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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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Bob24

Behind you Joey wrote: »

Hello folks, just about to create a portfolio and have a good idea of my split between stocks, bonds, cryptocurrencies, etc. My question is what is the best application/online trader to go with for trading stocks?

I have heard anecdotally that Revolut is too basic, Trading 212 is decent and DeGiro is robust and reliable. Uncertain regarding the others.

Any advice on which to go with? Investment will be circa €10k for reference.

If you are getting started and want something simple, reliable, with reasonable access to multiple markets, and with reasonable fees ... I'd say DEGIRO is a good place to start.

ganmo

Hi all
I've dipped my toe into the world of shares using degiro and started by buying irish shares.
Now I'm looking to buy some EU stocks. Is there anything I should be aware of like regulations or taxes

Bob24

ganmo wrote: »

Hi all
I've dipped my toe into the world of shares using degiro and started by buying irish shares.
Now I'm looking to buy some EU stocks. Is there anything I should be aware of like regulations or taxes

Overall it makes very little difference and you can go for it.

There is a technicality on withholding tax rates you might want to be aware of though.

Degiro will charge you the default withholding tax on dividends in countries for which Ireland has tax treaties with (as opposed to the reduced withholding tax from the tax treaty). The problem is that Revenue will then only let you offset foreign withholding tax against your Irish tax liabilities up to the level defined in the tax treaty (so effectively you are double-taxed on part of the dividend).

This is affecting several countries, but to give you a specific example, as an Irish tax resident you are supposed to pay 12.8% withholding tax on French dividends according to our tax treaty with France. But as DEGIRO doesn't do the paperwork with French authorities to get you the reduced rate, you are actually taxed based the French default withholding tax rate which is 30%.

Then once you declare that dividend income to Revenue, they will let you deduce 12.8% of the dividend amount from your Irish tax liability as this is what you should have paid to the French (they consider it is your responsibility to make sure you got the reduced rate in France), and you cannot recover the remaining 17.2%. So basically because of this whole thing you are getting screwed for 17.2% of the dividend (I believe you are entitled to claim it back from French tax authorities, but I suspect it would be a massive pain and not worth your while unless if is a fairly large amount).

Now to be honest it isn't a massive issue in the grand scheme of things unless you are buying a lot of stocks for which you are counting on large dividend payments in affected countries. For example if you had 10000 euros worth if French shares with 2% dividend yield, you would be talking 200 euros of dividend i.e. you would be losing 34.4 euros each year on your dividends because of this double taxation issue. So I wouldn't let it stop you from buying those shares, but you will want to beware of the issue if you are a large dividend investor.

ganmo

Thanks for the info.
I was gonna target dividend stocks so more research is needed
Thanks again

Irish94

Where would you begin, or what is the first step, if you wanted to invest an X amount of money in an Index fund (i.e. S&P 500) and forget about it for 20 years?

Brock Turnpike

Irish94 wrote: »

Where would you begin, or what is the first step, if you wanted to invest an X amount of money in an Index fund (i.e. S&P 500) and forget about it for 20 years?

Would also like to know this.

Shedite27

Irish94 wrote: »

Where would you begin, or what is the first step, if you wanted to invest an X amount of money in an Index fund (i.e. S&P 500) and forget about it for 20 years?

Brock Turnpike wrote: »

Would also like to know this.

Cheapest way is
1. Sign up for Degiro (or if their queue is still too long Interactive Brokers or some other alternative).
2. Lodge your money to Degiro.
3. Buy SPY5.DE - SPDR S&P 500 UCITS ETF

If you're living in Ireland, on ETF's you need to pay Capital Gains Tax every 8 years, so you can't completely "forget about it for 20 years". Have a read of this before you start
https://www.irishtimes.com/business/personal-finance/don-t-invest-in-an-etf-until-you-understand-the-tax-1.3421331

Also, you'll have the option to buy that product on multiple exchanges, I'd recommend avoiding the Irish stock exchange as you have to pay stamp duty on the purchase, and avoiding the UK as you'd bring in exchange risk. I'd go Germany (spy5.DE)

Bob24

On DEGiRO, you can make monthly purchase of several S&P500 ETFs with no fees. See full list of commission free ETFs here: https://www.degiro.ie/data/pdf/ie/commission-free-etfs-list.pdf

I’d suggest to go for an MSCI world one for a bit more geographical diversification though (MSCI world is heavily weighted towards the US but adds others developed markets to the mix).

