degiro since they started accepting Irish customers, but i recently came across trading212(invest) which seem to be a much better option as they don't appear to charge any trading fee.

They look too good to be true, therefore I wanted to check if anyone has any experience using trading212(invest) and whether it's worth moving from Degiro to them.

Thanks

JMMCapital · 17-04-2020 3:04pm

I would not recommend Trading212. They are for trading in CFDs which are an extremely risky form of derivative and highly speculative stick with Degiro.

Amouar · 17-04-2020 3:29pm

JMMCapital wrote: »

I would not recommend Trading212. They are for trading in CFDs which are an extremely risky form of derivative and highly speculative stick with Degiro.

They have 2 separate platforms, one for CFDs and one for stocks and ETFs called "Invest".

I was asking about "invest" and have been reading a few reviews online, it seems like the main issue is the low guarantee of 20k Euros as they are based in Bulgaria.

outonawing · 17-04-2020 5:13pm

According to their website they are authorised and regulated by the FCA and your funds are guaranteed up to £85,000

https://www.trading212.com/en/Safety-and-Security

Amouar · 17-04-2020 5:29pm

outonawing wrote: »

According to their website they are authorised and regulated by the FCA and your funds are guaranteed up to £85,000

https://www.trading212.com/en/Safety-and-Security

What's the catch then?

Seriously thinking of moving to them, as Degiro is charging me a lot in dividend fees. They also allow funding the account with a bank card, therefore it's much quicker than the bank transfers.

I'm using Degiro's custody account because i don't like the idea of having stocks I own given to those that want to short them. Does trading212 allow stock shorting? If so, i might just stick with Degiro for now.

Anyone already using trading212 (Invest) and can share any issue that they might be facing?

Thanks

dotsman · 17-04-2020 6:05pm

Amouar wrote: »

What's the catch then?

That's the million dollar question.

How do they make their money? A lot of cowboy operations in finance promise free or below-cost. But if you cannot see how they make a profit from up-front fees, then you can bet your ass they make their money by screwing you royally.

Best avoided until that becomes clear.

robman60 · 18-04-2020 12:42am

dotsman wrote: »

That's the million dollar question.

How do they make their money? A lot of cowboy operations in finance promise free or below-cost. But if you cannot see how they make a profit from up-front fees, then you can bet your ass they make their money by screwing you royally.

Best avoided until that becomes clear.

They make their money on the CFDs which they also offer. I have been using them for the ISA and it's fully regulated by the FCA, so happy to go with them.

I've found it to be a great platform although when I did contact them about a referral bonus they had they were less than useless but the app itself has been amazing. Particularly like the fractionals as I've been able to diversify easily with limited funds.

Amouar · 18-04-2020 10:39am

robman60 wrote: »

They make their money on the CFDs which they also offer. I have been using them for the ISA and it's fully regulated by the FCA, so happy to go with them.

I've found it to be a great platform although when I did contact them about a referral bonus they had they were less than useless but the app itself has been amazing. Particularly like the fractionals as I've been able to diversify easily with limited funds.

What's the benefit for having an ISA account Vs Invest account for Irish residents?

outonawing · 18-04-2020 10:45am

Amouar wrote: »

What's the benefit for having an ISA account Vs Invest account for Irish residents?

I imagine that you have to be a UK resident to open an ISA account, even if you don't, you can't avail of the tax benefits associated with one.

robman60 · 18-04-2020 12:32pm

Amouar wrote: »

What's the benefit for having an ISA account Vs Invest account for Irish residents?

No advantage, don't even think you can have an ISA in Ireland. Im living in the UK so that's why I'm using it. Otherwise the invest account is what you need.

Amouar · 18-04-2020 12:58pm

robman60 wrote: »

No advantage, don't even think you can have an ISA in Ireland. Im living in the UK so that's why I'm using it. Otherwise the invest account is what you need.

Do you know if they lend your shares to those that want to short them?

Jim2007 · 18-04-2020 3:48pm

Amouar wrote: »

Do you know if they lend your shares to those that want to short them?

Your question does not make any sense... the whole point of short is to sell shares you DON'T HAVE on the expectation that you can buy them on the market later at a lower price. Give your shares to anyone would make not sense, not to mention being illegal.

