Results from investing in just the S&P500

theleanist · 08-12-2021 12:17am #1

Hi everyone,

I started investing using Degiro in 2017. I decided to only invest in the S&P500 (VUSA) and have been purchasing units fairly regularly since - Ive put in about €36k into S&P over the last four years.

So far ...the results have been really good, as outlined below.

The purpose of this thread is to give regular updates on (1) the performance of my first trade and (2) the value of my overall S&P500 investments.

Hopefully people find it an interesting thread to follow. For those interested I have a fuller breakdown of my workings with graphs etc on my website - I'll post links once I gain permission.

My first trade (Nov 21 update)

Purchased 26 units of the S&P for €40.685 in July 17
Current buy rate (as of 29.11.21) is €76.278
Works out as a 11.69% AER after tax
Best available regular saving rate available to me in July 17 was 1.5% AER after tax from the 10 Year National Solidarity Bond.

Overall value of S&P investments (Nov 21 update)

Amount invested since July 17: €36,864
Value before tax as of 29.11.21: €55,454
Value after tax: €47,832
Profit after tax: €10,968

theleanist · 29-12-2021 7:05pm

Hi all,

Hope everyone had a great Christmas!

I invested another bit in the S&P500 (VUSA) in December. Brief summary below of (1) the performance of my first trade and (2) the value of my overall S&P500 investments.

As you'll see, the results remain very strong and far in excess of any regular saver available at present.

Summary: My first trade

- Purchased 26 units of the S&P for €40.685 in July 17

- Current buy rate (as of 24.12.21) is €78.953

- This works out as an AER of 12.33% after tax

- So the S&P500 (VUSA) has significantly outperformed the best available regular saving rate available to me in July 17 which as 1.5% AER after tax from the 10 Year National Solidarity Bond.

Summary: Overall value of S&P investments

- I purchased another 14 units of the S&P500 (VUSA) this month for a total price of €1,105.

- Total amount invested since July 17: €37,984

- Value before tax (as of 24.11.21) is €58,504

- Value after tax: €50,091

- Profit after tax: €12,107

Andrea B. · 29-12-2021 7:48pm

https://www.boards.ie/discussion/comment/118387216#Comment_118387216

Hi. Well done. Nice return.

Always curious on strategies, but have you any sort of stop-loss or risk mitigation should the market turn or is it something you would be willing to accept and ride out for the return?

Like, were you anxious mid-March 2020 as everything went off a cliff edge and fast?

theleanist · 30-12-2021 9:29pm

https://www.boards.ie/discussion/comment/118387439#Comment_118387439

Hi Andrea,

Thanks for the comment.

Yes, very happy with my return so far. Despite the high tax rate on profits, S&P still vastly outperforms regular savers.

"Have you any sort of stop-loss or risk mitigation should the market turn or is it something you would be willing to accept and ride out for the return?"

I have no stop-loss risk mitigation should the market turn. My strategy is extremely simple - I'm buying the S&P500 (VUSA) and holding!

"Were you anxious mid-March 2020 as everything went off a cliff edge and fast?"

No. My plan was to buy and hold. I believe over the long term the S&P will beat all regular savers. I actually purchased more of the S&P500 (VUSA) in April, May, July and October of 2020. My profit before tax did drop to €85 just after Covid hit in full force in March...but it re-bounded extremely quickly. I believe by the end of April it had already pass the February 2020 rate.

An experiment in index funds

Just to give the background, around 2017 I was looking to get a better return than the usual regular savers. A lot of what I read pointed to self managed low cost index funds, through one of the new online brokers which had popped up - Degiro etc. With many suggesting the bog standard S&P as the best place to start.

I looked at it as a bit of an experiment. My aim was to see if I could beat the best savings rate offered in Ireland at the time - 1.5% AER after tax offered by the State Savings 10 Year National Solidarity.

I wanted to take the leanist approach possible to investing - which explains the name! - so I decided to (1) just use Degiro, (2) only purchase the S&P500 (VUSA) and (3) only purchase €1,000 worth of S&P per transaction, as Degiro do not charge fees on purchases of S&P (VUSA) over €1,000. I've taken it slowly - I made six purchases in 2017, nine in 2018, two in 2019, five in 2020 and 11 this year.

All my eggs are not in the S&P basket!