Mantis Toboggan

What's the exchange risk with the UK currency?

Bob24

Mantis Toboggan wrote: »

What's the exchange risk with the UK currency?

An exchange as such doesn't introduce any currency exchange risk, as it is currency agnostic (you could have securities priced in EUR listed in London or securities priced in GBP listed in Dublin).

What could bring a currency risk is the currency in which the security is listed.

But if we are taking about an S&P500 ETF, it actually makes very little difference what the listing currency is (unless the ETF includes financial instruments for currency hedging).

The underlying stocks in the ETF are all priced in USD anyway, so at the end of the day regardless of the ETF being listed in USD, EUR, GBP, or whichever else currency - its value should be considered in USD. Listings in other currencies are just for convenience so that people can buy and sell in their own currency (and calculate taxes more easily) - but they don't have any role to protect from currency fluctuations.

If an ETF is designed to protect the investor against currency fluctuations, it usually has the mention "hedged" in its name.

And example would be this S&P500 ETF whereby the issuer clearly states: "the Fund seeks to track the performance of an index composed of 500 large cap U.S. companies which also hedges USD currency in the index back to EUR on a monthly basis".

At the moment, I personally wouldn't hedge against the USD strengthening though, as I believe the USD will be getting stronger and the EUR weaker on the coming months/years.

Mantis Toboggan

Thanks, so there's no need to avoid the UK as an exchange risk.

Yillan

My pensions and investments are with Standard Life through a financial advisor. I was considering adding S&P 500 to my portfolio. I have a DeGiro account, but Standard Life also have a S&P 500 fund I can invest in. This seems like the most sensible way of going about it. I get an AMC reduction and an improved allocation rate if I commit to a duration of payment. Am I missing some benefit of going through DeGiro, whether that be on tax, or fees? Thanks

Shedite27

Yillan wrote: »

My pensions and investments are with Standard Life through a financial advisor. I was considering adding S&P 500 to my portfolio. I have a DeGiro account, but Standard Life also have a S&P 500 fund I can invest in. This seems like the most sensible way of going about it. I get an AMC reduction and an improved allocation rate if I commit to a duration of payment. Am I missing some benefit of going through DeGiro, whether that be on tax, or fees? Thanks

Have a read of this and then investigate the Standard Life Option. Chances are, for every 100 euro you give them, there's probably only 98 going to your account (1% of that is a government levy), and then there'll be a management charge by SL each year too. If ya have the DeGiro setup already, and can by an S&P fund, you can do it yourself without giving 2/3% to Standard Life. It's also easier to get your money back in case of emergency (there's a breakage fee if ya take money from Sl in the first 5 years).

Irish94

Shedite27 wrote: »

Cheapest way is
1. Sign up for Degiro (or if their queue is still too long Interactive Brokers or some other alternative).
2. Lodge your money to Degiro.
3. Buy SPY5.DE - SPDR S&P 500 UCITS ETF

If you're living in Ireland, on ETF's you need to pay Capital Gains Tax every 8 years, so you can't completely "forget about it for 20 years". Have a read of this before you start
https://www.irishtimes.com/business/personal-finance/don-t-invest-in-an-etf-until-you-understand-the-tax-1.3421331

Also, you'll have the option to buy that product on multiple exchanges, I'd recommend avoiding the Irish stock exchange as you have to pay stamp duty on the purchase, and avoiding the UK as you'd bring in exchange risk. I'd go Germany (spy5.DE)

Bob24 wrote: »

On DEGiRO, you can make monthly purchase of several S&P500 ETFs with no fees. See full list of commission free ETFs here: https://www.degiro.ie/data/pdf/ie/commission-free-etfs-list.pdf

I’d suggest to go for an MSCI world one for a bit more geographical diversification though (MSCI world is heavily weighted towards the US but adds others developed markets to the mix).