Jim2007 · 18-04-2020 3:53pm

Amouar wrote: »

What's the catch then?

- UK based guarantee, for a start, after the end of the year you may have very little rights to that guarantee

- The company may not be able to offer services to EU citizens after the end of the year or may only do so on a restricted basis.

I would not go setting up something major in the UK until we see where it is going....

Jim2007 · 18-04-2020 3:55pm

robman60 wrote: »

They make their money on the CFDs which they also offer.

Do you have a reference for that on is it just an opinion. In my experience, I would expect that they make most of their income form commissions on trade flow - a cheap low risk option.

Amouar · 18-04-2020 4:16pm

Jim2007 wrote: »

Your question does not make any sense... the whole point of short is to sell shares you DON'T HAVE on the expectation that you can buy them on the market later at a lower price. Give your shares to anyone would make not sense, not to mention being illegal.

You didn't understand my question. Brokers that offer short selling, they actually take shares from their customers that own them and give them to those that would like to short them.

This is why Degiro offers an account called "Custody", meaning that they do not give your shares to shorters if you chose a custody account, but they charge much more fees, like dividend processing fees etc.

Below is what Degiro have on their website about the Custody account:

Custody

A Custody profile is different from a Basic profile in that the securities are held separately from the lending pool of DEGIRO clients’ securities and are thus unable to be loaned to third parties. Debit Money, Debit Securities, and Derivative trading is not available with a Custody profile and you cannot change to an Active, Trader, or Day Trader account. A Custody Profile has different conditions and fees. However you will still benefit from our low transaction costs and save money through trading with DEGIRO.

Supercell · 18-04-2020 5:11pm

I opened an account with Trading212 before the corona crash and as a result never used it (averaging down current positions with new funds).
The two main reasons behind opening the account were 1) no fees and 2) they don't have stupid "ethical" restrictions - for example on Degiro you cannot buy LMT for ethical reasons but you can buy plenty of ETF's that do contain it. If I want to be an ethical investor that should be my choice and not foisted on me by some fcunking woke type.

/ends rant.

Amouar · 20-04-2020 6:27pm

Found this in their terms of business

10.15. You are not permitted to Short Sell. This means that you cannot give us an Instruction to sell an Investment that you do not own at the time of the sale and that is not held on your account whether settled or unsettled at the time of sale.

I think that i will open an account with them and keep my Degiro account aswell.

sk8board · 20-04-2020 7:24pm

Am I correct to assume:

1. If you’re only buying ETFs, then the shorting of shares isn’t an issue and a basic a/c is just as safe as a custody one

2. The bank guarantee scheme protection of €20k on DEGIRO is only for cash left in the a/c uninvested, and doesn’t mean your investments are unprotected above that amount.

3. You still own your investments irrespective of the broker going bust - their book of business would simply transfer out to another broker, or you’d get the option to move it yourself

All in all, degiro is a pretty safe platform for the amateur etf investor to use.

Jim2007 · 20-04-2020 9:26pm

Amouar wrote: »

You didn't understand my question. Brokers that offer short selling, they actually take shares from their customers that own them and give them to those that would like to short them.

Yes I understand your question exactly and it still makes no sense. As I said, the point of shorting shares is to sell shares you don't have now on the expectation that you can buy them later on the market at a lower price. The obligation is to deliver up the shares, so borrowing shares is not an option since ownership must change hands.

However, that is not the fully, story - your quote from their documentation raised my interests, so I did some digging and made some enquiries of other in the industry....

I expect you are confusing short shares with securities lending, which is a different exercise altogether and in someways more risking if it goes wrong. It basically means that your instruments are being lent out to other institutions as the basis of a financial product they are selling. If it were to go wrong and there was a domino effect, then you could end up with nothing, since your physical shares are gone!

It would be very interesting to see a court case on this, because there is an ECJ ruling that states any fees generated in a retro type manner are the property of the client and needs to be paid over to the client.

And it does not finish there either, they are also getting commissions from trade flow - they use a small market maker to do this and it is unlikely that you are getting the best price on trades as a result.

There is not such thing in the financial sector as a free lunch. You pay every time in some what or other.

If it was me, there is no way I would go with brokers that engage in securities lending - you have no idea what could go wrong.