I do still have regular savings accounts with the usual low interest rates.....I have one where I keep a balance of money for unexpected costs etc. And, another one where I'm saving for a deposit for a house. The bulk of my savings go into these accounts. The remaining I put into the S&P which I'm looking at as my 'Freedom Fund' - something I'm growing over the long run to hopefully provide an alternative source of income if I can get up to the €700K/€800K range.

Thanks for for taking the time to comment. Happy New Year!

Viscount Aggro · 30-12-2021 9:37pm

41% tax on gains after 31/12/21

theleanist · 30-12-2021 9:47pm

https://www.boards.ie/discussion/comment/118393108#Comment_118393108

Hi Viscount - they know how to charge alright!

Yes, this is the rate I've factored into my calculations.

In total I've invested €37,984 into the S&P500 (VUSA) since 2017. My investments are currently worth €58,504 before tax. If I was to withdraw right now and pay the 41% on gains I could take out €50,091. So, after tax, I’ve earned a profit of €12,107 on my S&P500 investments.

In comparison, by my calculations, I would have earned only €991 if I had invested the same amount of money in the best saving scheme available in Ireland back in 2017 - the 10 Year National Solidarity Bond. So, despite the 41% tax on index funds, so far they are still performing far better at present than any regular saver.

Thanks for taking the time to comment.

Viscount Aggro · 30-12-2021 9:49pm

And they monitor this board, and can get IP addresses.

Andrea B. · 30-12-2021 9:49pm

https://www.boards.ie/discussion/comment/118393108#Comment_118393108

Ouch. Up from what%?

Am i correct in saying that it is only relevant to when you actually sell relative to when you bought?

Viscount Aggro · 30-12-2021 9:52pm

a lot of people sold in last few months, after the Revenue ebriefing came out.

irrelevant when you bought.

Check the topic on askaboutmoney.com

theleanist · 30-12-2021 10:00pm

https://www.boards.ie/discussion/comment/118393188#Comment_118393188

It would be great if they actually did get in touch with me! I have a query with them weeks now on MyAccount!

I'm doing everything above board and paying what I owe to the letter so no worries.

Andrea B. · 30-12-2021 10:13pm

https://www.boards.ie/discussion/comment/118393216#Comment_118393216

Cheers. But to be clear for myself, one is not liable for CGT until they actually sell, so if 10 years down line, one would only be paying the rate in place at that time?

Or have i got it arseways?

techman1 · 30-12-2021 10:19pm

https://www.boards.ie/discussion/comment/118393188#Comment_118393188

how do they do that, this is a third party site not a revenue site, only the police can get IP addresses from a third party site and only by a court subpoena. Can you explain I think this is important because we are not living in Putin's Russia surely?

massdebater · 31-12-2021 2:51am

https://www.boards.ie/discussion/comment/118393188#Comment_118393188

What makes you think this?

Viscount Aggro · 31-12-2021 6:06am

They have withdrawn their guidance on non UCITS ETFs,

meaning they are also subject to exit tax, and the 8 year deemed disposal rule.

Happyhouse22 · 31-12-2021 8:32am

https://www.boards.ie/discussion/comment/118394603#Comment_118394603

VUSA is Irish domiciled so the recent withdrawal of guidance doesn’t make any difference. VUSA was always taxed at 41% and subject to deemed disposal etc.

notsocutehoor · 31-12-2021 9:16am

Are you not subject to USC as well.

Great result btw, and I think a good long term strategy

Atlas_IRL · 31-12-2021 11:41am

https://www.boards.ie/discussion/comment/118393188#Comment_118393188

What's this got to do with anything? He said he was paying calculating tax, not tax dodging.

Patsy167 · 31-12-2021 11:50am

JimmyVik · 31-12-2021 11:55am

about 16% and 27% in 2020 and 2021.

31-12-2021 11:58am

https://www.boards.ie/discussion/comment/118395121#Comment_118395121

I love me a nice chart.

JimmyVik · 31-12-2021 2:06pm

Best decision I ever made a few years ago when I was researching investing in a rental property.

All the indicators told me not to get into the property investment business with the goal posts moving all the time.