Shedite27 and Bob24 - Thank you both for your replies. I apologise for my delayed response!

I must do a bit more reading up on what you have both said, as I don't feel confident in my knowledge at present. Would either of you mind if I message you privately to pick your brains more?

Bob24

Irish94 wrote: »

Shedite27 and Bob24 - Thank you both for your replies. I apologise for my delayed response!

I must do a bit more reading up on what you have both said, as I don't feel confident in my knowledge at present. Would either of you mind if I message you privately to pick your brains more?

Sure no problem.

Sols12

Looking for some assistance on how my dividend tax has been calculated and what I would have to pay in tax? I've filled out my W-8 form.

Using Degiro I have the following for a US based stock :

"Partnership distribution" = 50.63
"Partnership tax withholding" = (18.73)
Leaving me with a 31.90 return

This works out as a 37% deduction. If that figure is withheld what would I have to pay in terms of outstanding tax?

lotsobear

Hi folks, 2 question I hope some of you might be able to shed some light on..

1. I was looking at a stock on the LSE and the price is £180 per share, however the same company is all on frankfurt stock exchange for €4.50 per share. Obviously this difference is not due to currency what are the advantages/disadvantages of buying either one as they appear otherwise identical in their pass charts etc...

2. Does DEGIRO have a facility to provide a basic breakdown of you transactions every year for you to provide revenue?

Jim2007

lotsobear wrote: »

1. I was looking at a stock on the LSE and the price is £180 per share, however the same company is all on frankfurt stock exchange for €4.50 per share. Obviously this difference is not due to currency what are the advantages/disadvantages of buying either one as they appear otherwise identical in their pass charts etc...

To get any meaningful commentary you'd need to tell us the stock, the tickers and the time you did the comparison.

Kilboor

lotsobear wrote: »

Hi folks, 2 question I hope some of you might be able to shed some light on..

1. I was looking at a stock on the LSE and the price is £180 per share, however the same company is all on frankfurt stock exchange for €4.50 per share. Obviously this difference is not due to currency what are the advantages/disadvantages of buying either one as they appear otherwise identical in their pass charts etc...

2. Does DEGIRO have a facility to provide a basic breakdown of you transactions every year for you to provide revenue?

1. I'd buy on the exchange with the most volume. The only disadvantage of LSE would be currency fluctuations but even still if the company isn't actually a German stock I'd avoid Frankfurt due to lower volumes, different exchange compliances etc

2. Yes they give you an annual tax report and regular report every year.

Shedite27

lotsobear wrote: »

Hi folks, 2 question I hope some of you might be able to shed some light on..

1. I was looking at a stock on the LSE and the price is £180 per share, however the same company is all on frankfurt stock exchange for €4.50 per share. Obviously this difference is not due to currency what are the advantages/disadvantages of buying either one as they appear otherwise identical in their pass charts etc...

The LSE displays stock price in pence too, so Aviva for example shows on Degiro as GBX 245.90, which is a price of £2.45 per share.

GDK_11

Hi all,

As with many others I have a few extra quid floating around (that I can afford to lose)!! Be done some basic research and will continue to do before taking the plunge.

Not a trading question, but a question on whether having trading activity can affect your mortgage application like gambling can?

Shedite27

GDK_11 wrote: »

Hi all,

As with many others I have a few extra quid floating around (that I can afford to lose)!! Be done some basic research and will continue to do before taking the plunge.

Not a trading question, but a question on whether having trading activity can affect your mortgage application like gambling can?

I know what you're saying, gambling and trading has a lot in common, however, it's unlikely to become an addiction to buying shares that's going to ruin your finances (bad picks can do that). The same banks that are offering you mortgages are likely also offering you equity funds, so they do this investing/gambling also. I've not applied for a mortgage since starting investing, but think it would be a bit rich for banks to say investing is bad, while advertising investing.

NickSantigo

GDK_11 wrote: »

Hi all,
Not a trading question, but a question on whether having trading activity can affect your mortgage application like gambling can?