Amouar · 20-04-2020 9:34pm

Jim2007 wrote: »

If it was me, there is no way I would go with brokers that engage in securities lending - you have no idea what could go wrong.

Me neither, and this is exactly why I opted for a Degiro Custody account. Degiro engages in securities lending if you don't opt for a Custody account.

I couldn't find any proof that trading212 engages in securities lending, and if that's the case then i will stick with my Degiro Custody account.

sk8board · 20-04-2020 9:48pm

Is securities lending an issue with etfs?

Jim2007 · 21-04-2020 12:47am

sk8board wrote: »

Is securities lending an issue with etfs?

It entirely depends on the ETF and how it is structured. All ETFs are not equal, some use synthetics and leveraging to to produce a result similar to a particular benchmark, while others replicate the holdings. And yes some will borrow securities. Read the fact sheets carefully.

littlevillage · 21-04-2020 10:44am

Amouar wrote: »

Do you know if they lend your shares to those that want to short them?

Not sure if anybody here uses Degiro for short selling, but it would be an interesting question to ask them.

My understanding is yes they do allow short selling for their paying clients....and if they do, then they would by necessity have to 'borrow' shares from somewhere to temporarily lend out to short sellers....soo yes, probably they do lend out customer shares to short sellers.

Do you see this as a material risk? I assume they have strict controls in place ?

dotsman · 21-04-2020 11:52am

Jim2007 wrote: »

If it was me, there is no way I would go with brokers that engage in securities lending - you have no idea what could go wrong.

Exactly, there is no idea, because nobody has been able to think of any scenario where there would be an issue.

Amouar wrote: »

Me neither, and this is exactly why I opted for a Degiro Custody account. Degiro engages in securities lending if you don't opt for a Custody account.

But is it a rational fear or an irrational fear?

littlevillage wrote: »

Do you see this as a material risk? I assume they have strict controls in place ?

People love to think there is a huge risk, yet nobody is ever able to show a scenario where this is a problem.

Jim2007 · 21-04-2020 7:47pm

dotsman wrote: »

Exactly, there is no idea, because nobody has been able to think of any scenario where there would be an issue.

Hmm... let me clarify what I said, when I said "you have no idea what could go wrong", I meant you literally have no idea what risk you are exposed to, because you have no idea who your shares are lent out to and for what purpose.

As for what can go wrong, the well the simplest would be in the case of an issue with your broker and the is put under some form of legal administration. You have a right to claim you holds and they do not form part of an insolvency, if they are clearly identifiable which the are not if held in a general account of the broker and lent out to a third party. The administrator may even take the view that it is not worth his while to even go after them.

One of the common uses of instrument lending is in the construction highly leveraged products, in other words - derivatives. Now if they lent your instruments to say UBS or CS you might be OK because they have double digit T1s, on the other hand if say something like "WIR Bank Genossenschaft", got them it might not go so well.

And of course, then again the other big borrower are the hedge funds... again if they are lent to a big fund with a significant backer, it may be fine... but it also could go wrong.

We all remember Lehmans, bu we could just as easily be talking about UBS as well, Remember they had a $40b hole that would have seen them go down along with all their associated products. The only thing that saved them was some fancy footwork by the former CEO, who stitched up the Singapore Sovereign fund... and the first we know of it was the when the CEO was escorted out f the building.

At the end of the day it's up to you to decide. If you are happy for them to lend out your shares for a fee and collect a trade flow commission, while you carry the risk with nothing in it for you....then that is your choice.

Amouar · 22-04-2020 9:32am

Is it legal for borkers to lend securities if they don't mention that in any of their terms&conditions docs? I'm mostly referring to trading 212(invest) as they don't mention it anywhere.

outonawing · 22-04-2020 10:02am

Noted the following on Trading 212's website, wonder which one would compensate Irish investors:

Trading 212 UK Ltd. is registered in England and Wales, authorised and regulated by the Financial Conduct Authority, FCA (Register number 609146).

Trading 212 Ltd. is registered in Bulgaria and is authorised and regulated by the Financial Supervision Commission (Register number RG-03-0237).

For your safety and in compliance with our regulations, all clients’ funds are kept separately in segregated bank accounts and are covered by the Financial Services Compensation Scheme, FSCS (Trading 212 UK Ltd.) and the Investors Compensation Fund, ICF Bulgaria (Trading 212 Ltd).