I put the whole lot of the 6 figure sum that was burning a hole in my pocket into a S&P fund instead of buying apartments or houses and just forgot about it. I check it on 1st Jan each year.

massdebater · 31-12-2021 3:00pm

https://www.boards.ie/discussion/comment/118395807#Comment_118395807

Good call! Does that mean you're checking your pf tomorrow for the first time in a year?! 😲

Pussyhands · 31-12-2021 3:23pm

Surely OP is gonna have an absolute ballache to calculate the tax with deemed disposal every 8 years? Once the first shares hit 8 years, you'll be calculating tax every month from the shares you bought.

I treat BRK.B as an S&P fund. If it lags a few % behind, I won't mind as I don't have to pay tax every 8 years.

Here's a comparison:

2010 - present: The chart correlates very closely up to March 2020.

And when you look at the month by month from Mar 2020 - present it's clear that the S&Ps overall divergence was in the 3 month period after March from April to June. From June 2020 - present the CAGR for BRK.B is 30.5% and SPY is 32.8%

Pussyhands · 31-12-2021 3:25pm

https://www.boards.ie/discussion/comment/118395807#Comment_118395807

I have similar amount in cash :/

Do you invest yourself via online broker or go via professional investment firm?

theleanist · 31-12-2021 9:56pm

https://www.boards.ie/discussion/comment/118394667#Comment_118394667

Hi Happy, my understanding was also that they have been taxed at 41% CGT since I started investing in 2017, and are subject to deemed disposal after 8 years.

theleanist · 31-12-2021 9:59pm

https://www.boards.ie/discussion/comment/118394705#Comment_118394705

Hi Notsocutehoor, my understanding is as happyhouse explained above. Don't believe there is any USC, however, I'm not an expert!

Thanks for the comment, happy with the results so far.

theleanist · 31-12-2021 10:00pm

https://www.boards.ie/discussion/comment/118395121#Comment_118395121

Nice chart Patsy!

theleanist · 31-12-2021 10:04pm

https://www.boards.ie/discussion/comment/118395807#Comment_118395807

Great to hear that Jimmy. I thought long and hard before starting to invest. Up until 2017 I just put my savings into the best available savings accounts. I thought of investing as gambling, which is why I started so slowly with it and have put in a bit every so often rather than a big lump sum. Looking back I wish I had been braver and put more in as you did.

Thanks for the comment!

theleanist · 31-12-2021 10:23pm

https://www.boards.ie/discussion/comment/118396193#Comment_118396193

Hi Pussyhands, memorable name! Thanks for the comment.

I'm not an expert so don't take this as gospel... Based on my understanding of the deemed disposal, my plan is;

- In 2025 if I've made a profit on my six 2017 investments I will sell them and pay the 41% CGT. I'll then reinvest the original amount plus the profit after tax back into the S&P500 (VUSA)

- it shouldnt be too difficult to work out the tax I owe - I know the exact number of units I purchased in 2017 and what I paid per unit, and I'll know what I sell the units for in 2025.

- if in 2025 I've made no profit on my investments I'll declare this, pay no CGT and hold on to them for another eight years.

- I'll repeat this for subsequent years.

I'm open to correction and suggestions on the above as I haven't actually reached the point of deemed disposal on any of my investments. So, if there are any more experienced investors about they may have a better suggestion of how to manage. Please let me know!

My aim with investing in the first place was to beat the best savers available in the market -in 2017 it was the 10 year national solidarity bond at 1.5%. The above plan I've outlined seems straight forward and manageable to me, and worth the extra bit of admin based on the current results.

Thanks for the feedback, good luck with your own investments and hopefully 2022 is another good investing year!

massdebater · 01-01-2022 3:48am

"My aim with investing in the first place was to beat the best savers available in the market -in 2017 it was the 10 year national solidarity bond at 1.5%"

Congrats on beating your goal! Hopefully, as you're getting more experienced, you've raised your goals and are aiming to at least beat inflation (6-10+%) so you're not losing purchasing power every year. S&P500 performance is usually a good minimum to aim for. Great work so far!

fritzelly · 01-01-2022 4:44am

Sorry but this sounds like a sign up for my course spam - why didn't you post this when you invested originally?

Why are you looking to link to your website?

Anyone can come along and say I bought at the bottom and say look at me making so much money!

Bar a major crash the S&P always increases each year - inflation being another thing...

Results from investing in just the S&P500

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