I had shares in 2011 and was told in an application that shares won't count towards your application unless they are sold as they can go to zero. Banks were very difficult to deal with at the time and you had to have absolutely everything in perfect for an application

I was told during an application in 2016 that it can sometimes go against you. However, I got approval with no difficulty.
I had work shares when I moved house recently in 2018 and they were not even mentioned as a pro or a con.

If you are buying and holding and investing as opposed to buying and flipping stocks after a short time (Trading) then I don't see how it can go against you.
If you are trading I can see how it might go against you as they don't know if you are really good or really bad. A lot of parallels with gambling there I suppose

Sconsey

Another question on the different exchanges. I (foolishly) in the past always bought from the Euro based exchanges because I thought it would be easier from a currency fluctuation perspective.

So I am looking at Starbucks, have had my eye on it for a while and want to get in now. Degiro have it on three exchanges NDQ (US$) and FRA and XET (Euro).

I think Starbucks will grow in the US more than Erurope, would that be reflected in the NDQ value or does it all even out over the course of a few days? So if there is a x% growth in a day on one exchange will the others catch up the next day or can the differences vary considerably?

Does the Euro exchange reflect the European side of the business and the US reflect the US business? I doubt it but just want to check that too.

kokiyou

Sols12 wrote: »

Looking for some assistance on how my dividend tax has been calculated and what I would have to pay in tax? I've filled out my W-8 form.

Using Degiro I have the following for a US based stock :

"Partnership distribution" = 50.63
"Partnership tax withholding" = (18.73)
Leaving me with a 31.90 return

This works out as a 37% deduction. If that figure is withheld what would I have to pay in terms of outstanding tax?

If you are using DEGIRO you can click on Reports, look for the "Annual Tax Report Addition YYYY" replace Y with your specific year e.g. 2019. You will see that 15% should be withheld automatically if it is a US stock. So on your form 11 you should pay the remaining 37% (if you are a higher bracket earner for income tax) tax due.

Sols12

kokiyou wrote: »

If you are using DEGIRO you can click on Reports, look for the "Annual Tax Report Addition YYYY" replace Y with your specific year e.g. 2019. You will see that 15% should be withheld automatically if it is a US stock. So on your form 11 you should pay the remaining 37% (if you are a higher bracket earner for income tax) tax due.

Thanks for the reply.

I received $31.90 from a $50.63 distribution, why would Degiro take this amount (37%) and not just 15% if I have to pay the difference?

Taylor365

Sols12 wrote: »

"Partnership distribution" = 50.63

What is this? Doesn't sound like a dividend I've ever received from a stock.

Is it a fund or trust?

Sols12

Taylor365 wrote: »

What is this? Doesn't sound like a dividend I've ever received from a stock.

Is it a fund or trust?

It's a quarterly cash distribution. I've not come across it before also as dividends are tax correctly at 15% by degiro on my other stocks. I'm not sure what the rules are surrounding a cash distribution by a stock.

It's not a fund or trust but a stock from the energy sector

https://www.lawinsider.com/dictionary/quarterly-cash-distribution

Taylor365

Sols12 wrote: »

It's a quarterly cash distribution. I've not come across it before also as dividends are tax correctly at 15% by degiro on my other stocks. I'm not sure what the rules are surrounding a cash distribution by a stock.

It's not a fund or trust but a stock from the energy sector

https://www.lawinsider.com/dictionary/quarterly-cash-distribution

I've always received dividends as just that, dividends. That includes from D and DUK from the energy sector.

arleitiss

I have question on capital gains tax.

Let's assume (Big assumptions and optimism): I put in €2000 into stocks today.
Going forward - I am putting €200 per month into stocks for the next 20 years.

So in 20 years time, I've deposited total of: €48'000 (Monthly) + The original €2000 = €50'000

Let's assume in 20 Years those €50'000 I've been putting in are worth €150'000 (Optimistic but for illustration/simplicity purposes)

And I decide to sell everything and walk away.
Would I have to pay 33% CGT on €150'000 leaving me with profits of: €51'770 (+ First €1270 CGT exemption)
or would it be paid against €100'000 of profits (Total SUM - Deposits) leaving me with: €68'270 Profits