In the unlikely event of default, the FSCS compensation is up to GBP 85 000 and the ICF Bulgaria compensation is up to 90% (but limited to EUR 20 000) of the client’s funds. Each client will be compensated if one of our companies fails to comply with its obligations to the clients due to its financial state.

dotsman · 22-04-2020 10:47am

Jim2007 wrote: »

As for what can go wrong, the well the simplest would be in the case of an issue with your broker and the is put under some form of legal administration. You have a right to claim you holds and they do not form part of an insolvency, if they are clearly identifiable which the are not if held in a general account of the broker and lent out to a third party. The administrator may even take the view that it is not worth his while to even go after them.

I'm sorry, I'm not quite sure what you are saying here.

Jim2007 wrote: »

One of the common uses of instrument lending is in the construction highly leveraged products, in other words - derivatives. Now if they lent your instruments to say UBS or CS you might be OK because they have double digit T1s, on the other hand if say something like "WIR Bank Genossenschaft", got them it might not go so well.

And of course, then again the other big borrower are the hedge funds... again if they are lent to a big fund with a significant backer, it may be fine... but it also could go wrong.

We all remember Lehmans, bu we could just as easily be talking about UBS as well, Remember they had a $40b hole that would have seen them go down along with all their associated products. The only thing that saved them was some fancy footwork by the former CEO, who stitched up the Singapore Sovereign fund... and the first we know of it was the when the CEO was escorted out f the building.

OK, I think one of us has a serious misunderstanding of what's going on. When it comes to short-selling and lending the securities, this is to other customers.

For example, between all their customers, Degiro holds 1 million shares in company X. One of their customers, Bob, wants to short-sell 100 shares in company X. Degiro lends the 100 shares from that pool to enable him to do so.

As with all margin trading, as soon as the price approaches the max/min the customer's equity allows, Degiro will go a margin call, closing some/all of Bob's position before he can get him self into negative territory.

It's not really and different to a bank. They don't necessarily have your physical cash, segregated just for you, stored in a vault, but pooled together with all the other customer's money and the majority lent out, with enough reserves for liquidity.

To me, the kind of events that would trigger an issue here would be the "end-of the-world" type of events that would mean my portfolio has collapsed regardless. For which I am covered for 20K of losses from the Dutch government. The Degiro basic account is not intended for those who are investing hundreds of thousands/millions etc.

Jim2007 wrote: »

At the end of the day it's up to you to decide. If you are happy for them to lend out your shares for a fee and collect a trade flow commission, while you carry the risk with nothing in it for you....then that is your choice.

But there is plenty in it for me in that I pay much lower fees.

sk8board · 22-04-2020 1:44pm

Isn’t the €20k deposit insurance designed to cover the cash you have uninvested on account?
you can still have millions of euro in an equity portfolio and transfer it out of the broker if they were to cease to exist, via the administrator.

0815g · 18-05-2020 8:13pm

Joined trading 212 last week, and would be also interested in more input regarding this service. What I saw looks good to me, biggest trading app in UK and Germany and one of the biggest in the world so I wouldn't mind if I'm in the EU or not. Really good ratings on sites like Trustpilot.

I figured out that you can also buy just small parts of big shares (e.g. 0.04 Tesla for 30euro) so you can start kind of your own fee free stock saving plan by saving for example 10x different positions (could be a mix of shares, etf or fonds) with 25-30euro each month or whatever you want. Just put it in every month manually. I see this as a great opportunity

Fol20 · 19-05-2020 6:56pm

Amouar wrote: »

They have 2 separate platforms, one for CFDs and one for stocks and ETFs called "Invest".

I was asking about "invest" and have been reading a few reviews online, it seems like the main issue is the low guarantee of 20k Euros as they are based in Bulgaria.

Does degiro have any guarantee or is it all ok ?

sk8board · 19-05-2020 11:38pm

Fol20 wrote: »

Does degiro have any guarantee or is it all ok ?

Degiro has a Dutch regulated deposit guarantee of €20k.
Remember the deposit guarantee covers the cash you have on account waiting to trade, not the value of your investments.
If Degiro died (in a relatively orderly fashion) in the morning, you’d have 3 options:
1. Move your portfolio to a broker pre-selected by Degiro’s liquidator
2. Move it to your own preferred broker
3. Liquidate the assets and withdraw (a less likely option - it would have to be a very orderly wind down).

Otherwise it’s regulated and safe as a broker can be, separate client funds accounts etc.

The choices for diy investors in Ireland are broadly limited to two:
Davy and Degiro.

If you prefer an Irish presence, and don’t mind €15 trade fees, I’d pick Davy.
Personally I use degiro and v happy with them.

Supercell · 22-05-2020 3:42pm

How does Trading 212 deal with dividends on fractional shares, are they split pro-rata?

Despite my earlier protestations I've been thinking of making a manual kind of US ETF (infrastructure stocks - likely to boom if Biden gets elected, cloud and SaaS, renewable power) with a basket of fractional shares and just adding to it monthly with Trading 212. The free trades and fractional shares make this approach quite attractive to me on reflection.

JackieChang · 24-05-2020 5:56pm

JMMCapital wrote: »

I would not recommend Trading212. They are for trading in CFDs which are an extremely risky form of derivative and highly speculative stick with Degiro.

Do not listen to this guy. While it's true that you can trade CFDs on this platform, you can ignore the CFD section entirely. In fact you can disable it when you sign up and never see it ever again, and focus on investing only. There is a good selection of stocks on Trading 212. I've been using it for a few months now. Moved from Revolut which offers stocks on a very basic level.

I've had no problems with it so far. Plenty of engagement from the devs on the community support forum, happy to take new ideas etc. I just hope they keep the engagement up when the app explodes in popularity. I'm not sure if you've noticed but it seems like every tom dick and harry are investing in tesla / AMD these days.

Supercell wrote: »

I've been thinking of making a manual kind of US ETF

@Supercell they are rolling out a new feature which will allow you to create your own mini ETFs and automatically deposit into them. It's called autoinvest and should be coming out in a few weeks. I think it's in beta stage now for a select few.

One thing I'll add for anybody thinking of signing up... DO NOT TOUCH the "CFD" platform until you've spent ages reading up about what they are. You can loose hundreds of euros in seconds. Once you've read up on them, spend a few months on their practice account if you really want to try it.

Supercell · 25-05-2020 8:39am

JackieChang wrote: »

@Supercell they are rolling out a new feature which will allow you to create your own mini ETFs and automatically deposit into them. It's called autoinvest and should be coming out in a few weeks. I think it's in beta stage now for a select few.

Thanks for this, I didnt even know there was a community forum for it. I just read the beta post and have applied to join it. Answers my question too about fractional share dividends too, looks brilliant, exactly what I was wanting to do

JackieChang · 25-05-2020 11:48am

Supercell wrote: »

Thanks for this, I didnt even know there was a community forum for it. I just read the beta post and have applied to join it. Answers my question too about fractional share dividends too, looks brilliant, exactly what I was wanting to do

Good stuff. What did they say about fractional dividends?

Supercell · 25-05-2020 11:55am

JackieChang wrote: »

Good stuff. What did they say about fractional dividends?

Distributed prorata, to two decimal places which is fair enough to my mind.
Pity its only going to be fractional shares for now, some of the lower prices shares would be nice to add to my "pie" such as BAM for example, though BIP and BEP are fractional which is weird when the parent isnt so to speak.
I'm busy reading up and making a list for my "pie". Absolutely delighted I have to say.
If anyone is interested have a read of this - https://community.trading212.com/t/autoinvest-join-the-beta/6793

Supercell · 12-06-2020 9:36am

Just thought I should add here.
The Pie beta is rolling out and is absolutely bloody brilliant in my opinion.

However, of especial interest to Irish investors with the current taxable situation of ETF's, look what these devs are planning to do :

https://community.trading212.com/t/autoinvest-beta-feedback/8860/171

I’ll share one of our future ideas regarding the pies. We plan to connect to a data feed that will allow us to show the exact holdings of each ETF on its instrument page. This data will also allow us to put a ‘Generate Pie’ button there which will create a pie with the same holdings as the ETF’s. Moreover, this pie’s targets will be synced to the real ETF’s distribution percentages.

This is freaking awesome for us in Ireland especially!
Have to say I have decided to stop putting more funds into degiro and am using Trading 212 from here on in for further investing, they really are ahead of the game in Europe.

dotsman · 12-06-2020 10:26am

Supercell wrote: »

Just thought I should add here.
The Pie beta is rolling out and is absolutely bloody brilliant in my opinion.

However, of especial interest to Irish investors with the current taxable situation of ETF's, look what these devs are planning to do :

https://community.trading212.com/t/autoinvest-beta-feedback/8860/171

This is freaking awesome for us in Ireland especially!
Have to say I have decided to stop putting more funds into degiro and am using Trading 212 from here on in for further investing, they really are ahead of the game in Europe.

Sounds like a nightmare of epic proportions when it comes to cap gains tax!:eek:

iAcesHigh · 12-06-2020 10:31am

dotsman wrote: »

Sounds like a nightmare of epic proportions when it comes to cap gains tax!:eek:

Yeah, doesn't sound much easier on the paperwork then declaring ETF holding on a buy and on a sell...

Supercell · 12-06-2020 10:39am

dotsman wrote: »

Sounds like a nightmare of epic proportions when it comes to cap gains tax!:eek:

iAcesHigh wrote: »

Yeah, doesn't sound much easier on the paperwork then declaring ETF holding on a buy and on a sell...

Not really, actually it's easy :

https://helpcentre.trading212.com/hc/en-us/articles/360008145758-How-to-get-a-Tax-Statement-for-the-financial-year-

If you would like a Tax Statement, you can write us an email at info@trading212.com and we’ll send you over the tax statement for the previous financial year.

Supercell · 12-06-2020 11:05am

Hrrm, just had a lok at the revenue pages on CGT, the FIFO and four week rules are going to make this a total nightmare without some kind of software chomping through it all. Bugger it, our tax system really penalises investors in this country, an average cost as in other countries would be nice, ISA's would be even nicer!
Ok, i'm getting rid of my pies, feck it

iAcesHigh · 12-06-2020 11:49am

Supercell wrote: »

Not really, actually it's easy :

https://helpcentre.trading212.com/hc/en-us/articles/360008145758-How-to-get-a-Tax-Statement-for-the-financial-year-

statement won't help you in calculations when selling against each "minor" buy. I would really like this to work and have majority of my money in ETFs, but Irish policy on that will need to change before that makes sense for me, especially taking into account FF is considering lowering CGT to 25% which would make it 16% cheaper than ETF tax...

Supercell · 12-06-2020 12:00pm

iAcesHigh wrote: »

statement won't help you in calculations when selling against each "minor" buy. I would really like this to work and have majority of my money in ETFs, but Irish policy on that will need to change before that makes sense for me, especially taking into account FF is considering lowering CGT to 25% which would make it 16% cheaper than ETF tax...

Thanks god I only created my pies yesterday. I have turned off auto invest on them and will just let them sit, unless a miracle happens they wont hit the CGT limit this year as I was only testing various profiles so all very small.
Its very frustrating I have to say the whole ETF situation (as many people here have said many times before).
The four week rule is a massive PITA too, I honestly wasn't aware of it before, thankfully through luck more than anything else it wont affect my last years return either.
The Irish taxation system really needs to catch up with the times, it seems geared towards old fashioned pen and paper investing.

sk8board · 12-06-2020 8:00pm

dotsman wrote: »

Sounds like a nightmare of epic proportions when it comes to cap gains tax!:eek:

Have to agree, having filed both ETF and CGT returns every year for a while.
Its like driving to a garage 10 miles down the road to save €0.02 on petrol.

I’ve always hoped the increasing popularity of ETFs with amateur/DIY investors would make the Revenue clear the complexity. In another few years you’ll see thousands of small investors not even realising there is an 8 year deemed disposal, and/or will be filing incorrectly, if at all. It’ll be a mess.

That said, I’ve said the same about my rental tax situation for the last 15 years!

JackieChang · 16-06-2020 2:18pm

Supercell wrote: »

Hrrm, just had a lok at the revenue pages on CGT, the FIFO and four week rules are going to make this a total nightmare without some kind of software chomping through it all. Bugger it, our tax system really penalises investors in this country, an average cost as in other countries would be nice, ISA's would be even nicer!
Ok, i'm getting rid of my pies, feck it

What 's the four week rule? Couldn't find anything on google.

I did find this though "If investing in Irish Domiciled ETFs one will pay approx 41% tax on dividends & will pay 41% on overall gains. You will have to pay any tax due on growth every 8 years (even if not selling them). This inhibits on the potential compounding." Sounds like investing in ETFs is as good as throwing money down the toilet.

Supercell · 16-06-2020 2:40pm

JackieChang wrote: »

What 's the four week rule? Couldn't find anything on google.

I did find this though "If investing in Irish Domiciled ETFs one will pay approx 41% tax on dividends & will pay 41% on overall gains. You will have to pay any tax due on growth every 8 years (even if not selling them). This inhibits on the potential compounding." Sounds like investing in ETFs is as good as throwing money down the toilet.

Its here - https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/selling-or-disposing-of-shares.aspx

Shares sold within four weeks of acquisition
Shares bought and sold within a four-week period cannot be offset against other gains.

You can only deduct the loss from a gain made on a subsequent disposal of same-class shares acquired within the four weeks.

Basically they are penalising you for taking a loss quickly, or are strong believers that "time in the market beats timing the market". Rebalancing pies will be a total nightmare with these rules as would adding to or selling them. I have left my pies and am just not gong to touch for a while.

iAcesHigh · 16-06-2020 3:27pm

JackieChang wrote: »

What 's the four week rule? Couldn't find anything on google.

I did find this though "If investing in Irish Domiciled ETFs one will pay approx 41% tax on dividends & will pay 41% on overall gains. You will have to pay any tax due on growth every 8 years (even if not selling them). This inhibits on the potential compounding." Sounds like investing in ETFs is as good as throwing money down the toilet.

well even with extra 7% compared to shares (atm) it's probably still more profitable for most people who aren't willing to spend time to assess companies before investing... Tax on shares div's aren't any better btw

JackieChang · 16-06-2020 3:43pm

Supercell wrote: »

Its here - https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/selling-or-disposing-of-shares.aspx

Jesus what a massive headache.

NickSantigo · 17-06-2020 10:00am

sk8board wrote: »

Have to agree, having filed both ETF and CGT returns every year for a while.
Its like driving to a garage 10 miles down the road to save €0.02 on petrol.

I’ve always hoped the increasing popularity of ETFs with amateur/DIY investors would make the Revenue clear the complexity. In another few years you’ll see thousands of small investors not even realising there is an 8 year deemed disposal, and/or will be filing incorrectly, if at all. It’ll be a mess.

That said, I’ve said the same about my rental tax situation for the last 15 years!

It is unnecessarily complicated. I can't help but feel it's on purpose.
If you are investing in etfs for example chances are they are for American or foreign companies. It's like they feel you are taking money out of the economy to invest in foreign companies even though chances are you will bring that profit back into the Irish economy to spend.

For an amateur investor dollar with no time to do research and study markets dollar cost averaging into an S&P 500 etf is a very good and fairly safe way of investing and they have it so complicated it's not worth your while. Whole thing is so frustrating

iAcesHigh · 17-06-2020 12:33pm

NickSantigo wrote: »

It is unnecessarily complicated. I can't help but feel it's on purpose.
If you are investing in etfs for example chances are they are for American or foreign companies. It's like they feel you are taking money out of the economy to invest in foreign companies even though chances are you will bring that profit back into the Irish economy to spend.

For an amateur investor dollar with no time to do research and study markets dollar cost averaging into an S&P 500 etf is a very good and fairly safe way of investing and they have it so complicated it's not worth your while. Whole thing is so frustrating

I agree this should be easiest thing around to accommodate "amateur investor" (which in essence we all are). Also, I don't see reason why they don't charge usual CGT rate for it, but have different and "complicated" formula for these...

That being said, to be honest it's not that bad, is it? If you make sure you buy EU domiciled ETF you only need to do 2 things: report when you buy it and then report and pay tax when you sell it (with exception if you hold it for longer than 8 year in which case you need to report it post-8 years).

Obviously, dollar cost averaging makes this much more complicated, but if you simply save your money throughout the year and buy once or twice a year, paperwork isn't that bad....

Degiro vs trading212(invest)

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